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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

US cattle states try to stem the meatless revolution…

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

the right thing to do long term.

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

UK store closures hit new highs while JD Sports and Honest Burger put in impressive performances…

High street store closures at record levels (Daily Telegraph, Laura Onita) cites a report from PwC and the Local Data Company which show the highest rate of store closures on the UK high street in nine years. Fashion

retailers, pubs, bars and restaurants suffered the most, but then ‘Vibrant’ JD Sports outpaces competition (The Times, Ashley Armstrong) shows that it’s still possible to win in the “athleisure” market, despite what competitor Mike Ashley at Sports Direct might be saying and Honest Burger defies downturn in casual dining with £31m sales (Daily Telegraph, Oliver Gill) shows it’s still possible to turn a profit in burgers despite the experiences of Gourmet Burger Kitchen and Byron Burger in the last couple of years.

And finally, in other news…

I just couldn’t find an amusing or informative news story that got me interested today, so I thought I’d leave you with this amusing Great British Bake-Off effort as I was reminded of it last night: https://tinyurl.com/yxdtt92j. Yes, it’s the “old” presenters when it was on the BBC, but it’s a classic…

1. In MACRO NEWS, Putin’s party loses a lot of ground, UK recession fears recede and BoJo fails again
2. In CONSUMER/RETAIL NEWS, PPI claims hit £50bn, US retailers abandon Chinese suppliers and Primark suffers margin pressure
3. In AUTOMOTIVE NEWS, India sales dive, South Korea’s GM workers stage a strike, Ford gets downgraded to “junk” and Geely buys into Volocopter
4. In INDIVIDUAL COMPANY NEWS, Apple and Foxconn get into trouble in China, Intu buyout rumours buoy the share price and the FDA warns Juul on safety claims
5. In OTHER NEWS, I bring you a Newport greasy spoon…

So Putin’s party loses ground and fears of a UK recession seem overdone…

Putin’s party loses more than third of seats in Moscow poll (Financial Times, Henry Foy) shows that Russia’s ruling party, United Russia,  has just lost over a third of its seats in the Moscow City council election following a summer of protests against worsening living standards, government corruption and the heavy-handed treatment of political opponents. Voter disgruntlement has increased as Putin implemented pension reforms that increased the retirement age by five years and hiked up VAT as household incomes fell for the fifth year in a row. * SO WHAT? * I doubt this is really going to register with Vlad as this is a local election result, but it can be seen as a barometer of how the broader electorate is feeling. Parliamentary elections aren’t due until 2021 and he is supposed to hand over power in 2024 (chuh, right! I suspect he’ll try to do a Mugabe and find ways to cling onto power for as long as possible!), so now is probably as good a time as any to introduce unpopular reforms – the memory of which he probably hopes will fade before voters

next come to the polls.

Meanwhile, UK recession fears recede after surprise economic growth (The Guardian, Larry Elliott) cites the latest figures from the Office for National Statistics which show that the risk of the UK falling into recession have lessened as July saw a 0.3% increase in economic output. The services sector, which accounts for about 80% of the UK’s GDP, and manufacturing sector saw activity increase by 0.3% while construction had an uptick of 0.5% in July following contraction in the previous quarter. * SO WHAT? * OK, so this is just one month’s data – but it could have been worse. It seems that we’re OK for now, but Brexit is obviously brewing in the background.

Boris Johnson loses second attempt to hold snap general election (Financial Times, George Parker) heralds the latest bump in the road for BoJo as opposition MPs blocked his second go at holding a snap general election on October 15th. Parliament is now suspended for five weeks and so an election can’t now take place until November at the earliest. BoJo, in the meantime, will have to go to the EU summit on October 17th-18th to negotiate a new Brexit agreement without the threat of no-deal (although he has threatened to ignore the new law denying him the no-deal option). The drama continues…

Late PPI claims prove painful, US retailers abandon Chinese suppliers and Primark’s margins get squeezed…

PPI bill hits £50bn as Lloyds and Barclays increase their provisions (Daily Telegraph, Harriet Russell) shows that a massive rush of PPI claims skidding in before the August 29th deadline has tipped the banking industry’s final PPI bill to over £50bn. Lloyds and Barclays are among the banks that have had to increase their provisions for payouts as their previous assumptions had been based on 190,000 claims per week until the August deadline versus the actual number of 6-800,000 claims per week last month! * SO WHAT? * Tricky, but then again at least the banks can see light at the end of the tunnel. OK, so they’ve had to rein things in a bit by this but they will bounce back. You might be wondering why I put this story in the “Consumer/retail news” section – well it’s because I think that there will be a windfall effect going into the end of this year as people spend the money they receive. Now I don’t know the size of the average claim, but I am assuming that it’ll range from a few hundred quid to a few thousand so I would assume that people may well want to spend it! Given house prices these days, I would have thought that anything to do with home improvements will benefit (= DIY retailers and probably tradespeople themselves as they get more business) plus possibly electrical goods retailers as successful claimants upgrade TVs and other normally big ticket items. Who knows – maybe even car sales may see an increase as people use the lump sum as a deposit – they could certainly do with the boost! I am really going to sound like an old man now, but I remember at the end of the 90s that many people got “windfalls” as building societies went through a spate of demutualisation, resulting in their account holders suddenly getting their hands on “free” shares, which they duly sold. It was happening so frequently that people were rushing around opening accounts at any building societies they could to get access (they were referred to as “carpet-baggers”) although most places got wise to this pretty quickly and only allocated shares to customers who’d had accounts open for a certain amount of time. The rough “windfall” figure around this time was about £1,000 – and DIY retailers and electrical retailers did indeed do quite well from it. I am assuming that history will repeat itself, with

the windfall coming this time around from PPI rather than building society demutualisation…

US retailers accelerate shift away from Chinese suppliers (Financial Times, Alistair Gray) highlights the fact that US retailers are abandoning Chinese suppliers at an accelerated rate as a result of Donald Trump’s trade tariffs and are now switching their sourcing to countries such as Vietnam, Cambodia and Thailand. Retailers had been doing this already over the last few years as labour costs (which was why they went there in the first place) have been rising, but Trump’s latest moves have given them reason to quicken the pace. Retailers such as Carter’s (children’s clothing), American Eagle (teen retailer), Vera Bradley (luggage and handbags) are among those who have outlined plans to reduce their reliance on China but Morris Goldfarb, who runs G-III Apparel (which owns brands including DKNY and Andrew Marc) cautioned against complete abandonment as he said that “Once you get your production out of China…you can’t bring it back. Those factories will go out of business…you still need to keep a foothold [in China], until we fully recognise the depth and term of the problem”. * SO WHAT? * The mass-migration continues to other countries in the region. TBH, this is not a bad thing IMO because having your supply chain overly skewed to one country is not a good practice because if something goes wrong (in this case, tariffs), it can really b*gger things up for quite some time. I guess it’s always about finding the right balance between cost efficiencies, having “areas of excellence” and being too exposed to one country or region. I think that companies have a tendency to drift production upwards in lower-cost countries and then reach a point a few years down the line where those cost benefits no longer exist. I believe we have now reached such a point with China…

In Primark owner feels the pinch as sterling hits profit margins (The Times, Alex Ralph) we see that profit margins at the Associated British Foods-owned apparel retailer look vulnerable as a stronger dollar and weaker pound are increasing the cost of goods. The company said that it would not pass the price increases on to shoppers – but obviously this will come at the expense of profit margins. It would instead look to cut material costs to claw back some of the margin. * SO WHAT? * Primark has been somewhat of a success story on an embattled UK high street. Although this news is clearly disappointing, I don’t think it is disastrous – and the fact that parent company ABF kept its full year assumptions unchanged is cause for some relief.

India sees weak car sales, South Korea’s GM goes on strike, Ford gets downgraded and Geely invests in Volocopter…

The nightmare for automobiles continues in India car sales slump 41% as downturn deepens (Financial Times, Benjamin Parkin) as the latest figures from the Society of Indian Automobile Manufacturers unveiled the fifth consecutive month of double-digit losses. The main reason behind this nightmare is the chaos in India’s shadow banking sector which accounted for over half of the credit used for vehicle purchases. * SO WHAT? * This massive drop-off has forced automakers to cut staff, close/limit production and reducing the number of contractors. Sales of two-wheelers and commercial vehicles have also fallen and there has been increased pressure on the government to do something about the situation. India’s finance minister announced a number of measures last month to boost customer lending for new cars and to encourage government agencies to buy new cars, but clearly these initiatives have not started to feed through yet.

GM Korea workers stage first full strike in more than 20 years (Financial Times, Song Jung-a) heralds the first strike at GM in South Korea for over twenty years as they demand higher wages and protest against the company’s restructuring plans. Three plants will shut down in a strike that will last until the end of tomorrow. * SO WHAT? * Good luck with that. GM can just point to how the whole industry is suffering globally and how it needs to make cuts to survive an uncertain future – so asking for a wage hike and no job losses is going to be a big ask IMO. This is just more evidence of the hardships being faced by the automotive industry generally.

And if you were still harbouring thoughts that the car industry is actually in rude health, Ford’s credit rating slashed to ‘junk’ (The Times, Robert Miller) shows that even dim-witted credit agency Moody’s has decided to downgrade the company’s credit rating to Ba1 on concerns that Ford chief Jim Hackett’s plan to turn the thing around won’t work. Moody’s analyst Bruce Clark said that the downgrade reflected “the considerable operating and market challenges facing Ford, and the weak earnings and cash generation likely as the company pursues a lengthy and costly restructuring plan”. * SO WHAT? * This is a bit of a pain for Ford because it means that servicing its debt will now be a bit more expensive – something it could really do without given that it’s trying to turn things around. Moody’s (and other credit rating agencies, for that matter) always seem to be supreme at telling everyone what they already know and this move will just increase the pressure on the embattled car company.

Geely takes stake in German flying taxi start-up Volocopter (Financial Times, Sylvia Pfeifer and Peter Campbell) signals the Chinese carmaker’s investment in a minority stake of German flying taxi start-up Volocopter, which hopes to bring its VoloCity all-electric aircraft to a commercial launch within the next three years. Apart from acting as a sugar daddy, Geely will be working with the company to launch air taxis in Chinese cities. * SO WHAT? * OMG. Seriously. Given that it’s nigh on impossible to get permission to fly a freakin’ drone within spitting distance of human habitation these days, I fail to see how operating flying taxis will happen in the next three years. Surely the first passengers in these things will be those who have more money than sense and a death wish?? Sounds great but I really think that pigs might fly before taxis do (and I’m sure scientists are getting ever closer to the former)!

Apple and Foxconn face time on the naughty step, Intu gets boosted on rumours and the FDA warns Juul…

Apple and Foxconn broke Chinese labour law to build new iPhones (Financial Times, Louise Lucas) highlights a bit of a problem for the two companies ahead of Apple’s launch event tonight as it admitted that it breached Chinese labour law by employing over 50% of its workforce assembling the iPhone as contractors. The law states that it cannot go above 10%. Other claims in a report compiled by China Labour Watch about worker compensations and hours were refuted by Apple. * SO WHAT? * I may be wrong here, but the fact that this law was breached for quite some time and by quite some margin would suggest that authorities were willing to turn a blind eye but are now getting their own back on Trump’s tariffs by suddenly taking notice. No doubt we shall hear more about this as time goes on…

Intu buoyed by buyout talks (Daily Telegraph, Alan Tovey) shows that shares in the retailer landlord that owns malls such as Lakeside in Essex and The Trafford Centre in Manchester shot up by over 20% in early trading yesterday on rumours that property investor Orion was going to buy it. There was no official comment (or denial) of such intentions by either side. * SO WHAT? * Given the carnage of the UK retail landscape currently, I think that bid rumours will be the only thing to power retailer landlords at the moment. No doubt the share prices of other landlords will rise as investors try to bet who might be a nice bid target.

FDA warns Juul about marketing products as safer than cigarettes (Wall Street Journal, Jennifer Maloney) puts further pressure on companies making cigarette alternatives as the powerful Food and Drug Administration accused Juul of overstepping the mark when it said in marketing that its e-cigarettes are “totally safe”. The pressure and investigations continue to ratchet up on the industry…

And finally, in other news…

I’ll just leave you today with a headline that needs no introduction: Fanny’s faggots haven’t gone down well after Google bans advert (Metro, Richard Hartley-Parkinson, https://tinyurl.com/y6jg3pam). A marketing ploy, surely??

1. In MACRO & OIL NEWS, tariff wars hit both the US and China, we look at the latest situation facing BoJo and Saudi’s royals tighten their grip
2. In RETAIL/CONSUMER NEWS, UK footfall drops, we see the challenges at M&S, Premier Inn’s room upgrade and Apple ahead of its new handset launch
3. In INDIVIDUAL COMPANY NEWS, WeWork aims for an even lower valuation, Nissan searches for a new chief and vaping deaths prompt concerns
4. In OTHER NEWS, I bring you a great catch…

So the US and China suffer in the tariff wars, BoJo faces more challenges this week and the Saudi royals take more control…

In the ongoing trade wars, Manufacturers cut spending as trade war dents confidence (Wall Street Journal, Austen Hufford) shows that US manufacturers are holding back on investment in their workforce and production facilities as the ongoing trade dispute is making for an uncertain backdrop. Some companies are buying fewer machines and working hours are being cut – which is leading to weaker sales and lower pay for the workers, which could lead to a US economic slowdown. As one chief exec put it, “You can’t play roulette. You can’t gamble with 30 years of work”. Meanwhile, China exports decline as US trade dispute takes toll (Financial Times, Don Weinland) shows what’s going on on the other side as exports from China fell last month as the ongoing trade dispute continues to impact the manufacturing sector. Many analysts were actually expecting a temporary boost as Chinese companies put in more orders to beat the September 1st tariff deadline – but this did not materialise. Interestingly, last month’s export data also shows that the country’s trade surplus (which measures how much its exports exceed imports by value) fell to $34.8bn – way below market expectations – versus a $45bn surplus in July. * SO WHAT? * Both sides can clearly take a bit of pain and, at the moment, it seems like neither side appears to want to blink first. Still, cracks are starting to show so the pressure continues to build ahead of the next round of talks in October.

In the ongoing Brexit drama, Leo Varadkar plays down prospects of Brexit breakthrough (Financial Times, Arthur Beesley) highlights the first face-to-face meeting between Boris Johnson and Irish PM Leo Varadkar, due to take place this morning. Varadkar was keen to manage expectations, though, when he said “I don’t expect any big breakthroughs but I do think it’s an opportunity for us to establish a

relationship”. Johnson stokes Brexit flames by sticking to aggressive strategy (Financial Times, Jim Pickard) reviews the situation so far with BoJo and Brexit and looks forward to events that are likely to unfold from now. At the moment, it sounds like he will ignore legislation that was passed last week to force him to get an extension to Article 50 – and if he does, this could spark an emergency judicial review by the Supreme Court later next month which would lead to a massive bun fight between judges, the government and parliament. * SO WHAT? * It is interesting to see that, despite all these setbacks for BoJo, opinion polls currently put the Conservatives ahead at 35%, Labour at 21%, the LibDems at 19% and the Brexit party at 12%. I get the feeling that the voting public is just getting sick of limbo and is increasingly getting behind someone (even if they don’t particularly like him) who is taking action. Having said that, the credibility of polls has taken a bit of a beating in the last few years, but I would suggest that a 14% lead on second place is pretty big. More drama to come in the next few days…

Saudi oil shake-up to spark fresh unease in energy market (Financial Times, Ahmed Al Omran, David Sheppard and Andrew England) shows that the ruling royal family is tightening its grip on oil as it removed its energy minister, Khalid al-Falih, and replaced him with King Salman’s son Prince Abdulaziz yesterday. Falih was also replaced as chair of Saudi Aramco last week in the run up to the state oil company’s expected IPO. * SO WHAT? * This is a big deal because members of the ruling family are not usually appointed to such a key role and it has often been seen as one of the most secure government positions. Falih’s predecessor, Ali al-Naimi, was in the job for 21 years! This latest move suggests that Saudi Arabia, the de facto leader of Opec, is not happy with an oil price hovering around $60 a barrel. It also reflects Crown Prince Mohammed bin Salman’s ruthless leadership style as he continues to make progress on his ambitious economic reform programme (called Vision 2030) that aims to reduce the kingdom’s reliance on oil revenues. However, in order to achieve that, he needs higher oil prices (ideally $70-80 a barrel) to finance his plans.

UK shoppers stay at home, M&S faces big challenges ahead, Premier Inn goes posh and Apple expectations rise ahead of tomorrow’s reveal…

UK retail footfall dips further as shoppers shun high street (The Guardian, Miles Brignall) cites the latest data from retail data company Springboard which shows that the decline in people going to high street stores is continuing as shoppers preferred to go to out-of-town retail parks or shop online in the latest quarter. Springboard said that malls are having a particularly tricky time at the moment and Helen Dickinson, chief of the British Retail Consortium, remarked that “Only retail parks, with their combination of activities and shopping, were able to buck the trend, and there is little sign that the stresses on retail will abate any time soon”.

The formidable challenge of rejuvenating M&S (Financial Times, Jonathan Eley) looks at the problems and what needs to be done with M&S after last week’s fall from the FTSE100. Chairman Archie Norman (who is credited with turning around performances at Asda and ITV) and Chief exec and M&S-“lifer” Steve Rowe have been making some sweeping changes in senior management, the store portfolio and in their online offering. * SO WHAT? * M&S seems to me to be perennially going through some kind of reinvention with varying degrees of success (well certainly since I’ve been following it for over two decades!). They start off with review of the stores, a format revamp to make things look more “exciting” in the shops and perhaps review existing or promote new brands. The difference this time, as far as I am concerned, is this seismic shift of customer behaviour that everyone is having to cope with – more customers shopping online. The thing is, M&S is pretty slow and lumbering as retailers go and it has coped with these changes less well than some of its smaller and nimbler competitors. I think that it has been going in the right direction and although you could argue that the Ocado investment was rather expensive (and late!), this is the price it will have to pay to drag itself up-to-date. Whether it properly takes advantage of this or not is another question. At the moment, it seems that investors are not giving it the benefit of the doubt, hence its slide from the FTSE100. I don’t see any particularly decent developments for M&S in the near future, but maybe some of the big changes going on in the background will yield fruit a little bit further down the line.

Meanwhile, Premier Inn aims to put rival to bed with new business rooms (The Times, Dominic Walsh) heralds a new initiative for the Whitbread-owned budget hotel chain as it has started trialing premium rooms aimed at business users. The Premier Plus rooms cost an extra £15-20 per night versus the standard room. This follows the launch last year of Super Rooms at rival Travelodge which have better furniture, a Lavazza coffee machine, a choice of pillows and a better shower. * SO WHAT? * This seems like a good idea and is clearly designed to make each hotel more profitable. The only thing is that it sounds like it’s just getting increasingly like a “normal” hotel – but then again with the rise of things like Airbnb when it comes to accommodation options, you can’t blame them for trying to rejig things.

Then Apple bets more cameras can keep iPhone humming (Wall Street Journal, Tripp Mickle) takes a look at Apple ahead of its annual big reveal tomorrow where it is expected to unveil the new iphones (probably called the iPhone 11 with a couple of extra letters stuck on the end). Basically, the event is creating less buzz every year as the tech improvements get more and more incremental in nature. Apparently, three phones are to be launched tomorrow that have additional rear cameras and improved capabilities for low-light photos. I hope you were sitting down when you read that earth-shattering prediction 😜. We’ll obviously have to wait until tomorrow to see for sure, but I think it’d be fair to say that expectations are pretty low in terms of big changes.

WeWork moots even lower valuations, Nissan seeks a new chief and vaping deaths increase concerns…

In WeWork parent weighs further valuation cut (Wall Street Journal, Maureen Farrell) we see that the office space’s parent company, We Co., is considering a valuation that could fall under the $20bn level as some investors increase pressure for the company to abandon its scheduled Initial Public Offering. An investor roadshow (where a company that is about to float does a massive worldwide tour of investors and potential investors to persuade them to buy shares when they come to market) is scheduled to start today, but given the tricky economic backdrop, more investors are saying that the company would be better off to postpone. * SO WHAT? * Given that the company was valued at $47bn at its last financing round, this is a big deal. To my mind it either shows desperation (in that it thinks this is the most it’ll be able to raise before plummeting further) or naivety on the part of previous investors (including Japan’s SoftBank). I think that there are far better companies to buy in this space and that WeWork is increasingly looking like it is all style and no substance.

Nissan board to meet on CEO succession (Wall Street Journal, Sean McLain and Nick Kostov) highlights the latest dramatic twist in the Nissan story as current chief exec Hiroto Saikawa looks like he’ll be resigning over allegations of the manipulation of his stock-based performance compensation today. * SO WHAT? * This is hilarious given that he was so vocal about predecessor Carlos Ghosn’s dodgy dealings. It seems that they are all at it and so a new generation of leader will be expected to sweep a broom through a tired company at a very difficult time where pretty much all automakers around the world are facing falling sales and higher costs. Whoever comes in next will not only have to sort out Nissan, but its currently tricky relationship with longtime partner Renault. What a shambles!

People urged to stop vaping following more deaths, hundreds of illnesses (Wall Street Journal, Brianna Abbott and Jennifer Maloney) will not make easy reading for tobacco companies who are increasingly betting their futures on vaping as US health authorities are now advising people to stop using e-cigs and other vaping products while they conduct investigations into three more deaths from mysterious illnesses relating to severe lung injury. Companies such as Altria, Reynolds American and British American Tobacco will no doubt be watching developments very closely.

And finally, in other news…

I thought I’d leave you today with a tale of quick reactions in Hero Catches a Stranger’s Phone Mid-Air While Riding a Roller Coaster (Time, Cady Lang https://tinyurl.com/y56yz9wu). Nice!

1. In MACRO NEWS, the US and China agree to resume trade talks and BoJo’s difficulties continue
2. In TECH NEWS, Facebook moves into dating and Samsung relaunches its folding phone
3. In RETAIL NEWS, it’s all good for Lululemon and Boohoo, less so for Flannels and Monsoon
4. In INDIVIDUAL COMPANY NEWS, the Tesla 3 goes to #3 and WeWork settles for a much lower valuation
5. In OTHER NEWS, I bring you the heart-warming story of the Mighty Quinn…

So markets rally on the resumption of US-China trade talks while BoJo’s nightmare continues…

Markets breathe easier as US and China agree to resume trade talks (The Times, James Dean) shows the latest reaction to scheduled talks between Liu He (China’s vice-premier and lead trade negotiator) and Robert Lighthizer (the US trade representative) in Washington early next month, which were agreed over the phone yesterday. Markets generally went higher and investors sold out of “safe haven” assets like gold as hopes of a resolution rose yet again. * SO WHAT? * TBH, this is just noise as talks have been held so many times before and either resulted in nothing or very small concessions. IF there is any proper resolution to the ongoing impasse, world markets will immediately skyrocket IMO – but I’d even be cautious about that given that either side can be prone to bending conditions. However, both Trump and Xi would emerge looking like gods and it would do the former’s campaign for presidential re-election next year the power of good. I guess it all depends on whether China is willing to string things out and gamble on Trump losing to a candidate who might be easier to negotiate with or whether it wants to stem the pain sooner and hammer something out.

Boris Johnson’s brother quits over Brexit in fresh blow to PM (Financial Times, Sebastian Payne and Jim Pickard) is yet another bump in the road to Brexit for older brother Boris Johnson as Jo Johnson said he would stand down from parliament at the next election. BoJo will try again to dissolve parliament on Monday after an unsuccessful attempt on Thursday. * SO WHAT? * It’s interesting to see that after constantly pushing for a general election to “let the people decide” that Corbyn is wavering yet again. He is being urged by remainers of all parties not to push for a

general election until they get proper assurances that the Brexit date will be delayed. If he wants any chance of winning an election, I would say that he really has to get his act together. He voted “Leave” in the referendum, but is now the rallying point for Remain, he spent ages on the fence on remain/leave/second referendum, continued to push for a general election and now he got what he wanted, he’s dithering again. It just seems to me that the voting public wants clearly defined positions as human nature seems to demand black and white rather than shades of grey (which, TBH, is unrealistic) and the nearest you are going to get to this is LibDems (who have been Remainers from the off) versus Conservatives (who have “purged” the doubters and are positioning themselves as the face of “Leave”). The problem, though, is that I’d argue hardly anyone knows who the leader of the LibDems is – let alone what their policies are outside Remain – and that the Leave/let’s-just-get-this-thing-done/”at-least-Boris-is-actually-doing-something”/UKIP vote will swing to the Conservatives. The other problem, of course, is European Brexit negotiator Michel Barnier. This guy has been “negotiating” with the UK all along and so I just don’t think it’d be in his interest to budge as it would make him look like a kn0b – plus any climbdown would increase suspicions that the situation in Europe is actually worse than it seems on the surface. There’s probably slightly more chance of him negotiating a better deal with BoJo than with May (because BoJo is “new”) but not much. I think that someone would have to step in on the European side IN ADDITION TO Barnier to change anything, but I just don’t think anyone will. France’s Macron is massively pro-European and so would probably make things even harder, Germany’s Merkel is a dead-woman-walking as far as political clout is concerned and Spain and Italy have big leadership problems of their own to deal with – let alone get involved with Brexit. I’m open to ideas as to how an improved deal might be made, but I just can’t see any at the moment.

There’s good news for singletons as Facebook launches online dating in the US and Samsung decides to relaunch its folding phone…

Facebook launches online dating service in US (Financial Times, Camilla Hodgson) highlights the start of Facebook’s much-anticipated dating service in the US as it hopes that its position as the world’s biggest social media platform – on which 200m people list themselves as being single – will turn into a frenzy of love matches (or, at least, more revenues 😍). Facebook Dating was first launched in Colombia last year and asked users to create a separate dating profile while the feature itself stays within the “standard” Facebook app. Users then select which photos and personal details from their profile to include but their name and age will NOT be changeable. Friends are never suggested as potential matches although there is a “Secret Crush” feature that lets users select up to nine people from their Facebook friends who will get a notification if they are also on Facebook Dating and if the interest is mutual they BOTH get a notification. There’s no swiping right or left as per Tinder and Bumble and a new feature for the US launch will be the ability to add Instagram posts to their profiles, with the promise of more to come. * SO WHAT? * Facebook’s entry into this marketplace puts it up against the likes of Match Group – which owns Match.com, OkCupid and Tinder – eHarmony, Hinge and The League. It is indeed a hugely interesting market – eMarketer estimates that the number of adults who use dating apps will hit about 25m in 2019 and Tinder had about 8.5m

users in the US as of March 2019. On the one hand, you’d think that Facebook is uniquely placed to clean up here because of the sheer size of its user base – but users will need to be convinced that their data (which, TBH, is probably even more sensitive when it comes to romance!) will be safe. It would present another potentially very lucrative advertising channel because it will be aimed at a more defined group and possibly put pricing pressure on the competition. However, like I said, I think that Facebook’s success here is not a certainty given increasing mistrust by users over how their information is used. Surely it is only a matter of time before Facebook wades into recruitment in a big way to take on Microsoft-owned LinkedIn.

Samsung putting its reworked folding phone on sale today (Daily Telegraph, Matthew Field in Berlin) heralds the relaunch today of the £1,900 Samsung Galaxy Fold in South Korea, to be rolled out in the UK, France, Germany and Singapore by September 18th. You will recall that the phone with the folding screen was announced in February and due to launch in April, but a proper rollout had to be postponed due to cracks in the screen after only a few days of reviewer testing. Chinese rival Huawei postponed the launch of its Mate X foldable phone (which had been due to launch in September) for the second time following the whole US-blacklist thing. This all comes just one week before Apple is expected to unveil the iPhone 11 Pro. * SO WHAT? * Whatevs. This thing is ridiculously expensive, but the company will probably do well from the “halo effect” where customers don’t buy the top-of-the-range but maybe the next best thing or others in the range. Let’s hope for Samsung’s sake that the thing doesn’t spontaneously combust or something as it could do with a bit of good news!

Lululemon and Boohoo smash it but Flannels and Monsoon don’t…

In a quick look at the retail landscape, Lululemon Athletica boosts fiscal-year outlook (Wall Street Journal, Allison Prang) shows that the posh sportswear company upped its forecasts for full-year revenues and earnings as its Q2 earnings jumped by 31% versus the previous year while Boohoo boosts full-year guidance as sales soar (Financial Times, Jonathan Eley and Myles McCormick) shows that the UK online fashion retailer outperformed expectations and also hiked up its forecasts for the full year. Boohoo’s share price has risen by about 73% so far this year and hit an all-time high of 285.8p in trading yesterday, making it more valuable than Asos which has had two recent profit warnings.

On the other hand, Ashley’s Flannels debut ends hastily after protesters force shutdown (The Times, Ashley Armstrong) shows that the Sports Direct-owned up-market fashion chain’s first foray into London was less than ideal as animal welfare protests outside the new shop disrupted things enough to make it shut early. Flannels sells brands like Balmain, Burberry, Gucci and Brioni – as well as limited edition £3,000 sneakers – but clearly sales won’t have been good yesterday. Then Monsoon to face legal challenge (The Times, Louisa Clarence-Smith) shows that landlords aren’t taking things lying down as British Land has decided to launch a legal challenge to Monsoon Accessorize’s CVA, which would slash store rents by between 25 and 65% across Monsoon Accessorize’s 258 shops. Given that CVAs have become so prevalent these days, it was only a matter of time before landlords decided to push back.

Tesla sees strong UK sales and WeWork opts for a reduced valuation…

Tesla Model 3 was UK’s third bestselling car in August (The Guardian, Jasper Jolly) highlights the success of Tesla’s “mass-market” offering as its sales of electric vehicles generally have doubled in the past year, according to the latest figures published by the Society of Motor Manufacturers and Traders (SMMT) yesterday. It is now the UK’s third best-selling new car, beaten only by the Ford Fiesta and VW Golf. * SO WHAT? * Nice, but this is from an incredibly low base (electric vehicles represent just 1.1% of all car sales this year) and the charging network is still rubbish. I don’t know this for sure, but I wonder whether this is just a blip as shipments are just playing catch-up with the order book (I think that the first UK deliveries only started arriving in June this year). Keeping its #3 spot over

the next year or two would be even more impressive especially as the competition is hotting up all the time.

WeWork set to slash its IPO valuation by over $20bn (Daily Telegraph, James Titcomb) sounds highly dodgy, don’t you think? Given that the office space unicorn was valued at $47bn in its last funding round 8 months ago it sounds highly suspicious that they are now talking about valuing themselves at $20-25bn ahead of next week’s investor roadshow ahead of the IPO. * SO WHAT? * This is just another company with pumped-up valuations wanting to sling more investor money into their cash-burning furnace. Other recently-listed companies like Uber, Lyft and Slack have been hugely disappointing in terms of share price performance since listing and I would be willing to bet money that WeWork will be just the same. FWIW, I think that there are more profitable companies in this space that are actually profitable and have a track record that encompasses down markets as well as ones that are going up – WeWork only really has experience of the latter. As my favourite Warren Buffet saying goes, “You never know who’s swimming naked until the tide goes out.”

And finally, in other news…

I thought I’d end the week on a really heart-warming story about a brave little lad in A sick child couldn’t leave his house. So strangers came to his window by the dozens to entertain him (The Washington Post, Cathy Free https://tinyurl.com/y5g3na66). This does give you some faith in human nature!

1. In TECH NEWS, Google and YouTube get fined, Google is accused of dodgy dealings in data, Slack takes a hit, Apple talks about a cheaper iPhone and Amazon experiments with hand recognition
2. In MACRO NEWS, Hong Kong markets get a relief rally after Lam relents, Spain sees a rise in household spending, BoJo takes a beating, the chancellor ushers out the “age of austerity” while the UK teeters on recession
3. In INDIVIDUAL COMPANY NEWS, RBS warns of a big dent from PPI, Porsche brings out an electric car and Halfords warns on a poor summer
4. In OTHER NEWS, I bring you the currywurst’s birthday…

So Google and YouTube get fined, Google is accused of dodgy dealings in data, Slack falls, Apple mulls a cheaper iPhone and Amazon studies hand recognition…

In Google and YouTube pay $170m to settle child privacy claims (Financial Times, Kiran Stacey) we see that YouTube and its parent have agreed to pay a fine to the Federal Trade Commission (FTC) after being accused of illegally harvesting personal information from kids without parental consent. It was accused of using cookies on channels aimed at children without first seeking parents’ permission which enabled the platform to earn millions from letting companies target advertising. FTC chair Joe Simons stated that “YouTube touted its popularity with children to prospective corporate clients. Yet when it came to complying with COPPA [the Children’s Online Privacy Protection Act], the company refused to acknowledge that portions of its platform were clearly directed to kids. There’s no excuse for YouTube’s violations of the law”. * SO WHAT? * This is the biggest ever fine handed down by the FTC for a COPPA case and follows the record $5bn fine it negotiated with Facebook following accusations of the latter’s violation of user privacy. Interestingly, part of yesterday’s settlement states that YouTube MUST make video creators identify when their videos are targeted at kids – and if they are, the company will automatically disable cookies. About time! Mind you, the two Democratic commissioners at the FTC did not support the settlement because they didn’t think it went far enough and that parties could still circumvent these new procedures. I suspect that we shall see more in the way of data privacy-related cases as time goes on…

Talking of which, Google is secretly sharing personal data, watchdog told (Daily Telegraph, Natasha Bernal) highlights new evidence submitted to Ireland’s data watchdog, the Irish Data Protection Commissioner, which appears to demonstrate that Google is secretly sharing users’ personal information with advertisers – a breach of GDPR. It was submitted by a small search engine called Brave which alleges that Google is enabling ad-tech companies to compile and share users’ personal data from 8.4m websites. Google/GDPR: not as advertised (Financial Times, Lex) says that privacy regulators in Europe have been looking into how companies sell advertising space on line and whether the methods they use comply with GDPR. As things stand, Google argues that owners of advertising-funded websites should be the ones to get user consent in Europe, but regulators are unlikely to let Google off the hook that lightly. * SO WHAT? * Regulators are serious about slapping fines on those who breach GDPR, which can go up to 4% of a company’s annual turnover. That would

equate to about $5.5bn for Google’s parent Alphabet based on last year’s revenue – chunky, but not enough to hold them back considering they have $121bn sat around in cash. The market continues to grow and Google and Facebook look set to continue to take the lion’s share – fine or no fine.

Slack shares plunge despite raising full-year outlook (Wall Street Journal, Sarah E. Needleman) highlights the 13% fall in Slack’s share price in after-hours trading despite the fact that it said that its revenues had increased and that it had raised its outlook. It was sold off because it said that growth was slowing and losses were greater than market consensus. Slack says that it has over 100,000 paying customers but the majority of organisations it works with are still on free subscription plans. * SO WHAT? * Following its much hyped flotation, which was via the unconventional direct listing mechanism (and which cuts out many of the advisors who are traditionally part of an IPO), Slack has continued to struggle with two elephants in the room – the fact that people may be reluctant to move away from “traditional” e-mail and that it has a big dangerous competitor in Microsoft which has a similar product called Teams. Maybe I’ll be proved wrong, but I think that this company is all style and no substance – and given Microsoft’s grip on enterprise software and knowledge of its user base, Slack will continue to face increasingly higher hurdles to stellar percentage growth rates. I just wonder whether Microsoft will be to Slack what Facebook’s Instagram has been to Snapchat as the bigger player just copies the smaller player’s best ideas and blasts them out to its bigger user base to negate any reason to try something new.

Then in Apple to sell ‘low-cost iPhone’ next year to talk rivals’ success (Daily Telegraph, James Cook) we see that the company is looking at releasing a cheaper iPhone next year, similar in size to the iPhone 8, that will have the same internal components as this year’s iPhones but with a lower quality LCD display rather than the more expensive OLED screen. * SO WHAT? * It would be the first “low-cost” iPhone (you don’t see those words next to each other, do you!) since it launched the iPhone SE in 2016 for a starting price of £379 and is aimed at taking some market share from the likes of Huawei and Samsung, who have been rampant at the lower end of the market.

Amazon device lets you pay for shopping with your hand (Daily Telegraph, James Cook) says that the company is apparently testing a tool that will let supermarket shoppers pay for food by scanning their hands! It is expected to release the system in its Whole Foods grocery stores over the next few months, according to the New York Post and uses cameras to measure the size and shape of hands to check ID and approve payment. Interestingly enough, Amazon got a patent back in 2015 for a scanning system that used people’s ears to identify them. Pretty amazing, eh!

Hong Kong gets a respite, Spanish shoppers open their wallets, BoJo gets another kicking and the new chancellor announces the end of austerity while the UK edges towards the brink of recession…

Hong Kong shares rally as tension eases (The Times, Ben Martin, Tanya Zhekova) highlights the announcement yesterday from Hong Kong chief executive Carrie Lam that she would withdraw the extradition bill that sparked of months of protests. The bill would have enabled the extradition of criminal suspects to mainland China for trial, which raised concerns that China was trying to tighten its grip on the territory and resulted in violent protests. The Hang Seng Index closed up by almost 4% – its strongest rise for ten months. HK stocks/extradition bill: derailed (Financial Times, Lex) said that this was a small victory for the protesters and gave some relief to stocks that were hit by association like MTR Corp whose subway stations were attacked by protesters because they thought that its suspension of the Airport Express line was tantamount to supporting China and Cathay Pacific, which was the target for protester ire after discouraging staff from taking part in the protest. * SO WHAT? * Property developers and retailers were also hit by the protests and had a bit of a relief rally but it is unlikely that this will be sustained given the Hong Kongers still have more demands (investigate police abuse, the detainment of protesters and the resignation of Carrie Lam etc.). Maybe China is hoping that this climbdown will take the sting out of things for now – but political risk in the markets will remain as the mainland is unlikely to take this kind of insubordination lying down.

Meanwhile, back in Europe, Household spending helps Spain to buck eurozone growth trend (Financial Times, Daniel Dombey) highlights the relative success of Spain as the eurozone’s fourth biggest economy continues to enjoy a run of growth powered most recently by household spending. This has been due in part to the government’s decision to raise the minimum wage by a considerable 22% this year – its biggest increase in forty years! What a pity that it seems to have cr@p politicians!

Talking of which, Boris Johnson defeated in Brexit and election votes (Financial Times, George Parker, Jim Pickard and Mehreen Khan) shows that the British PM is licking his wounds after suffering a double defeat as MPs blocked his bid to go to Brussels with a no-deal option as well as his attempt to call a general election under the terms of the Fixed Term Parliaments Act, where he needed two-thirds of MPs to back the motion. However, Conservative peers battle to stop rebel anti-no-deal bill (Financial Times, James Blitz) shows that the anti-no-deal Brexit bill may still be delayed in the House of Lords due to 100 amendments needing to be debated. Conservatives are in the minority in the upper house, so dragging things out may prove to be too difficult. The drama continues…

UK chancellor signals an end to the ‘age of austerity’ (Financial Times, Chris Giles, Delphine Strauss and George Parker) heralds a new direction for the government in the midst of all the Brexit shenanigans as the UK finance minister has reversed a decade of austerity following the financial crisis by announcing some big public spending plans on the NHS, schools and the police. * SO WHAT? * Sounds lovely and maybe it’ll persuade some voters to but an ‘X’ in the box for the blues at a general election, but it could all be academic as the political situation remains unstable. The Conservatives are obviously being accused of giving away freebies just before an election (but hey, all parties do this – so this is no great surprise) and other critics will obviously say it isn’t enough and will bang the drum for their own causes. Still, I would take this all with a very big pinch of salt. Brexit is still the main thing on everyone’s mind…

It seems that we might need a bit of boost given UK slips closer to recession as service sector slows (The Guardian, Richard Partington) which cites the latest survey from IHS Markit/CIPS which shows that sluggish growth in the service sector has not been sufficient to make up for big declines in manufacturing output. * SO WHAT? * Given that the services sector accounts for 80% of Britain’s GDP, this is obviously a big deal. Mind you, although manufacturing has been weak of late I wonder whether it will actually pick up again as firms start to run low on product they stored-up in the run-up to the previous Brexit deadine and look to building up stockpiles once more ahead of October 31st.

RBS gets a PPI punch in the face, Porsche unveils a new electric car and Halfords has another profit warning…

Following on from last week’s deadline, RBS warns of further £900m hit from deluge of late PPI claims (The Guardian, Rupert Jones) as it seemed to get caught out by the sheer volume of last-minute claims. Rival banking group CYBG – which includes the likes of Clydsedale and Yorkshire banks as well as Virgin Money – says it also faces a big bill for the same reason.

Then Porsche unveils $150,000 all-electric sports car to challenge Tesla (Financial Times, Peter Campbell) heralds a rival for Tesla – albeit at the rather expensive end of the scale. The new Taycan will be part of Porsche-owner parent Volkswagen’s pledge to have 25% of its vehicles to

run on battery power by 2025. The new car was launched simultaneously at a Chinese windfarm, a German solar panel farm and Niagara Falls seemingly to emphasise the company’s commitment to renewable energy. Porsche is the first performance car manufacturer to take the electric plunge – but it is unlikely to be the last. The “cheaper” version will start at $150,000 while the higher spec Turbo S will set you back $185,000. Oh go on then, I’ll have two…

Meanwhile, Halfords issues another profit warning as poor summer takes toll (The Guardian, Mark Sweney) shows that the embattled bike retailer pointed to poor summer weather and weakening consumer confidence as being behind the latest fall in sales. Both bike and car-related sales suffered in comparison to stellar growth in last year’s particularly hot summer although online sales continued to grow strongly. * SO WHAT? * As long as consumers are nervous, they are unlikely to buy big ticket items like bikes – plus it seems that the 2012/Bradley Wiggins effect on cycling has appeared to calm down somewhat in what has been a huge growth area. Its store portfolio remains under review so I would expect more closures.

And finally, in other news…

You know I’ve always got your back when it comes to really interesting things to say in conversations/at parties/at the water-cooler at work. Well how about Germany celebrates 70 years of saucy currywurst sausage (Reuters, https://tinyurl.com/y26pgdqd). Well I never!

1. In MACRO NEWS, BoJo loses, UK construction hits a new low and HS2 faces big delays whilst over in Europe, Germany continues to look vulnerable, Italy manages a coalition and Spain tries to avoid an election. Elsewhere, weaker US manufacturing further points to global slowdown
2. In RETAIL/HIGH STREET NEWS, Lego announces shop openings, M&S exits the FTSE100, Wagamama’s owner announces closures and Walmart stops selling bullets (for some guns)
3. In INDIVIDUAL COMPANY NEWS, Tesco sells its mortgage business to Lloyds and GKN looks to cut 1,000 jobs
4. In OTHER NEWS, I give you a trick on when to use who vs. whom. Wild, I know…

So BoJo loses, UK construction worsens, HS2 faces major delays, Germany wobbles, Italy cobbles something together, Spain tries to avoid another election and US manufacturing weakness indicates a slowdown…

So you’ll be waking up this morning to news that Boris Johnson was defeated in his bid to keep no-deal on the table in Brexit negotiations, despite threatening to deselect Conservative MPs as candidates in the next election. What’s next after crushing Tory defeat on no-deal Brexit? (Financial Times, George Parker) says that the next step is for MPs to vote today on emergency legislation that would stop a no-deal Brexit and seek an extension to the Article 50 process until January 31st. The bill would then have to go through the House of Lords and if it passes that hurdle, it will go to the Queen for Royal Assent. Johnson could try to push for a snap election on October 14th or 15th before the bill becomes law so that he can go to Brussels a few days afterwards to hammer out a better deal with a better majority. However, in order to do this, Johnson would need the support of two-thirds of MPs under the 2011 Fixed Term Parliaments Act – which would necessitate the support of Labour MPs. Could he win if there was an election? Obviously, he thinks so, but the result is anyone’s guess as he might win some Labour seats in Leave-voting heartlands, but he would lose Conservatives seats as well with perhaps the LibDems gaining in the south and Labour strengthening in big cities. A commons majority is not a certainty by any means.

As if all the Brexit malarkey wasn’t enough to contend with, UK construction reports biggest fall in new work since 2009 (The Guardian, Phillip Inman) cites the latest IHS Markit/CIPS UK construction PMI survey which shows that the British building industry saw its biggest fall in new work since March 2009 when the UK was in recession following the financial crash. This survey measures total activity in the sector and shows that construction fell for the fourth month in a row led by office building and general maintenance. Having said all that, there haven’t been any major job losses and companies seem to have kept their recruitment plans steady – which has probably been the case because Brexit has resulted in a widespread shortage of workers. Clearly, this is a sector like many others that needs clarity on Brexit.

Then in HS2 to be delayed by up to 7 years, government admits (Financial Times, Jim Pickard and Gill Plimmer) we see that the embattled HS2 high-speed rail link between London to the North will be delayed and see costs rising to

up to £88bn versus the original budget of £55.7bn at 2015 prices. * SO WHAT? * Have we reached the point where it’s now too late to turn back? A review led by former HS2 chairman Doug Oakervee is due to make recommendations by Christmas as to whether the project should continue and, if it does, how it will proceed from here. Cheaper options include using slower trains (trains are currently designed to run at 249mph) or stopping the line at London’s Old Oak Common that will avoid having to tunnel under the capital to Euston station. Over £7.4bn has already been spent on HS2 even though construction of the track and tunnelling hasn’t started yet. We’ll just have to wait and see!

With all this going on in the UK, it’s a good job that Europe’s OK. Haha. NOT 😜. Brexit weighs on Germany’s export-dependent manufacturers (Financial Times, Martin Arnold and Valentina Romei) highlights Germany’s current economic vulnerability as it is suffering from Brexit-related problems (exports to Britain fell by 21% quarter-on-quarter – the steepest fall since the financial crisis) as well as Trump’s tariffs on car imports. Exports account for 47% of Germany’s GDP versus around 30% for Britain and France and 12% in the US – so you can see why this is a problem. Then Five Star members approve Italy coalition with centre-left rival (Financial Times, Miles Johnson) shows that a snap election, that was pushed for by the anti-immigration League party’s Matteo Salvini recently, has probably been averted as the anti-establishment Five Star agreed to working with the centre-left PD party but God only knows what’s going to happen here. Still, the hope is that this is a coalition that will be more likely to “play nice” with Brussels who clashed with Salvini on immigration and public spending. Sanchez outlines agenda to woo radical left in move to avert poll (Financial Times, Daniel Dombey) shows that things ain’t great in Spain either as caretaker PM Pedro Sanchez is currently scrabbling around to get the support of the radical left Podemos party to form a “progressive government” in a bid to avoid a general election on November 10th – in what would be its fourth in four years! Sanchez needs to win a parliamentary vote on forming a new government by September 3rd to avoid this fate. Everyone distrusts each other, so the situation is a complete mess at the moment.

US factory activity shrinks for first time in 3 years (Wall Street Journal, Sarah Chaney and Andrew Restuccia) cites the latest figures from the Institute for Supply Management’s manufacturing index, which measures factory activity, and shows that the manufacturing sector actually contracted for the first time since August 2016 and is now at its lowest level since January 2016. * SO WHAT? * Along with a lot of the other data we are getting at the moment, this would seem to provide further evidence for a global slowdown of world trade. The longer the US-China game of tariff “chicken” continues, the worse the situation is likely to get.

Lego decides to invest in shops, M&S falls out of the FTSE100, Restaurant Group announces closures and Walmart stops selling some types of bullets…

Lego builds for future in Asian market despite a fall in profits (Daily Telegraph, Laura Onita) heralds the announcement by toy giant Lego that it will be opening over 160 outlets this year – 40% more than 2018 – as part of an aggressive expansion into China and India. It currently has 500 stores worldwide and last month announced new sites in the UK, France and Netherlands. * SO WHAT? * This is a particularly interesting tactic given that toy retailers such as Toys R Us and Scandinavia’s biggest toy retailer Top Toy have gone bust due to tough trading conditions, so by going against the current Lego is making a strong statement here. Although sales and revenues were up over the first half of the year, profits slumped as the company ploughed cash back into the business. Lego is now the world’s #1 toy maker, having overtaken both Hasbro and Mattel.

In M&S crashes out of blue-chip index (The Times, Ashley Armstrong) we see that M&S has dropped out of the FTSE100 for the first time since the index was created 35 years ago. It currently has over 80,000 staff and 1,035 shops across Britain but has been suffering acutely in the last few years with its apparel offering. The share price fell 1.5% yesterday but it has halved in value over the last three years. Companies need to be ranked 110 or higher to stay in the FTSE100, but yesterday M&S fell to being the 115th most valuable company. It will be joined in relegation to the FTSE250 by Micro Focus and Direct Line and replaced by Polymetal (mining), Hikma (drugs) and Meggitt (Engineering). * SO WHAT? * TBH, I think that dented pride is probably the biggest impact here for M&S. FTSE100 tracker funds will have to sell out, but then other funds will buy it, although net-net it’s probably going to get a bit weaker. Still, maybe being out of the FTSE100 spotlight may be a good thing for the embattled retailer as it tries to

turn itself around. A little bit of humility may go a long way…

High Street gloom continues in Restaurant Group lines up 150 closures (Financial Times, Archie Hall) as the company announced plans to close over 150 Frankie & Benny’s and Chiquito outlets in order to turn its business around. This follows the expensive acquisition last year of Wagamama for £559m and will equate to at least half of the company’s F&B and Chiquito restaurants. Closures are expected to take place gradually given that many locations have years to run before their leases run out. The Restaurant Group’s share price fell by almost 12% on the news. * SO WHAT? * While Wagamama’s was probably a good strategic purchase last year, it came at a very heavy price especially when you consider the carnage that is the casual dining sector at the moment. The company was optimistic about its expanded vegan menu, lower-alcohol options and greater presence on delivery apps as well as the prospects for its Wagamama brand, which is trading in line with expectations. However, Wagamama’s touted US expansion is likely to go on the back burner while the UK business gets sorted.

Walmart to stop selling ammunition for assault-style weapons (Wall Street Journal, Sarah Nassauer) shows that the retailer announced it would not be selling short-barrel rifle ammunition – used in assault weapons and some hunting rifles – or handgun ammo in its stores with immediate effect after selling off current inventories. It expects its market share of ammunition to fall from the current 9% to 6% over time as a result of this. * SO WHAT? * Talk about closing the door after the horse has bolted. Last month, a gunman killed 22 people in a Walmart in El Paso with a semi-automatic rifle and only a week before that a Walmart employee shot and killed two other workers at a Mississippi Walmart store. Walmart is one of many retailers, such as Dick’s Sporting Goods, who have imposed tighter restrictions on gun sales in the last few years but there are still plenty of places (like Cabela’s, Bass Pro and Academy Sports and Outdoors) who still sell semi-automatic weapons and ammo. Funnily enough, the NRA criticised Walmart’s decision saying that “Lines at Walmart will soon be replaced by lines at other retailers who are more supportive of America’s fundamental freedoms”.

Tesco sells its mortgage business to Lloyds and GKN announces job losses…

Tesco leaves home loans with £3.8bn sale to Lloyds (Daily Telegraph, Harriet Russell and Yolanthe Fawehinmi) highlights Tesco Bank’s desire to cut costs as well as the competitive nature of the current mortgage lending market. RBS had been a frontrunner to buy the loan book of 23,000 customers but Lloyds won out in the end. It is likely that investors will see this as a good thing given

that it simplifies Tesco’s overall business and gives Lloyds some more clout in the mortgage market.

GKN Aerospace to shed 1,000 jobs worldwide (The Guardian, Rob Davies) heralds the announcement of worldwide job losses as the company continues with a restructuring that pre-dates its £8bn takeover by Melrose. It said it is making the cuts to streamline the business after a string of acquisitions led to a number of areas of overlap. The company’s chief exec Hans Buthker said that “We are creating a single, fully integrated business aligned to our customers’ needs, which will ensure we are better positioned within the competitive global aerospace market”. GKN Aerospace is part of the larger GKN engineering group that was bought last year by takeover and turnaround specialist Melrose.

And finally, in other news…

I thought I’d leave you today with A Simple Trick for Remembering When To Use Who vs. Whom (Mental Floss, Ellen Gutoskey https://tinyurl.com/y54h643u). Sounds boring, but is actually quite useful! For a more extreme example of the importance of correct grammar in the workplace, have a look at this classic sketch from Mitchell and Webb.

1. In MACRO & CURRENCY NEWS, BoJo issues an ultamatum, we see what Labour’s economic pledges cost, UK factory output slows right down and Libra gets no love from the ECB
2. In RETAIL NEWS, pleas increase to save the UK high street and Sports Direct tries to drive Debenhams into the ground
3. In INDIVIDUAL COMPANY NEWS, Toyota pushes into China and Allen & Overy’s attempts at a US deal fail
4. In OTHER NEWS, I bring you a John Bercow mix…

So BoJo gets on the front foot, Labour’s pledges get priced up, UK factory output disappoints again and Libra gets zero support from the ECB…

Whoever said politics was boring, eh?? Boris Johnson threatens to call October 14 election (Financial Times, George Parker and James Blitz) shows that BoJo has ratcheted up the pressure on Remoaners by saying that if he loses today’s vote to keep no-deal on the table, he will call a General Election on October 14th. BoJo said that he would rather hold an election than seek any further Brexit delays and that keeping no-deal on the table is the only way he will be able to engineer any kind of better deal with the Europeans. Mind you, to trigger an election, two-thirds of MPs would have to vote for it. * SO WHAT? * If this happened, it is likely that he would bill the election as a “people versus parliament” election and put the Conservatives firmly in the Brexit camp, which would negate Nigel Farage’s party and pit them against Labour, the LibDems, SNP and Greens in the Remain corner. It looks to me like he wins if he manages to keep no-deal on the table and he wins if things go to a General Election and he gets what could be a bigger mandate – but he will obviously be scuppered if he loses the vote today and the subsequent election (clearly a big gamble, but one that his advisers think he can win as things stand). It’s interesting to note here that the LibDems don’t really feature much in any commentary at the moment despite having actually been in government more recently than Labour and my feeling is that they could take a hefty chunk of a potential Labour vote because it might attract disgruntled Labour and Conservative Remainers. On the plus side, you could probably argue that the LibDems are the only decent-sized party that has nailed its colours to the mast as Remainers from the earliest stages whereas Labour and the Conservatives have had a lot of in-fighting over it since the referendum. On the negative side, I would challenge you to go up to anyone on the street and ask them who the leader of the LibDems is (it’s Jo Swinson 😜) and what their policies are apart from those on Brexit. Overall, though, I think that this is another bold move from BoJo that will either strengthen his position by appealing to the Brexiteers or fail spectacularly.

Following on from yesterday’s comment about how much Labour’s plan to just take 10% of companies’ shares would actually cost, Cost soars for Labour’s grand pledge to shape the economy (Financial Times, Chris Giles and Delphine Strauss) looks at how much Labour’s promises to “end austerity, eliminate in-work poverty and drive up living standards across the UK economy” whilst staying within budget would cost. The current chair of the Office for Budget Responsibility, Robert Chote, estimates that whatever government got in power, borrowing would have to be within £25bn per year if it wanted to see its debt ratio falling, meaning that a Labour government would have

to raise taxes by at least this much. Mind you, Labour itself said in last year’s Labour Party dossier that the bill to end austerity alone would cost £42bn per year. * SO WHAT? * It’s difficult to tell which ideas will end up as official party policy going into an election given that shadow chancellor John McDonnell has flirted with ideas such as a complete overhaul of the use and governance of land, rethinking the role of the Bank of England, trialing universal basic income (i.e. flat lump sums for the unemployed), nationalisation of rail companies, utilities and the Royal Mail plus a drive towards the use of green energy – all of which will cost an enormous amount of money and whose benefits (if any) are unlikely to be felt for years, all at a time of economic instability. I suspect that this will be played on in any potential election campaign to scare voters away from Labour. If they do run, I would have thought that they are more likely to vote yellow rather than blue.

Meanwhile, UK factory output dives to seven-year low as Brexit fears rise (The Guardian, Richard Partington) cites the latest report from IHS Markit and the Chartered Institute of Procurement and Supply which shows that UK manufacturers have seen the sharpest drop in factory output for seven years due to Brexit fears and a broader slowdown in the global economy. * SO WHAT? * Interestingly, the report also said that firms had restarted plans to stockpile goods, just as they did before the original 29th March Brexit deadline – so I guess that it’s possible activity may pick up. On a related note, we’re not alone in manufacturing activity drying up – the same report also showed that manufacturing in the eurozone contracted for the seventh month in a row in August as weak demand for goods persisted.

Then in Facebook’s Libra digital currency plan ‘could threaten ECB’ (Daily Telegraph, Matthew Field) we see ECB board member Yves Mersch voicing his scepticism regarding Libra at a legal conference in Frankfurt thus: “I sincerely hope that the people of Europe will not be tempted to leave behind the safety and soundness of established payment solutions and channels in favour of the beguiling but treacherous promises of Facebook’s siren call”. He went on to say that he thought that it could potentially reduce the ECB’s control over the Euro, adversely affect the execution of monetary policy and weaken the Euro’s international role. Not a fan, then. * SO WHAT? * This is about as surprising as someone telling us that bears do actually sh!t in the woods/that the Pope is, in fact, Catholic – but clearly Libra is getting central bankers all around the world pretty tetchy as it will be a leap into the great unknown and potentially weaken their power. The thing is, if their power weakens, I think that it will give governments less control over the ability to “smooth” the performance of their economies and we could see much more volatility as a result. In a separate, yet related, note Manny Pacquiao launches world first ‘celebrity cryptocurrency’ (The Telegraph, Jamie Fullerton https://tinyurl.com/y5h3fzzp) shows that celebs and boxers are now starting to jump on the crypto bandwagon. Wouldn’t it be just great if rapper 50 Cent launched a coin. What would he call it?? A 50Cent coin??

UK retail continues to suffer and Sports Direct seeks revenge on Debenhams…

Plea for action to save high street as sales stagnate (The Times, Callum Jones) highlights appeals from the British Retail Consortium (BRC) to save the UK high street as its chief exec Helen Dickinson observed that “Summer discounting and poor footfall have hit in-store sales particularly hard. If the government wants to avoid seeing further store closures and job losses on the high street, they must take action”. Overall, food sales were good, but non-foods were weaker. More gloom for the high street…

Mike Ashley wants to ‘eliminate Debenhams as a

competitor’, court hears (The Guardian, Rob Davies) brings our attention to high drama as Debenhams’ barrister said in a court hearing yesterday that his client believed Sports Direct was backing the legal action by the Combined Property Control Group (CPC) to overturn the current CVA in order to “drive Debenhams into administration so that it can pick up its assets on the cheap”. * SO WHAT? * You will recall that Sports Direct was shut out of Debenhams as the latter managed to garner enough support from creditors to push through a CVA, which effectively rendered Sports Direct’s £150m share holding worthless. Sports Direct was originally a participant in the case but stepped away after Debenhams’ lawyers argued that it wasn’t a big enough creditor – but it didn’t stop the company from continuing to bankroll the action. This case will be very closely watched given the increasing prevalence of CVAs in the last couple of years. If it succeeds, the retail landscape will look even more uncertain as this apparent safety net could prove to have gaping holes.

Toyota targets China and Allen & Overy’s US overtures come unstuck…

Toyota accelerates push into Beijing car market (Financial Times, Kana Inagaki) highlights Toyota’s ambitions for China as the company has signed deals with BYD and Comtemporary Amperex Technology (CATL) to develop batteries for electric vehicles, invested $600m in China’s ride-hailing group Didi and started working with start-up Pony.ai on an autonomous driving project as well as participating in Baidu’s self-driving car programme Appollo. * SO WHAT? * Against a backdrop of manufacturers such as Ford, PSA and General Motors all seeing softer sales in the world’s #1 car market, Toyota has seen its sales jump by 12% between January and July versus the same period last year and seems to be catching up with the likes of VW and GM as relations improve between Japan and China.

Mind you, Japan has to continue to be careful to over-egg its burgeoning China relationship as it could annoy Trump, who could make things more difficult in America. Going back to it, though, Toyota still has some ground to make up with other foreign companies in China – especially in autonomous vehicles – but things seem to be going in the right direction.

Meanwhile, City law firm’s American marriage bites the dust (The Times, Jonathan Ames) heralds the failure of 18 months of talks about a merger with LA-based O’Melveny & Myers as the two parties couldn’t come to an agreement about the valuation of the combined business, ironically costing them millions in advisory fees. * SO WHAT? * UK law firms have been been trying to get a foothold in the US in order to get mandates on US deals and highly lucrative private equity work, but US companies have so far been pretty aloof. No doubt efforts will continue, but it’s back to the drawing board for now for A&O as it joins a number of its “Magic Circle” brethren in failed attempts at merging with US law firms. In the meantime, US firms continue to pick off star performers at UK law firms…

And finally, in other news…

As you know, I always try to find something for you in this section that is either amusing, or informative – or both! Unfortunately, nothing particularly hit me on this today so I thought I’d leave you with a little light music from John Bercow, speaker of the House of Commons, famous for shouting “Orderrrrr!” amidst clamouring politicians. Click HERE to listen to it, but you might need to turn the volume down. I suspect he’ll be saying this a lot in the next few days 😜 JOHNNY B IN DA HOUSE

1. In MACRO NEWS, more US tariffs irk the Chinese and dent small US firms while Hong Kong braces itself for a general strike and in the UK, we look at the impact of a no-deal Brexit and the potential impact of a Labour share grab
2. In FINANCIALS NEWS, HSBC puts more pressure on mortgage lenders and Revolut plans a hiring spree
3. In INDIVIDUAL COMPANY NEWS, US shale companies continue to go bankrupt and Musk dabbles in insurance
4. In OTHER NEWS, I bring you a cafe that makes your eyes go funny…

So more tariffs come in, Hong Kong faces a general strike and, in the UK, we look at the potential impact of a no-deal Brexit and Labour’s proposal to raid companies of their shares…

China lashes out at US as Trump brings in new tariffs (The Times, Callum Jones) heralds the latest round of tariffs at the US slapped 15% duties on Chinese imports worth $125bn over the weekend. China counter-punched with 10% duties on around 1,700 American products including crude oil. This is the first of two waves of tariffs, the second of which is to be imposed by Washington on December 15th. Prior to yesterday’s move, Trump put duties on $250bn-worth of Chinese goods and China put duties on $110bn worth of US goods in retaliation. China’s state media responded to the latest round by saying “The United States should learn how to behave like a responsible global power and stop acting as a school bully”. Mind you, even though the US is taking the lead on all this, Tariff uncertainty weighs on small businesses (Wall Street Journal, Ruth Simon) shows that current actions are hurting “the little guys” by creating an atmosphere of uncertainty. A monthly survey for the Wall Street Journal showed that economic confidence among small firms fell in August has fallen to its lowest level since November 2012 as 40% of respondents expect the economy to worsen over the next 12 months versus 29% in July and 23% a year ago. Some are supportive of Trump’s actions and are willing to take short term pain for long term gain, but it seems that it is the uncertainty that is hurting the most as it makes planning very difficult.

Meanwhile, things are hotting up in Asia as Hong Kong braces for general strike after chaotic weekend (Financial Times, Sue-Lin Wong, Jamil Anderlini and Nicolle Liu) highlights today’s general strike following weeks of protests that are continuing to escalate despite Chinese efforts to quell them. Protests were originally sparked by a controversial extradition bill that would enable suspects to be tried in mainland China but have broadened to include demands for an independent inquiry into the police and universal suffrage. The strike will continue tomorrow and will undoubtedly cause a great deal of chaos as a previous strike last month crippled the city’s transportation network and resulted in hundreds of flight cancellations. The increasingly heavy-handed crackdown by authorities on protesters continues.

Back in the UK, Javid’s hard sell to City chiefs (Daily Telegraph, Jack Torrance) highlights chancellor Sajid Javid’s rather tricky task of trying to sell business chiefs the “opportunities” of a no-deal Brexit in a meeting scheduled for today with over a dozen bosses of companies such as Barclays, the London Stock Exchange and RBS. Talks are expected to focus on “Brexit opportunities and challenges”. Talking of no-deal, House prices could nosedive after no-deal Brexit – report (The

Guardian, Richard Partington) highlights a report by accountancy firm KPMG which concludes that a no-deal Brexit could result in house prices falling by up to 20%, hitting prices in London and Northern Ireland particularly hard. In the midst of all this, Boris Johnson vows to purge rebels who vote against no-deal Brexit (Financial Times, George Parker) shows a PM attempting to take control in the Brexit debate by taking extreme measures to ensure the threat of a no-deal won’t be scuppered. * SO WHAT? * Opponents of no-deal are teaming up across party lines currently in order to pass a law to stop BoJo executing a no-deal departure on October 31st, but the clock is ticking as they will have to get such legislation through this week. Having said that, Michael Gove, minister for no-deal planning, implied on TV yesterday that BoJo could actually ignore the law even if the legislation DID get through. The drama continues…

And talking of opposition, but moving away from Brexit for a moment, UK’s Labour would cost companies £300bn by shifting shares to staff (Financial Times, Jim Pickard) cites a report compiled by the Financial Times and Clifford Chance that shows companies and landlords alike stand to lose big time if Labour got into power in the event of an imminent general election. They would seize about £300bn of shares in 7,000 large companies and “give” them to workers, in what would be one of the biggest state raids on the private sector in a western democracy, and attack private landlords by imposing higher taxes on them and implementing a “right to buy” scheme for private tenants. The report looks at what could happen in the event of a Labour government and extrapolates what this would actually cost. * SO WHAT? * I guess that the most staggering conclusion is that Labour would basically seize £300bn versus the £4.8bn Tony Blair’s government expropriated from utilities companies in a “windfall tax”. The consequences would be catastrophic as there would be huge legal challenges from companies, shareholders and whole countries, such as China and the US, complaints from the WTO and then potential retaliation from other countries. Shadow chancellor John McDonnell says that more employee ownership is good for productivity and encouraged long-term thinking, saying that “It’s right that we all share in the benefits that investment process produces” but Matt Kilcoyne at the Adam Smith Institute observed that “Our largest investors are pension funds and they’ll see billions of pounds wiped off their books. So we’ll all see the value of our pensions fall. It’s the biggest raid of all our nest eggs in living memory”. As for landlords, McDonnell said that he wants to attack the buy-to-let market and make it easier for tenants to buy the homes they live in but suggested that they won’t have to pay market price when he said “You’d want to establish what is a reasonable price, you can establish that and then that becomes the right to buy”. Incredibly, he added that “You (the government) set the criteria. I don’t think it’s complicated”. WHAT???? Erm, surely what will happen is that the tenant will buy the house for less than it’s market value and then they’ll just sell it and pocket the difference. And who will decide market value?? Good old comrade McDonnell. Putin would be proud.

HSBC continues to cause ripples in the mortgage market and Revolut embarks on a hiring spree…

On the subject of housing and mortgages, HSBC to lend extra £35bn to UK home buyers (Financial Times, David Crow) shows that HSBC, which until now generates almost 80% of its profits in Asia, is pushing forth into the mortgage market by increasing its current £100bn exposure to UK mortgages to £135bn. It has traditionally lagged other mortgage lenders but has expanded its market share following the introduction of legislation in 2014 that forced British banks to separate their UK operations from their international and investment banking business. * SO WHAT? * Rivals are whinging that HSBC’s rapid expansion is distorting the mortgage market by providing cheap mortgages to grow their book making it harder for competitors to maintain or increase their own margins. Some players, such as Tesco Bank, have had to abandon the mortgage market as a result and there are concerns

that the squeezing out of other players could ultimately damage competition. Having said that, HSBC’s mortgage market share of 7% is still way lower than Lloyds on 20.4%, Nationwide on 13% and Santander UK on 11.2%. Customers are clearly benefiting from the availability of cheap mortgages in the meantime.

Then in Revolut plans hiring spree in customer service and compliance (Financial Times, Nicholas Megaw) we see that the banking disruptor has plans to increase its staff numbers by almost a third in a drive to strengthen in two key areas. Its customer base continues to expand rapidly and its £4m investment in Portugal with 400 new staff is intended to meet criticisms that it is having trouble coping with the influx. * SO WHAT? * This follows similar moves by rivals N26 and Monzo to make sure they meet new customer expectations and comes as it looks for backers in its next big investment round, expected by the end of this year. On another note, it seems that Portugal is becoming an increasingly popular FinTech hub because of its low costs, high quality of education and good standard of life. Companies such as Google, BNP Paribas and Euronext have all opened tech centre there in recent years. 

US shale companies continue to go bust and Elon Musk talks about insurance…

It’s interesting to see that, following on from last week’s news about BP selling out of its Alaskan interests to concentrate on shale, Oil and gas bankruptcies grow as investors lose appetite for shale (Wall Street Journal, Rebecca Elliott and Christopher M Matthews). So far, 26 oil and gas producers including Sanchez Energy and Halcon Resources have filed for bankruptcy this year as shale producers borrowed big in the last few years to up production and are having trouble refinancing debt that’s coming up for renewal as oil prices continue to hover at around $60 a barrel. This has meant that investing more money in shale has become a less compelling option for investors, leaving some of the operators high and dry. 28 producers went bankrupt in the whole of 2018, so you can see why concerns are increasing about the acceleration in bankruptcies this year. * SO WHAT? * It’s the smaller operators who have suffered the most thus far, but maybe this is where the majors such as BP can step in and buy

them up for decent prices and squeeze out better economies of scale.

Musk moves into insurance to cut premiums for Tesla owners (Financial Times, Robert Armstrong and Oliver Ralph) heralds the beginnings of Tesla becoming a bona fide motor insurer as the company decides to do something about the perception that its vehicles cost too much to insure. Currently, specialist insurer Markel underwrites Tesla’s auto insurance, but Tesla said that it is moving towards becoming an insurer in its own right and use its own balance sheet to underwrite car insurance. Musk argues that Tesla’s access to data captured by their cars will give his company an advantage in pricing over third party insurers as they use “anonymised fleet data” rather than driver-specific data. It hopes to slash insurance rates for its drivers by 20-30% as a result. * SO WHAT? * At first glance, this looks like it will be a nightmare given that insurance is an extremely complicated business to be in for anyone, let alone an electric car company! However, Tesla is in the unique position of knowing more about its drivers than any other insurer possibly could so will be in a much better position to judge the safety of its drivers. Still, it does sound like it’s taking an unnecessary risk here by wading into another complicated and highly competitive industry.

And finally, in other news…

I thought I’d bring you a very unusual cafe today in Tokyo’s amazing 2D Cafe looks like an illustration, but it’s an actual restaurant you can eat in! (SoraNews24, Casey Baseel https://tinyurl.com/yymoydhn). This really does make your eyes go funny!

1. In MACRO & ECONOMIC INDICATOR NEWS, US growth wobbles on the trade war, Boris Johnson tries to head off opposition and Ukraine gets a new young PM while UK consumer spending looks vulnerable and Hays rejigs its business
2. In TECH NEWS, Dell sees record PC revenues and Micro Focus falls through the floor
3. In INDIVIDUAL COMPANY NEWS, YouTube reconsiders its paywall, Juul faces more scrutiny, Amigo has a shocker and Lewis Hamilton invests in a new meat-free burger chain
4. In OTHER NEWS, I bring you an amazing Airbnb…

So US growth wobbles, BoJo speeds momentum, Ukraine gets a new PM, UK consumer spending looks increasingly vulnerable and Hays shuffles its business…

Trade war hits US growth as Trump renews attack on Fed (Wall Street Journal, James Dean) cites an estimate downgrade from the commerce department of Q2 GDP growth from 2.1% to 2% due to exports and business investment being weaker than it had originally thought. Trump is currently trying to find a balance between re-setting the trading relationship with China and ensuring that his own economy continues on a growth track, but some observers think his efforts are starting to slow things down on the domestic front. Trump resorted to his tried-and-tested strategy of blaming anything negative on someone else and tweeted yesterday that “The economy is doing great, with tremendous upside potential! If the Fed would do what they should, we are a rocket upward!”. The market is expecting a 0.25% cut in interest rates at the Federal Reserve’s next policy meeting to avert potential recession in the US.

Meanwhile, Boris Johnson seeks to avert defeat by accelerating Brexit talks (Financial Times, George Parker and Jim Brundsen) shows that BoJo is trying to up the tempo in talks with Brussels to hammer out a revised Brexit deal in order to avoid defeat at the hands of his opponents next week. His chief Brexit negotiator, David Frost, is to meet his EU counterparts twice a week throughout September to get a new deal before the summit set for October 17th-18th. * SO WHAT? * Basically, BoJo wants to keep the soft border in Ireland and Europe has thus far refused any such overtures. He is said to be hoping to ensure this ahead of the EU October summit. MPs who are opposed to a no-deal are trying to get together to stop him from using the threat of no-deal to get a better deal and things are likely to come to a head when they return from their summer recess next Tuesday.

Elsewhere, Oleksiy Honcharuk named as Ukrainian prime minister (Financial Times, Roman Olearchyk) heralds the approval of 35-year-old lawyer Oleksiy Honcharuk as the country’s next prime minister under President Volodymyr Zelensky’s administration. He’ll be Ukraine’s youngest PM and will aim to increase economic growth and investment by accelerating privatisation plans, lifting restrictions on selling agricultural land, speeding up deregulation and strengthening the rule of law. The new parliament is also expected to implement more legislation to crack down on corruption.

In terms of economic indicators, Brakes could go on consumer spending as confidence falls (Daily Telegraph, Tim Wallace) cites the latest GFK survey that shows confidence in consumer spending, which makes up a significant chunk of the UK’s economy, is falling. The last time the reading has been this low is in the eurozone crisis in 2013 and concerns of recession are increasing. GFK’s Joe Staton siad that “Unless there is major good news impacting the hearts and minds of consumers, my concern is this [indicator] will fall, and if it falls people will stop spending and the brakes will come on the economy, as we saw at the beginning of the last downturn”. On the plus side, wage growth is continuing and employment is tight – so things could be worse.

Talking of employment, Recruiter’s profits hit by slowdown in Europe (The Times, Ben Martin) shows that the UK’s biggest recruiter, Hays, struck a cautious note in its results yesterday as it spoke of a weakening German market and tougher conditions in the UK. It has had to cut managers in the Netherlands, Belgium and France as part of a European restructuring due to an increasingly inhospitable business landscape. * SO WHAT? * The company, which recruits people into white-collar industries, is often seen as an economic bellwether considering its size and breadth of exposure to the job market. Although things haven’t been great of late, chief exec Alistair Cox maintained high hopes for the German business – which he wants to double over the next few years – but said that, for the moment, weakness in manufacturing and automotive companies as well as the possibility that Germany could tip into recession is proving to be a dampener.

Dell posts solid PC revenues while Micro Focus tanks…

Dell reports record revenue in PC division (Wall Street Journal, Maria Armental) heralds a solid performance by the company which saw its quarterly profits boosted by a big tax benefit and record revenues from sales of PCs, notebooks and workstations to commercial clients. Dell’s vice chairman Jeff Clarke observed that “We are in the early stages of a technology-led investment cycle”. If that is indeed the case, then the next year or two could bring more joy for the company that returned to public markets in December after a five-year absence.

Micro Focus suffers £1.7bn wipeout over sales shock (Daily Telegraph, Matthew Field and Michael O’Dwyer) is a

story doing the rounds of the broadsheets today as Britain’s second biggest tech group saw its share price crater by 32% yesterday after issuing a profit warning in an unscheduled trading update. Micro Focus, which specialises in prolonging the life of legacy computer systems, has continued to struggle with the integration of the acquisition of HP’s software business in 2017. Chief exec Stephen Murdoch, said it would now undertake a strategic overhaul of the business, leaving all options open. * SO WHAT? * This is serious stuff – and if there’s any more share price weakness, the company will have to face the prospect of being ejected from the FTSE100 next week, when there is a rebalancing. This news has really thrown the cat among the pigeons, leaving investors wondering whether there will be more M&A, whether the company will go private or whether there will be some disposals.

YouTube reconsiders its paywall, Juul faces more accusations, Amigo has a nightmare and Lewis Hamilton invests in a meatless burger joint…

YouTube drops paywall for new shows as streaming war heats up (Financial Times, Anna Nicolaou) signals an interesting development in streaming as YouTube announced that it is going to make its original programming – including cult hit Cobra Kai – free to watch, moving away from the subscription model and back into its ad-supported model just as the likes of Apple and Disney wait in the wings to launch their subscription channels. The Google-owned platform has decided not to mix it with the likes of Netflix et al in what will be a crowded market and said that all future original shows will be available for fixed time periods with ads, but for free. Cobra Kai, for instance, saw its first season moved in front of the pay wall on Thursday and season 2, which will be broadcast next month, will also be available for free. All other shows in its existing library will stay behind the paywall because of contracts YouTube has with producers. * SO WHAT? * I think that this is a good move because people have become accustomed to seeing ads on YouTube over the years – and it means that it will be able to mitigate the high costs of creating content in a tried-and-tested way. As I keep saying, I think that people will reach subscription fatigue when all these other channels throw their hats into the ring, but YouTube will continue to attract users who don’t mind ads in return for free access to content.

Following on from all the Philip Morris International/Altria merger chat that’s going on at the moment, Juul’s marketing practices under investigation by FTC (Wall Street Journal, Jennifer Maloney) says that the Federal Trading Commission (FTC) is conducting an investigation into whether vaping start-up Juul Labs has used influencers and other marketing to target minors. The FTC sent Juul a letter requesting more information about its marketing last September and it has been deepening its investigation ever since. The Food and Drug Administration (FDA) is also investigating Juul’s marketing practices. * SO WHAT? * Juul’s slick campaigns have been seen to be

instrumental in the skyrocketing popularity of vaping as the practice among teens shot up by 78% from 2017 to 2018, according to federal data. The FDA has been just one party looking to kill its use among youngsters and news of the FTC’s investigation just ratchets up the pressure – something that Altria, the owner of a 35% stake in Juul, and Philip Morris International will have to take into account in their merger talks.

Talking of regulatory crackdowns, Amigo shares plummet as regulatory crackdown looms (The Guardian, Kalyeena Makortoff) shows that the share price of the loans group Amigo dropped by over 50% yesterday after it warned that growth would evaporate due to increased scrutiny by regulators and a Brexit-led economic downturn. Amigo specialises in guarantor loans where the borrower uses friends and family to guarantee payments on loans to those with trickier credit histories. The company said that “While past recessions have demonstrated the resilience of our business, we believe it is prudent to factor a deteriorating economic outlook into our impairments model. We will continue to monitor the potential impact and will review our position again at the half year”. * SO WHAT? * The Financial Conduct Authority is concerned about the practice of re-lending to existing borrowers, so Amigo is having to find new customers which is, presumably, more expensive to do. They are also going to be more cautious in their lending conditions, which may also dent growth prospects…

And finally, I thought you might be interested to see Lewis Hamilton invests in meat-free burger chain (The Guardian, Sarah Butler) as the F1 driver is teaming up with a few other investors to back a meat-free burger chain called Neat Burger. The first one will open just off London’s Regent Street on Monday, to be followed by others in Covent Garden and Kings Cross. There are plans to open in the US next year and 14 outlets across Europe over the next two years. Fellow investor Ryan Bishti said that “We are not aiming for vegans or a plant-based niche, we are aiming to convert meat eaters. We are part of a movement happening when you look at the world today in the Amazon with deforestation for crops and agri-farming. This is a perfect way to make a change”. Neat Burger’s chefs have spent 10 months working with Beyond Meat to develop their own patty. * SO WHAT? * The vegan revolution rolls on! For more on meatless, see my more detailed write-up HERE.

And finally, in other news…

I thought I’d bring you an amazing Airbnb today in You can rent a snow igloo in Finland on Airbnb for $122 a night (Insider, Alison Millington https://tinyurl.com/y22navcl). Wow!

1. In BREXIT NEWS, BoJo makes a bold move – and we look at the reaction
2. In RETAIL, RESTAURANT AND BLING NEWS, Guess shrugs off tariffs, Tiffany suffers from HK protests, Ted Baker signs a deal in Japan, WH Smith does well in hospitals, Pizza Express/Franco Manca/Loungers have contrasting results and De Beers loses its lustre
3. In M&A AND IPO NEWS, PMI/Altria gets a muted reception, Thomas Cook finalises a rescue from Fosun and Peloton aims to float
4. In OTHER NEWS, I bring you a dancing baby…

So BoJo goes nuclear and we see the reaction…

Uproar as Boris Johnson shuts down parliament to protect Brexit plan (Financial Times, Sebastian Payne) highlights BoJo’s announcement yesterday that he will be shutting parliament down for five weeks in his efforts to stop a no-deal Brexit on October 31st (although the official reason is to give BoJo a chance to unveil a “bold and ambitious” package of legislation in the Queen’s Speech on October 14th). Parliament will be suspended (or “prorogued”) from the second week of September until October 14th in the longest suspension since 1945. * SO WHAT? * This move will undermine a plan by opposition parties to use legislation next week to try to delay Brexit beyond October 31st because it means they won’t have time to push through legislation to stop it. They will probably try to table a motion of no confidence in the government but, at the moment, there don’t seem to be enough MPs who would vote for this and one insider added that “If MPs pass a no-confidence vote next week, then we won’t resign…we won’t recommend another government. We’ll dissolve parliament [and] call an election between November 1st and 5th”. There is a very useful timeline breakdown of events in What is Boris Johnson trying to achieve? (Financial Times, George Parker and Jim Pickard) for those of you who crave more detail on this. You no doubt know already, but you will be hearing LOADS of noise and commentary on this for the next couple of

months as people get increasingly hysterical/smug about this latest action. I shall try to pick through the noise in the meantime and bring you the facts so you can decide for yourself. FWIW, I think that people who disagree with BoJo’s actions will say that no-deal is disastrous for British businesses and must be avoided at all costs (hence opposition parties who would never normally come together, coming together to try and stop it), those in the middle will say that keeping no-deal on the table will give us a powerful bargaining chip in the Brexit negotiations giving us the best chance of a better deal and those who agree will say that BoJo is just following through on his promises to deliver Brexit, without any extensions or further interference. If we get an improved deal as a result, BoJo will look like a hero and win the resulting general election – but if he fails to secure better terms and powers on with a no-deal, his continued tenure as PM will look decidedly dicey. Given that many businesses are preparing for a no-deal scenario, we might have an interesting situation where a no-deal Brexit proves NOT to be as disastrous as everyone is predicting – which would further fuel BoJo’s cause, especially if he manages to hammer out a decent trade deal with Trump in the meantime.

Sterling slumps as fears grow that worst is yet to come (Daily Telegraph, Tom Rees) shows the initial reaction to BoJo’s announcement yesterday as the pound had one of its steepest falls of the year in its immediate aftermath as fears of a “disorderly” departure from Europe increased. Sterling could be heading even lower in the build-up to October’s crucial EU summit as investors mull over the prospect of a messy Brexit and potential general election.

Guess strengthens, Tiffany suffers, Ted Baker signs a Japanese deal, WH Smith heads for profits, Pizza Express/Franco Manca/Loungers have contrasting fortunes and De Beers loses its sparkle…

Guess sees little effect from potential China Tariffs increase (Wall Street Journal, Micah Maidenberg) highlights a strong performance from Guess?Inc as it said that it had managed to mitigate China tariff risks by reaching agreements with vendors. Along with its strong results and a lift in full year profit forecasts, the share price rose by 11% in aftermarket trading, although it has fallen by 28% so far this year. The company is scheduled to announce a new strategic plan by the end of October.

Tiffany’s summer sales fall as tourist spending continues slowing (Wall Street Journal, Dave Sebastian) shows that the jeweller suffered weaker sales in the second quarter on fewer tourists loading up at its US stores and disruption to stores in Hong Kong as protests continued to rage. It did, however, keep its full year guidance intact and talked about opening more flagship stores in Hong Kong and Shanghai. * SO WHAT? * It’s good that the company has kept its full-year guidance unchanged, but there are a couple of big potential headwinds in Asia – firstly, no-one knows how long the Hong Kong disruption will last for and secondly, sales consumption tax (Japan’s VAT) is to rise from 8% to 10% in October, which could potentially dent sales.

Talking of Japan, Japan’s new dawn for Ted Baker (Daily Telegraph, Mason Boycott-Owen) heralds a new five-year licencing deal with Sojitz Infinity where the latter will use its local knowledge to sell Ted Baker merch in Japan’s department stores. Ted Baker has had a Japan presence since 2012 and now has five outlets, but the business is still in loss. This follows a venture between Ted Baker and Shanghai LongShang Trading Company to promote Ted Baker in China, Hong Kong and Macau. * SO WHAT? * Japan has been the death of many a UK retailer over the years, but having an agreement with “a local” at least gives you a fighting chance (although that’s no guarantee of success either). This sounds good in theory and maybe Ted Baker stores will benefit from a halo-effect from having an increased presence in Japan’s classy department stores,

but exposure to the latter sounds like a half-baked hope to me given how department stores worldwide are generally in terminal decline. BTW, Japanese department stores are pretty special – if you ever get the chance to go to one in Japan you will be amazed! A proper experience, for sure, but it comes at a price…

WH Smith on track for profits (Daily Telegraph, Laura Onita) shows that WH Smith is on track to meet profit targets as it concentrates its efforts on higher margin stationary and adding Post Offices to its stores. Sales at airport outlets continue to lead sales growth, but hospital outlets are now outpacing railway outlets in terms of sales. Its high street stores continue to get weaker, however. * SO WHAT? * Sometimes I do wonder how WH Smith can survive on the high street given that you can get pretty much everything it sells quite easily online. However, as long as the cash cows in airports, hospitals and railway stations continue to crack on I would have thought that they will continue to enjoy a stay of execution.

Then in the troubled world of casual dining, Pizza Express sees profits fall as Franco Manca grabs a bigger slice of the market (The Guardian, Sean Farrell) shows the contrast between two pizza chains as Pizza Express suffered in the first half of the year and put new restaurant openings on hold while Franco Manca continued to benefit from its sourdough pizza, green cola and vegan cheese offering. Peter Martin, VP at food and drink consultancy CGA observed that “In a very fast-moving, competitive market, consumers want something new and there is plenty of choice. Franco Manca has benefited from being different in that Italian space”. Loungers and Franco Manca chains seize on high street malaise (Financial Times, Alice Hancock) points out that smaller restaurant chains are managing to keep outlet opening costs down by refusing to pay high rents as they take advantage of landlords’ weakening position.

In Diamonds lose their sparkle as sales at De Beers plunge (Daily Telegraph, Jon Yeomans) we see that the global slowdown in the diamond market is hitting industry leader De Beers as it reported a massive 44% fall in sales at its latest sales round. Diamond pricing is a very opaque affair with De Beers and its Russian rival Alrosa having a stranglehold on the market. The diamond market as a whole is suffering from a combination of changing consumer tastes, the rise of synthetic diamonds, rupee devaluation hitting the Indian market, US-China trade tensions hitting the China market and tighter lending criteria from banks meaning that some producers have had financing issues.

The PMI/Altria deal has failed to excite so far, Thomas Cook finalises a survival deal and Peloton aims for an IPO…

Following on from the announcement of a reunification of Philip Morris International and Altria, Investor doubts put $200bn Morris-Altria merger at risk (Financial Times, Andrew Edgecliffe-Johnson, Richard Henderson, Eric Platt and James Fontanella-Khan) shows that investors have been underwhelmed by the terms of the deal so far as share prices of both companies are now lower than they were before the news came out. * SO WHAT? * PMI shareholders are probably worried about dilution and exposure to the mature US market whereas Altria shareholders will probably argue that their shares should be more highly valued. The all-paper deal will have to be approved by shareholders of both companies to go through. The debate will rumble on…

Thomas Cook agrees terms of £900m rescue deal with Fosun (The Guardian, Kalyeena Makortoff) shows that the troubled travel agent is closing in on survival in a deal that

will give Chinese congolmerate Fosun control of its holiday business. Fosun already owns Club Med and an 18% stake in Thomas Cook and the £900m cash injection may be completed in early October. Tough times, but Thomas Cook survives to fight another day.

Elsewhere, Exercise bike firm Peloton to float with potential value of $8bn (The Guardian, Sarah Butler) heralds the latest firm with massive losses itching to float on the stock market. * SO WHAT? * It touts itself as being the Netflix of fitness but TBH, I think there is limited upside for a firm that relies on customers using a £2,000 bike or treadmill where they can livestream or download classes. On top of that, subscription costs £39 per month for access to online classes for full interaction with other users and instructors or £19.49 without the interactive element. Chief exec Foley says “Peloton is so much more than a bike – we believe we have the opportunity to create one of the most innovative global technology platforms of our time”. What a load of w*nk. This has all the hallmarks of a disaster, IMHO – it sounds like it is completely up itself and its losses have tripled in the last year alone! It is exposed to a very narrow customer base who have a number of alternatives (like Zwift, for example) and just screams “fad” as far as I’m concerned. Maybe I’m wrong, but I just think it sounds like a “POS”.

And finally, in other news…

I thought I’d bring you something that will melt even the stoniest of hearts in Adorable Baby Busts a Move to Jonas Brothers’ ‘Sucker’ While Holding a French Fry (Inside Edition, https://tinyurl.com/y6j3xufs). It’s always great to see a happy baby!

1. In M&A NEWS, Philip Morris and Altria consider reuniting, BP sells Alaska operations to concentrate on shale and Harry Ramsden’s gets swallowed up
2. In RETAIL NEWS, CostCo opens in China, UK shop prices fall and Arcadia shuts US stores
3. In MACRO NEWS, Rouhani refuses talks with Trump and UK mortgage approvals rise
4. In OTHER NEWS, I bring you a pizzadilla gone viral…

So Phil and Altria consider getting back together, BP ditches Alaska for shale and Harry goes Deep Blue…

Falling tobacco demand spurs Philip Morris, Altria to talk merger (Wall Street Journal, Jennifer Maloney and Cara Lombardo) shows that the two tobacco companies, who split apart in 2008, are considering getting back together again. If they managed to do so, the enlarged entity would have a market value of about $200bn – yes, that’s $200bn. Philip Morris is the larger of the two entities and would control 59% of the enlarged group in an all-stock deal if it all went ahead. * SO WHAT? * Basically, things have now come full circle as the two split over ten years ago because it was deemed that the original company was trading at a discount to its sum of the parts and so it split into Altria, which had a US focus, and Philip Morris International, the overseas business. The boundaries between the two businesses have become increasingly blurred over the years and now it seems that the two are considering a reunification because of a weakening global trend of cigarette sales and a desire to pool their resources in cigarette alternatives. Crudely speaking, Philip Morris has its heat-not-burn IQOS product and Altria has a 35% chunk of vaping supremo Juul (which it bought for $12.8bn in December last year) and you could argue that getting together would mean that they could have a much broader product line-up in the cigarette-alternatives space. This isn’t yet a done deal, as there will no doubt be regulatory

hurdles to overcome that will inevitably result in the sale of various brands, but a reunification sounds reasonable on a strategic basis given evolving consumer behaviour.

BP to sell Alaska operations to Hilcorp for $5.6bn (Financial Times, Anjli Raval) heralds a major moment for BP as this sale signals the end of its 60-year history in Alaska, with a view to the funds raised being funneled into its shale operations. The Alaskan business includes its exploration and production business as well as its pipelines division, which includes its stake in the Prudhoe Bay field and Trans Alaska Pipeline. BP plans to dispose of $10bn-worth of assets over the next couple of years to pay for last year’s acquisition of BHP’s US shale operations. * SO WHAT? * BP is currently developing its US shale business, which includes assets in the Permian and Eagle Ford basins, in competition with rivals like ExxonMobil and Chevron who are also planning on increasing production.

In Harry Ramsden’s gobbled up by rival Deep Blue (Daily Telegraph, Alan Tovey) we see that the fish and chip shop chain has been bought from Boparan Restaurant Group (BRG) by rival Deep Blue Restaurants. Deep Blue currently owns 26 chip shops whose number will be boosted significantly by Ramsden’s 34 sites. The deal was done for an undisclosed sum and BRG will retain a stake in Ramsden’s. * SO WHAT? * This deal will make Deep Blue the go-to company for fish and chips, but it will also allow BRG to concentrate its efforts on Giraffe, Ed’s Easy Diner and Fishworks whilst also keeping a hand in fish and chips. Given ongoing problems in the casual dining sector, it’s probably just as well for BRG to concentrate on a smaller portfolio.

CostCo has a busy opening day in China, UK shop prices continue to weaken and Arcadia is allowed to shut US stores…

What trade war? China’s first Costco draws crowds of shoppers (Wall Street Journal, James T. Areddy) highlights the apparent success of Costco’s first store in China. The Shanghai store opening was so successful, as it turned out, that it had to shut its doors at 1pm – a full eight hours before it was supposed to! Chinese shoppers poured in to get grand-opening prices on Pampers, Ocean Spray and Samsonite products, among others. Things got so bad that shoppers had to contend with elbowing for sale items, huge checkout queues and a 20-minute wait for the toilet! * SO WHAT? * This sounds pretty spectacular as openings go, but what will matter more is whether shoppers continue to stream in over the longer term. It does show, however, that Chinese shoppers are not really deterred by the US-China tariff rollercoaster – especially if there is a bargain to be had!

Shop prices fall at fastest rate in a year (Daily Telegraph, Tom Rees) cites the latest stats from the British Retail Consortium which show that the prices that we pay in shops have fallen at their fastest rate in a year (-1.5% year-on-year). The trade body blamed “weak consumer spend and intense competition” as retailers have been forced to rely more on discounting to shift product. * SO WHAT? * More signs of an increasingly nervous consumer, but at least the employment market is tight and wages are on an upward trend – for the moment.

Arcadia set to shut stores after US deal (The Times, Ashley Armstrong) highlights the fact that Arcadia – Philip Green’s retail group that includes the likes of Topshop, Burton and Dorothy Perkins – is now free to go ahead with US store closures as part of its original CVA, which had been held up in the US by two landlords. It is believed that the legal challenges had been dropped following an out-of-court settlement with Vornado and Caruso. * SO WHAT? * This smooths the path for Arcadia to pursue its turnaround plans, but don’t expect any quick wins here – Green is just clearing the decks at the moment. There’s a lot that needs doing to get Arcadia back on track and it’s going to take quite some time. In the meantime, the pressure continues on the UK high street as many of its competitors continue to struggle.

Rouhani pours cold water on Trump talks and UK mortgage approvals see a sudden rise…

Following on from yesterday’s prospect of conciliation, Iran’s president Rouhani rules out talks with Donald Trump (Financial Times, Monavar Khalaj, Michael Peel, Andrew England and Demetri Sevastopulo) tells us that Iranian president Hassan Rouhani said on state television yesterday that he wouldn’t meet Trump until the US lifted sanctions on Iran. * SO WHAT? * Clearly, this makes France’s President Macron look like a bit of a kn0b as he was trying to look heroic by saying he could get both sides together. Neither side on the US-Iran looks like wanting to give an inch at the moment, so any kind of agreement still looks pretty far off.

Home loans up as lenders drop rates (The Times, Gurpreet Narwan) cites the latest data from UK finance, which shows that mortgage approvals rose to their highest level in over ten years in July as buyers took advantage of very competitive rates. The growth was driven by remortgaging, although approvals for home purchases were also up strongly. * SO WHAT? * Under “normal” circumstances, rising mortgage approvals would imply brighter economic prospects as they are often seen as a sign of increasing confidence (because people don’t want to spend big chunks of money when things are looking a bit iffy on the economic front). However, many economists are saying that this isn’t a sign of optimism – just that lenders have had to drop their rates to attract more customers. It may also be that people are wanting to get any house purchases/sales out of the way ahead of the October 31st Brexit deadline – so activity could drop very sharply in the run-up.

And finally, in other news…

I thought I’d bring you something edible today in the form of A fried deep dish BBQ chicken ‘pizzadilla’ is breaking the internet and even Chrissy Teigen wants to try it (Insider, Ian Burke https://tinyurl.com/yy4flmdp). This looks like a LOT of hassle to make, but I bet it’s pretty darn tasty! However, if I make one, I shall be sure to film it and tell you what it’s like!

1. In MACRO NEWS, Trump looks to meet Iran and makes positive noises about China while Germany continues to wobble, the UK services sector takes a beating and Indonesia plans to move its capital city
2. In RETAIL NEWS, the UK high street is promised a BoJo boost, M&S looks like it’ll fall out of the FTSE100, KFC experiments with pseudo-nuggets and Indian dining apps face pressure
3. In INDIVIDUAL COMPANY NEWS, Amgen buys Celgene’s Otezla while Johnson & Johnson faces a big fine
4. In OTHER NEWS, I bring you two memorable gift ideas…

So Trump softens his stance slightly on Iran and China, Germany stares the prospect of recession in the face, the UK services sector suffers Brexit buffeting and Indonesia’s capital looks like moving…

Given Trump’s track record, I wouldn’t get too excited by either Trump ready to meet Iran’s Rouhani for new nuclear deal (Financial Times, Victor Mallet and Michael Peel), where France’s President Macron has offered to broker a meeting between the two sides to hammer out a new nuclear agreement with Iran, or indeed Trump’s warmer words on China rally Wall Street (The Times, James Dean) where he appeared to be open to the possibility of delaying proposed tariffs on Chinese imports. My conclusion? Nice words at the G7 summit – which stabilised falling Asian markets – but we need to see some action, especially as Latest US-China tit-for-tat tariffs drive yuan down to 11-year low (The Guardian, Martin Farrer) shows just what effect the current war of words/tariffs has been having on China (weak currency, job losses etc.). You just have to take what Trump says with a pinch of salt as he is liable to backtrack/change his mind at any given time!

Germany on brink of recession as business confidence nosedives (The Guardian, Graeme Wearden) cites the closely-followed Ifo survey which shows that business confidence has fallen to its lowest level for seven years. This confirms similar recent rumblings from the Bundesbank and Ifo’s head, Professor Clemens Fuest, pointed out on CNBC that “Everything we see at the moment means there are ever more indications of recession in Germany, meaning two quarters of negative growth”. * SO WHAT? * Europe’s growth engine is not currently running on all cylinders. Mind you, it would be greatly helped if Trump sorted the whole tariff malarkey given Germany’s reliance on exports. Also, Germany’s finance minister Olaf Scholz has said that he’s prepared throw €50bn at the economy to avert a potential recession – so that could help. Maybe this will tip him closer to the edge. As an aside, I have been wondering whether all this European weakness will actually make BoJo’s task easier in negotiating a “better” (or slightly less bad, depending how you look at it) Brexit because when the original agreement was being negotiated, Europe looked like it was doing pretty well for the most part. I think that it should, in theory, if he was negotiating with one party – but the problem is

that he’s negotiating with 27 other member countries at the same time, which makes things rather trickier. Also, he’s doing this against the clock, which may mean that he runs out of time.

Vital services sector hit by Brexit fallout (The Times, Louisa Clarence-Smith) cites a CBI poll which shows that British consumer service firms including hotels, bars, restaurants and leisure-related companies had their fourth consecutive quarterly fall in business activity and things ain’t looking any prettier in the immediate future. In fact, expectations are at their lowest level since early 2012. Even professional services firms, like lawyers and accountants, have experienced their steepest profitability drop-off since 2011. Rain Newton-Smith, chief economist of the CBI, observed that “The outlook for services firms is bleak at the moment, with Brexit uncertainty holding back investment and expansion plans…the idea of a no-deal Brext is clearly weighing down the economy and is affecting businesses both big and small”. * SO WHAT? * Everyone wets themselves about the services sector because it accounts for 80% of the UK’s GDP, so bad health in this area is baaaad news. Basically, businesses tend to hate uncertainty and therefore want clarity ASAP over any withdrawal agreement. In the meantime, many are hoping for the best (abandoning Brexit? A better deal?) but preparing for the worst (no-deal).

Although Joko Widodo names Borneo site for new Indonesian capital (Financial Times, Primrose Riordan) sounds a bit random (and possibly like one of those headlines you see around April Fool’s Day), it is a very serious matter. Indonesia’s current capital, Jakarta, is actually situated on swampland and is currently one of the fastest sinking cities in the world. Some experts believe it could be completely submerged by 2050, so when President Widodo announced a site in East Kalimantan on Borneo yesterday, it was a major historical moment. The site was chosen for a number of reasons, including its lower risk to natural disasters like “floods, earthquakes, tsunamis, forest fires, volcanoes or mudslides” and construction is hoped to commence in 2021, with government functions expected to transfer there from 2023-2024. It is expected to cost $32.7bn and will be funded by public-private partnerships, the private sector and state-owned companies. * SO WHAT? * This will be a MASSIVE undertaking and it could well be undone by any number of current politicians or successors when he leaves office in 2024. Critics will say that he’s just avoiding the problem of how to make Jakarta more habitable by completely upping sticks. Still, this will be a huge boost for construction in the region.

The UK high street gets a boost, M&S faces demotion from the FTSE100, KFC trials meatless nuggets and Indian dining apps face push-back from restaurants…

More towns to benefit as fund for struggling high streets hits £1bn (The Guardian, Zoe Wood) highlights an enlarged pot of cash allocated to Britain’s high streets (from £675m in last year’s budget to £1bn now) by the Ministry for Housing, Communities and Local Government (MHCLG) for specific projects designed to boost city centres. 100 towns are now in the running to get their hands on the cash for projects like new bus services and turning empty shops into homes with BoJo saying that “This scheme is going to re-energise and transform even more of our high streets – helping them to attract new businesses, boost local growth and create new infrastructure and jobs”. * SO WHAT? * Critics will say that this is p!ssing in the wind and that the fund is nowhere near large enough to save the rapid demise of our high streets. Traditional retailers continues to complain about an outdated business rates system and the imbalance of tax demands on offline and online retailers. It seems to me that this is a sticking plaster being put on a massive gaping wound and is probably designed as a vote-sweetener ahead of a potential general election. The structural problems on our high streets run deep and I think that much more needs to be done if they are to survive in their current form. The problem is that this won’t happen quickly enough – certainly not if BoJo has got a general election on his mind in the near-future.

Talking of problems on the high street, FTSE100 disappearance looms as M&S falls out of fashion (Daily Telegraph, Louis Ashworth) shows that high street stalwart M&S could fall out of the prestigious FTSE100 when it rebalances next week – and looks likely at the moment to be replaced by Russian gold and silver miner Polymetal, which is now worth £5.24bn after its shares have risen by an impressive 40% since the start of May. * SO WHAT? * In terms of the day-to-day running of the business, dropping out of the FTSE100 to the FTSE250 is no great shakes in the scheme of things, but it usually means that FTSE100 index funds in particular will be forced to sell the shares (because they can only invest in FTSE100 companies) that will depress the price even more (although this may be mitigated to some extent by mid-cap

index funds buying into M&S). Still, M&S has managed to scrape through in the past when it’s come close to relegation and the rebalancing is due to take place a week tomorrow.

There’s good news for vegetarians/vegans/flexitarians in First the vegan sausage roll – now KFC to test out meat-free nuggets (The Guardian, Zoe Wood) where KFC said that it is working with Beyond Meat to launch plant-based chicken nuggets and wings in the US. The product is called “Beyond Fried Chicken” and will come in green containers. The nuggets (which are made from plant-based wheat protein) will be given away in a one-day free trial to be rolled out in restaurants across the US if successful. Shares in Beyond Meat rose by 4% and in Yum! (which owns KFC) by 1.3% on the news. * SO WHAT? * The meat-free revolution rumbles on! Currently, meat-free alternatives in supermarkets aren’t that cheap compared to their meaty counterparts, but as distribution increases and production costs come down, they will no doubt get cheaper for the average punter. If this momentum continues, it will change the face of the agricultural industry on a global basis. If you want to read more about the meat-free industry, have a look HERE at my latest monthly.

In Indian dining apps face restaurant exodus over discount ‘epidemic’ (Financial Times, Benjamin Parkin) we see that there’s a growing revolution by restaurants in India against the increasing might of dining apps such as Zomato, EazyDiner and Gourmet Passport because they are being forced into making discounts of up to 50% to stay on the apps. Dining apps in India have exploded in popularity as “Foodtech” has grown from a $120m industry in 2015 to an estimated $5bn currently, but the National Restaurant Association of India is now encouraging members to opt out of platforms that offer massively discounted meals to diners. * SO WHAT? * Thus far, the campaign has concentrated on dining platforms, but it sounds like it will spread to cover online delivery companies next such as Swiggy and Uber Eats. Rohan Agarwal, a manager at consultancy firm Redseer, observed that “This is the first consolidated pushback from the restaurant side so far, in an industry where otherwise the aggregators were trying to push for the terms”. It seems to me like the dining apps have reached the next stage of maturity after a frenzied period of stellar growth and will have to wind in their bid for rapid expansion via discounted offers and spread the love by letting the people who actually make the food get more money. That way, everyone’s happy – but there is a lot more negotiation to come to get to this state of affairs.

Amgen buys Celgene’s Otezla for $13.4bn and Johnson & Johnson gets slapped with a big fine…

Drug sale clears path for Celgene merger (The Times, James Dean) shows that Bristol-Myers Squibb is one step closer to a successful $74bn ($90bn, if you include debt) takeover of Celgene as the latter has agreed to sell its hugely popular psoriasis treatment, Otezla, to Amgen for $13.4bn. * SO WHAT? * This will go some way to satisfying the US competition regulator over the latter’s concerns about the combined entity having too much power in anti-inflammatory drugs. On the other side of the equation, this should enhance Amgen’s strong psoriasis and anti-inflammatory treatment portfolio. The Otezla sale is contingent on the Bristol-Myers Squibb and Celgene deal going ahead, but if it does, it will be an even bigger pharmaceutical acquisition than Pfizer’s acquisition of

Warner-Lambert in 1999.

Johnson & Johnson ordered to pay $572million in Oklahoma opioid case (Wall Street Journal, Sara Randazzo and Jared S.Hopkins) heralds the possibility of further findings of liability for drugs companies regarding the ongoing spread of opioid abuse. This upsurge in cases being brought by state and local municipalities is coinciding with more concerted efforts by the Justice Department to investigate the over-prescription of opioids by doctors. The Oklahoma case was the first to go to trial and focused on J&J because the other two drugmakers settled out-of-court. * SO WHAT? * The crux of all this is whether drugmakers such as J&J made misleading claims in their marketing campaigns about addiction risk and the breadth of efficacy for a number of chronic pains. J&J is going to appeal the judgment. The whole industry will be watching this very closely to gauge whether they need to build up funds for future litigation costs. It never rains but it pours for J&J, which is continuing to face massive lawsuits on its baby powder, pelvic mesh and hip devices and other pharmaceutical products.

And finally, in other news…

I thought I’d bring you TWO intriguing gift ideas. The first one sounds great for frustrated golfers who want a short-cut in Nissan develops golf ball that automatically finds the hole every time (SoraNews24, Master Blaster https://tinyurl.com/yy7g95he), but then Couple mortified by mother-in-law’s engagement gift with very awkward design flaw (The Mirror, Courtney Pochin https://tinyurl.com/yyvblatu) shows how kind intentions can sometimes go awry…

1. In POLITICAL NEWS, South Korea-Japan relations get even worse
2. In INDIVIDUAL COMPANY NEWS, Hasbro buys Peppa for $4bn, e-cigarette companies get called in and NMC Health stuns short-sellers
3. In RETAIL NEWS, UK high street sales drop like a stone, Laura Ashley disappoints, Links goes up for sale, Morrisons closes stores and Ocado has another warehouse fire
4. In OTHER NEWS, I bring you the world’s most instagrammable cafe…

So South Korea-Japan relations continue to worsen…

South Korea scraps intelligence-sharing pact with Japan (Financial Times, Song Jung-a and Kana Inagaki) charts the latest development in the worsening relations between the Asian neighbours as South Korea retaliates against Japan following the latter implementing trade restrictions on the former. Everyone had expected the General Security of Military Information Agreement to remain in place despite the increasingly frosty relations between the two countries, so this latest move has come as a surprise to many. Kim You-geun, deputy director of South Korea’s presidential National Security Council, stated that “We have determined that it would not serve our national interest to maintain an agreement we signed with the aim of exchanging military information which is sensitive to

security”. * SO WHAT? * Some may dismiss this as a storm in a teacup – just a bit of a flare-up of tensions that have always been bubbling under the surface. However,  this seems to be more serious than usual. The Americans will be getting nervous about regional stability in that such moves imply that South Korea is favouring China as its superpower backer and Russia will no doubt be quite keen to poke the hornet’s nest by using this situation to needle Japan with its constant territorial battles in the Kuril Islands. Trump has been keen to take troops out of the region and let them just get on with it, so an escalation of rhetoric between South Korea and Japan is not in US interests because they might have to beef up presence there once more. The thing is that neither side appears to want to climb down and the longer this goes on, the worse things are going to get as nationalism on both sides continues to escalate to potentially damaging proportions. Let’s hope tensions ease for the sake of regional stability.

Hasbro buys the company behind Peppa Pig, e-cigarette makers face more scrutiny and NMC Health confounds the short-sellers…

Hasbro picks up Peppa Pig in $4bn deal (Wall Street Journal, Micah Maidenberg) highlights Hasbro’s purchase of Entertainment One, the entertainment company famous for Peppa Pig, PJ Masks and Ricky Zoom. Hasbro’s chief exec, Brian Goldner said that “These brands have many of the characteristics and profitability of our franchise brands”. Entertainment One is based in Toronto and also produces TV and film for adults in addition to operating a music business. Hasbro said that it expected to squeeze out $130m in annual cost savings by 2022 as it will bring part of Entertainment One’s toy business in-house and raise profitability of its licencing and merchandising activities. * SO WHAT? * Toymakers have been having a nightmare in the last few years as kids increasingly turn to mobile device-based gaming and away from “traditional” toys – which has ultimately led to the demise of companies such as Toys R Us. Having said that, although Hasbro shares fell by 5% in after-market trading, they have actually gone up by over 40% so far this year. Toymakers have been trying to broaden the appeal of their assets in order to attract more customers – so, for example, Hasbro has developed a Fortnite version of Monopoly and Mattel has launched a film studio to make movies based on Barbie and other toys. I think that the Entertainment One purchase will give Hasbro access to more popular content – but it’s what it does with it that counts!

Then in E-cigarette makers quizzed over health risks to smokers (The Times, Alex Ralph) we see that the US House of Representatives energy and commerce committee has asked e-cigarette makers to give them details about the health impact of their products. Fontem

Ventures (a subsidiary of Imperial Brands and owner of the Blu brand), Reynolds American (the US business of British American Tobacco), Japan Tobacco International (which owns the Logic brand) and Juul (the vaping supremo which is 35% held by Altria, the company famous for the Marlboro brand) have all had to submit details of their marketing practices, any research they have on the health impact of their products on adolescents and adults along with a list of the influencers who are paid to peddle their products. * SO WHAT? * I’m all for cigarette alternatives to wean people off smoking, but I think that concerns over young people getting IN to smoking via vaping are worth looking at more closely (especially if their long-term health suffers as a result). Given that no-one really knows what the health impacts are of e-cigarettes, it’s good to see that there are moves afoot to monitor it properly. The letters were sent out after the Centers for Disease Control and Prevention voiced concerns over a “cluster of pulmonary illnesses possibly related to to e-cigarette product use…primarily among adolescents and young adults”. You can find more out about this in Vaping is suspected in sever lung illnesses (Wall Street Journal, Betsy McKay). The debate rumbles on…

Bid talk is shot in the arm for health firm (The Times, Alex Ralph) is a popular story in today’s broadsheets as it highlights the reasons behind the 42% share price rise of FTSE100 private healthcare provider NMC Health yesterday – basically, there were rumours of a bidding war between two investor groups for a 40% chunk of the company. NMC remained tight-lipped on the development that coincided with the company’s better-than-expected first half results statement. * SO WHAT? * The shares have been a favourite of short-sellers due to scepticism over the company’s accounting policies, sending the price down by 53% since August last year, so this news will be painful for them. More detail is needed before getting too excited about this, however. Still, what a move! If bid rumours prove to be false, these things will fall through the floor…

UK high street sales hit new lows, Laura Ashley disappoints, Links is up for sale, Morrisons sheds stores and Ocado has another warehouse fire…

Today’s retail stories don’t make for an uplifting read as UK high street sales fall at fastest rate since 2008 (The Guardian, Phillip Inman) cites the latest report from the CBI which showed that sales volumes and orders fell at the fastest rate for a decade due to rising costs and increasing Brexit uncertainty, Laura Ashley is off the pace – could it soon be off the stock market too? (Daily Telegraph, Laura Onita) highlights Laura Ashley’s disappointing results

dashing hopes of an iminent turnaround and Owner tries to find buyer for Links (The Times, Robert Miller) shows another British retailer potentially biting the dust if a buyer isn’t found. The jewellery chain’s current owner, Folli Follie, bought Links back in 2006 and is asking for offers next week.

The bad news continues in Morrisons shuts four supermarkets, putting 400 jobs at risk (The Guardian, Zoe Wood) following a performance review. Recent Kantar data showed that Morrisons was the worst-performing supermarket incumbent. Then Ocado orders hit by second warehouse fire (The Times, Ashley Armstrong) heralds Ocado’s second fire in six months, this time in Erith, east London. Customer orders will be disrupted as a result but it doesn’t sound quite as serious as the one they had in Andover, which took four days to put out. The retail sector really could do with a boost at the moment, but I don’t see one coming any time soon.

And finally, in other news…

I thought I’d bring you something pretty spectacular today in the form of This Is Officially the Most Instagrammable Café in the World (BestLife, Diana Bruk https://tinyurl.com/y4oqkyga). If the food in there tastes as good as it looks, then it’s clearly a winner! I’m not normally into this kind of thing, but it really is very impressive…