Category: Uncategorized

1. In MARKETS & POLITICS NEWS, trade war fears give investors the jitters and May looks “Mexit” in the face
2. In LEISURE-RELATED NEWS, Mitchells & Butler toasts solid profits, Hollywood Bowl eyes crazy golf expansion, Thomas Cook gets an offer and Merlin considers going private
3. In RETAIL NEWS, Casino and Rallye shares are suspended, unloved retail parks spark interest while B&M disappoints
4. In OTHER NEWS, I bring you some tips on what to look out for in restaurants. For more details, read on…

So global market nerves jangle at US-China trade while PM May eyes a departure…

Global markets rocked as US-China trade and tech rift deepens (The Guardian, Larry Elliott) highlights the fall in Asian, European and North American stock markets as investors got increasingly concerned about the escalating war of words (and actions!) between China and the US. Weirdly (and I say that given the scale of the recent anti-Huawei campaign led by the US), Trump said last night that “If we made a deal, I could imagine Huawei being possibly included in some form or some part of it”. * SO WHAT? * This sounds to me like Trump is backpedaling slightly on his aggressive stance towards the embattled telecoms tech company, which might leave other countries who’ve acted on his warnings high and dry. Trump’s rhetoric has pushed countries to either partially or fully exclude Huawei from their 5G networks which will have p!ssed the Chinese off no end and so they may well take their frustration out by

pulling investments from these countries in retaliation. If the US does a deal including Huawei now, it will look like Trump and his security advisers were talking BS all along IMHO. I think all of this is ultimately about the US wanting to stop China from being better than them at tech and putting a massive spanner in its huge growth machine. Everyone else is just being caught in the cross-fire.

Theresa May to give firm departure date as Brexit deal founders (Financial Times, Laura Hughes, George Parker and Sebastian Payne) heralds what will be the inevitable “official” demise of Theresa May’s time as PM as she is expected to outline plans to step down. Downing Street advisers are due to meet at 10am today to be briefed on further details, but senior Conservative MPs believe that her formal departure will be in the week of June 10th, after Trump’s state visit. * SO WHAT? * TBH, I think most people will be surprised at how long she has remained in power given the continued failure of her deal and the growing frustration of Brexiteers and Remainers alike. Apart from being a mid-table Premiership football manager, this has probably got to be one of the least attractive jobs going at the moment, no??

M&B pubs do well, Hollywood Bowl eyes crazy golf, Thomas Cook gets and offer and Merlin considers going private…

All change at M&B sends profits soaring for pub chain (Daily Telegraph, Michael O’Dwyer) shows the parent of All Bar One, Harvester and Toby Carvery announcing a solid 8.7% jump in pre-tax profits for the six months to April 13th, partly due to better weather versus the same time last year. Mitchells and Butlers (M&B) runs 1,700 UK pubs and restaurants is positive about the future as many changes being made across the business are starting to bear fruit. The most recent Mother’s Day was its third best sales day ever – beaten only by the last two Christmas Days – bolstering the chief executive’s boast of M&B brands being associated with celebrating special occasions. A particular highlight among its brands was the success of its Miller and Carter steakhouses. * SO WHAT? * It just goes to show that even in the dark days of Brexit uncertainty we are still going out! It also goes to show that failures, like the most recent one at Jamie’s Italian, aren’t a given – and that there’s still money to be made if it’s done right.

Talking about fun stuff, Firm strikes out towards crazy golf (The Times, Dominic Walsh) shows that the UK’s biggest tenpin bowling operator is about to move into crazy golf! Hollywood Bowl has just bought two sights in York and Thorpe Park, Leeds that are going to be called Puttstars – and games will include an electronic scoring system. Sounds great, right?! The company currently operates 60 sites under the Hollywood Bowl and AMF brands and it just announced increases in revenues and profits. * SO WHAT? * Again, this shows that, against an uncertain economic backdrop, Brits are still willing to spend on “experiences” although that kind of confidence evaporates when it comes to spending on big ticket items like cars and houses. If you

provide the right atmosphere and the right offering there are still punters out there willing to spend money.

Thomas Cook receives offer for northern European arm (The Guardian, Jasper Jolly) highlights an offer that has been received by the ailing travel company for its northern European business from private equity company Triton Partners, which bought the Dutch-Swiss travel company Sunweb Group in December. * SO WHAT? * Thomas Cook is having a very tough time at the moment due to its massive debts and Brit holiday makers not booking holidays with them because of Brexit uncertainty. As a result, its share price has cratered by a whopping 90% since May last year. It has been receiving all sorts of offers for various bits of its airlines business, so this is just the latest approach it’s had. At least it’s getting offers, I guess!

In Entertainment giant Merlin to sound out private buyout (Daily Telegraph, Oliver Gill) we see that the company behind Alton Towers, Legoland and Madame Tussauds has been advised to sell itself by ValueAct Capital, one of its biggest shareholders. ValueAct believes that the company should be taken private because the City is not giving the world’s second-biggest visitors attraction group enough credit. The company backed Merlin’s management and said that it believes that the private investors would value it at a 30% premium to its current value if it went down this path. * SO WHAT? * If you were being cynical about this, you could say that it’s just ValueAct talking its own book (it has a 9.3% stake in Merlin) but then again, if it didn’t believe in what the management was doing it would no doubt be very vocal about it and demand seats on the board etc. Given the difficult economic outlook, maybe going private would protect the company from being tarnished with bad sentiment elsewhere and help it to concentrate better but it all depends on what the management wants to do in the future. If it wants to make some sizeable acquisitions, for instance, it may be better to stay “public” to raise more money more broadly, but if wants to grow organically for the foreseeable future then maybe private is the way to go.

France’s Casino and Rallye hit problems, UK retail parks might get some love and B&M has a tough time…

Shares in Casino and parent Rallye suspended in Paris (Financial Times, Harriet Agnew and Robert Smith) heralds a potential major restructuring at the group as shares were suspended yesterday. Casino owns supermarket chains Monoprix, Franprix and Geant and has been selling off assets to reduce its debts but it seems that things have come to a head with its hugely complex structure. Casino’s problems have been made worse by an ongoing price war with supermarket rivals Carrefour, Auchan and E.Leclerc. Shares in both Casino and parent company Rallye have fallen by around 40% since March. * SO WHAT? * Shares don’t get suspended lightly – so this must be very serious. We’ll just have to wait to see what happens.

Partners give retail parks some love (The Times, Louisa Clarence-Smith) looks at what could be some rare good news for Britain’s unloved retail parks as American asset managment group Pimco’s Bravo Strategies III has bought

four retail parks in Aberdeen, Dundee, Inverness and the Isle of Wight for £60.5m in a joint venture with British investor New River Reit. California-based Pimco is one of the world’s most influential investors and New River has a £1.3bn portfolio of 34 shopping centres, 19 retail parks and 650 community pubs. * SO WHAT? * Yes, this property is pretty cheap, but it’s cheap for a reason. I would also argue that it is particularly risky to buy these assets when footfall at these places is dropping and tenants are moving out as they continue to go out of business. Still, I guess that there’s a price for everything. I just wonder whether they’ll do anything to make these places any better!

B&M shares discounted amid German woes (The Times, Elizabeth Burden) highlights difficulties in the discounter’s German business, but it sounds like these problems are behind them and that the company is now on the front foot. Chief exec Simon Arora said that “We enter the new financial year with renewed trading momentum, particularly in the UK, a high quality new store expansion programme in place and investing in our new infrastructure to support future growth”. However, B&M dampens Asda bid speculation (Daily Telegraph, Ashley Armstrong) shows that the company was keen to bat away speculation that it was planning a reverse takeover of Asda in the wake of the failed Asda-Sainsbury’s merger. For now, it seems that the company wants to grow organically.

And finally, in other news…

I thought that some of you may be heading out to pubs/restaurants over the coming Bank Holiday weekend, so maybe this will come in useful for you: Chefs reveal red flag they look out for at restaurants – and questions they ask (The Mirror, Zoe Forsey https://tinyurl.com/y4jy6gcf). Some of it is kind of obvious, but some of it less so – and worth keeping in mind!

1. In TECH NEWS, Huawei’s headaches get worse, Hikvision looks like it might get the Huawei treatment and Qualcomm gets a big slap
2. In CONSUMER, RETAIL AND COSMETICS NEWS, Lowe’s has a profit warning, UK inflation goes up, M&S and Arcadia’s tough times continue while we see cosmetic acquisitions, Pret’s plans for Eat and the latest on meat-free
3. In MONEY-RAISING NEWS, Transferwise becomes Europe’s #1 and Trainline eyes a chunky listing
4. In OTHER NEWS, I bring you the world’s smallest McDonald’s. For more details, read on…

So Huawei gets dumped on even more, Chinese CCTV giant Hikvision potentially faces a similar fate and Qualcomm gets a big fine…

British companies drop Huawei after US ban (The Times, Simon Duke) shows that things are continuing to get tricky for the Chinese telecoms giant as three of Britain’s biggest tech and telecoms companies are cutting ties with it. Arm, the Cambridge-based and SoftBank-owned microchip group, will stop licensing its chip designs to Huawei while EE and Vodafone have decided to drop its handsets from their 5G networks. Huawei said that it will ramp up efforts to make its own chips in response. Fears over Britain’s CCTV as US puts Hikvision under scrutiny (Daily Telegraph, Hannah Boland) suggests that this Chinese company, which is one of the biggest suppliers of CCTV cameras in the world, could be next to get the Huawei treatment according to rumours that Washington was thinking about banning Hikvision from doing business with US companies. * SO WHAT? * This is obviously all about applying pressure in the US-China trade negotiations, but I have to say that Trump is playing a very dangerous game here because Chinese companies will ramp up efforts to make their own components and cut out any outsiders. It’s also conceivable that, if this takes place, China could effectively

be cut off as a market to tech outsiders. Given all the chat about the potential of the Chinese market and the efforts that have gone into improving relations with China over the years, I think that this would be a blow to all concerned. On the other hand, you could argue that Trump is just shaking things up after years of “over-accommodating” China and following through with threats that past leaders couldn’t stomach.

Qualcomm’s practices violate antitrust law, judge rules (Wall Street Journal, Tripp Mickle, Brent Kendall and Asa Fitch) heralds the latest development in Qualcomm’s legal struggles as a federal judge just ruled that Qualcomm unlawfully restricted competition in wireless chips – agreeing with findings from the Federal Trade Commission in its antitrust lawsuit against Qualcomm. * SO WHAT? * It’s a case of three steps forward, one step back for Qualcomm as its share price shot up by 50% following the resolution (in its favour) of a long-running legal dispute with Apple – but this news saw its share price plummet by 10%. This ruling could definitely damage future business for the company, so obviously it is launching an appeal. The key thing to remember here is that this could affect LICENSING for Qualcomm – and this is where it makes its real money rather than selling the chips themselves. The company gets fat fees from its patents and this ruling could force them to hand some of their licences over to rival chip suppliers, which would cut out the 5% royalties they earn on every handset up to $400. Tricky for them but potentially good for everyone else!

Lowe’s warns, UK inflation rises, there’s more retail gloom from M&S and Arcadia as cosmetics companies are snapped up and Pret announces its plans for Eat…

Following on from what I said yesterday about the success of US DIY giant Home Depot, DIY retailer Lowe’s issues profit warning on rising costs (Financial Times, Alistair Gray and Philip Georgiadis) paints an altogether different picture as this DIY company cut its profit forecasts for 2019, blaming the impact of rising costs on first quarter earnings. The share price fell by 11% in response to the news as it is obviously struggling to maintain market share compared to its bigger rival Home Depot. * SO WHAT? * As I said yesterday, market watchers monitor DIY retailers like Home Depot and Lowe’s to get a feel for the health of the US housing market. Clearly the signals are a bit mixed given that Home Depot did quite well and Lowe’s didn’t – but I’d be inclined to think that this is Lowe’s problem and not a sign of US housing market weakness.

Meanwhile, back in the UK, Higher energy bills and transport costs drive up UK inflation (The Guardian, Larry Elliott) shows that consumer wallets are being squeezed as the annual rate of inflation, announced by the Office for National Statistics, went up to 2.1% in April versus 1.9% in March. * SO WHAT? * This means that inflation has returned to the government’s 2% target for the first time in four months. Thankfully, earnings are still rising faster than prices – but still, this will be a bit of a blow to consumers.

Gloom on the UK high street continues in Marks & Spencer to close another 20 stores as profits plunge (The Guardian, Zoe Wood) as the retailer continues to try to turn its fortunes around. It is to close 72 of its big high street stores in addition to the 48 is has already shut and it will also close 25 of its smaller Simply Food convenience stores. The locations of stores that will be affected has not yet been disclosed. * SO WHAT? * Turning around something the size of M&S is no easy job and will take time. I expect that things will probably get worse before they get better – and there is even talk that M&S could drop out of the FTSE 100 index for the first time ever. Let’s hope that a slimming down, a bit of brand tinkering and some online magic from their forthcoming Ocado tie-up can turn things around for the ailing retailer. I think that this must be even more of a nightmare for landlords as M&S abandoning key sites just continues the hollowing-out of city centres – with not that many companies wanting to take their place.

Green to cut stores and staff in Arcadia restructuring (Daily Telegraph, Ashley Armstrong) piles on the retail misery as the company behind the Topshop, Dorothy Perkins and Miss Selfridges brands continues its bid for survival. Chief exec Philip Green and his wife have offered a £100m cash injection for Arcadia’s pension scheme as part of efforts to win backing for a major business overhaul. This restructuring will need support from its landlords to go ahead, with a vote scheduled for June 5th. * SO WHAT? * A CVA is not a guarantee of future survival, but it does give the company some breathing space. Still, not great for the high street as a whole.

In the cosmetics space, Cannabis firm buys British beauty brand This Works (The Guardian, Rob Davies) heralds the purchase of British beauty brand This Works for £43m by the world’s biggest cannabis company, Canopy Growth, in a deal that will see a launch of products infused with cannabis ingredient CBD to help users sleep and improve their skin. * SO WHAT? * CBD doesn’t make you “high” per se, but it is supposedly good for you and there’s been a sharp increase in the number of products containing CBD for its “wellness” benefits. Canopy will use its financial clout to help This Works internationally.

In Natura announces $2billion deal for Avon (Wall Street Journal, Patrick Thomas) we see that Brazil’s biggest cosmetics company Natura Cosmeticos, owner of The Body Shop and Australia’s Aesop brand, has reached an agreement to buy Avon Products Inc for $2bn in an all-stock deal. Natura shareholders will own around 76% of the enlarged entity. * SO WHAT? * This sounds like a reasonable strategic deal and Natura expects it will be able to cut costs by $150-200m per year. Avon chief exec Jan Zijderveld said that “together with Natura, we will have broader access to innovation and a portfolio of products, a stronger e-commerce and digital platform, and improved data and tools”. 

Moving on to food, Pret hopes to open new vegetarian outlets ‘at pace’ after buying Eat (The Guardian, Sarah Butler) follows on from Pret’s acquisition of Eat for an undisclosed sum as its chief exec outlined plans to convert most of Eat’s 94 outlets to Veggie Prets by the end of next year, pending approval from the UK competition watchdog, the Competition and Markets Authority. At the moment, it only has four veggie outlets – three in London and one in Manchester – but Pret is keen for a fast rollout. Vegan meat market is poised to mushroom (The Times, James Dean) suggests that it’s on to a good thing as research from Barclays (entitled “I can’t believe it’s not meat”!) predicts a bright future for those who are involved in supplying tasty meat-alternatives to consumers who prefer eating plants to animals.

Transferwise takes the European #1 spot and Trainline is on track (#seewhatididthere) for a nice IPO…

Transfer start-up in Europe’s top spot (The Times, Tabby Kinder) highlights the latest funding round of money transfer start-up Transferwise where investors handed it $300m for shares in the company. The company has now

raised a total of $689m, implying a doubling of the $1.6bn valuation it had at its last funding round 18 months ago. This makes it the most valuable fintech start-up in Europe!

I have mentioned this before but Trainline on track for £1.5bn float (Daily Telegraph, Oliver Gill) has now confirmed that it will be seeking a London stock market listing that will help it to pay down debt and get into profit. * SO WHAT? * I quite like this company. Unlike some others seeking a listing at the moment, it’s got a proper product, operates in a number of markets and is scaleable. Let’s see what happens when it DOES come to market!

And finally, in other news…

I thought I’d leave you today with World’s tiniest McDonald’s opens in Sweden, welcomes bees as customers (Mental Floss, Michele Debczak https://tinyurl.com/y32r2nmq). It’ll give you a buzz…

1. In RETAIL & UK HIGH STREET NEWS, US retailers brace themselves for tariff fallout, Home Depot posts solid results, Urban Outfitters looks at clothing rentals, Sephora ramps up openings and we look at Jamie Oliver’s restaurant collapse and Halfords’ woes
2. In FINANCIALS NEWS, Nationwide highlights the tight mortgage market while Tesco Bank abandons
3. In INDIVIDUAL COMPANY NEWS, Tesla’s nightmare continues and British Steel nears total collapse
4. In OTHER NEWS, I bring you a new anti-procrastination device. For more details, read on…

So there’s a ton of retail news today! Here goes…

Big retailers’ sales lag as they gird for tariffs (Wall Street Journal, Suzanne Kapner and Sarah Nassauer) shows that sales for a number of big retailers lost momentum in the latest quarter, indicating an uncertain outlook given that higher tariffs on Chinese imports will start to have an impact. Department stores Kohl’s, JC Penney and Nordstrom all showed falling sales and Kohl’s – which imports about 20% of its goods from China – decided to cut its expectations for the full year, sending its share price down by 12% on the announcement. * SO WHAT? * These results are quite disappointing, but not all retailers have been doing badly – Walmart, Macy’s and TJX (parent of TJ Maxx – known over here as TK Maxx – and Marshalls) all saw decent growth in comparable store sales. OK, so the tariff thing is going to be a pain, but the labour market in America is tight and consumer confidence is still riding high – so things could be a lot worse for retailers.

Home Depot warms up after long, cold winter (The Times, James Dean) shows that the world’s biggest home improvement retailer took a knock from wet weather and weaker timber prices but still managed to announce an  increase in comparable store sales of 2.5% in the latest quarter. This was below market consensus of 4.2% and is the slowest growth rate for the last three years. Having said that, the average sale per customer and number of transactions rose in the first quarter. * SO  WHAT? * Given its size and significance (the company is worth around $210bn at the moment and employs around 400,000 people in the US, Canada and Mexico), many look at Home Depot as a proxy for the health of the US housing market. It didn’t exactly knock it out of the park this time, but it wasn’t a complete disaster either. Given the unusually cold and wet weather for a number of states in the quarter – and the delaying effect it has on usual customer spending patterns – I don’t think that the company has done too badly.

I think that it would be fair to say that clothing retailers are suffering mixed fortunes at the moment and Urban Outfitters to start renting clothes (Wall Street Journal, Khadeeja Safdar) looks at an interesting new potential solution to the problem. Basically, the owner of Urban Outfitters, Free People and Anthropologie stores will launch a service this summer whereby customers pay $88 a month that will let them borrow six items from their own brands plus outside labels Gal Meets Glam, Levi’s and Reebok among others. The customers choose six items of clothing on the website, receive delivery with a reusable bag and prepaid posting label, keep the clothes for a full month and then return them to get six more, although they also have the option to buy. Returned garments are then washed, dry-cleaned and inspected before being sent to another customer. The new business is called Nuuly and is clearly trying to catch the retail wave that is gaining momentum at the moment – apparel rental. * SO WHAT? * According to GlobalData Retail figures this area has been growing by 20% per year, was valued at $1bn in 2018 and is projected to be worth $2.5bn in 2023 (although obviously this is a projection and should only be seen as a guide). The hope is that this will attract new customers and boost existing per-customer spend rather than cannibalise sales.

Rent the Runway is the biggest player in clothing rental currently, but other mall retailers like Ann Taylor, Express and American Eagle have all starting rental offerings using a retailer web platform called CaaStle which also handles the logistics side of things including shipping and dry cleaning. I really quite like this idea and wonder whether it will continue to grow as fast as the projections would suggest. Clearly, this isn’t going to be great for everyone (I have short arms and legs, for instance, and so often have to get clothes adjusted) but I think that the idea behind it is quite clever in theory – especially considering that this will feed into the whole desire for some to have a new outfit on every Instagram post! The problem is that the company is going to have to be very careful that the idea is not abused by customers, otherwise losses could start to mount up. 

In other high street news, Sephora ramps up store openings as it taps ‘beauty revolution’ (Financial Times, Harriet Agnew) shows that the French beauty and make-up retailer, which is part of luxury giant LVMH, is looking to accelerate its global expansion as it continues to open up to 150 stores a year. Unlike many, Sephora believes that investment in physical stores is an integral part to engaging with its customer base as part of a multi-channel approach. It will focus its expansion efforts in North America and Asia, with the number of stores in China set to double in the next few years. The company has benefited in the last few years because of rising demand for beauty products (presumably stoked by YouTuber make-up stars etc.).

Yesterday’s big news (in the UK, anyway!) was Jamie Oliver’s restaurant chain falls into administration (Financial Times, Jonathan Eley) and shows the ongoing tough conditions in mid-market casual dining. The final death knell sounded only one year after the chain used a CVA to slim down and will result in the closure of 23 of 25 eateries operated by Jamie Oliver Restaurant Group – including Jamie’s Italian, Barbecoa and Fifteen – will 1,000 immediate job losses. Depite all the efforts to keep it going – Jamie himself injected £12.6m of his own money into it in 2017 – it has come to this. * SO WHAT? * Basically, it seems to me that he expanded too quickly and it lost the initial freshness that people liked as other chains came (and went) in the market. They also suffered as customers increasingly opted to staying at home and ordering takeaways via companies like Deliveroo and Just Eat. Local authorities in Glasgow, Cambridge, Cardiff, Exeter and Oxford will lose out as landlords as will major real estate investment trusts including Shaftsbury, Hammerson and Land Securities. Everyone will be asking who’s going to be next – and with a list including the likes of Carluccio’s, Giraffe, Gourmet Burger Kitchen, Byron Burgers and Prezzo all having problems, it’ll be interesting to see who survives.

Veering away from food, Halfords revival set to be uphill struggle (The Times, Simon Duke) highlights weakening profits and a tricky outlook for the bicycle and car parts retailer which operates 316 Halfords Autocentre garages, 451 Halfords stores and 26 specialist bike shops including Cycle Republic and Tredz. The current chief exec, Graham Stapleton, plans to invest more in its online capabilities, open more specialist bike shops and garages whilst simultaneously cutting costs. * SO WHAT? * Good luck with that lot. It seems to me like cycling experienced a glorious boom after Wiggo won in the London Olympics, but now things are on the wane and Halfords is right in the middle of it. 

Nationwide and Tesco Bank both suffer from a tight mortgage market…

Nationwide’s profits hit by mortgage price war (The Times, Patrick Hosking) is a headline which says it all as Britain’s biggest building society saw its profit margins hit by the continuing price war in mortgages and scrap for deposits. Its net interest margin (NIM) – the difference between the rate it pays deposits and the rate it lends at – has narrowed from 1.31% to 1.22% in the year to April 4th – and pre-tax profits fell by 15%. * SO WHAT? * Chief exec Joe Garner expects things to get worse in mortgages and is also facing a squeeze on the deposits side with competition from new-kid-on-the-block Marcus (Goldman Sachs’ retail

bank) as well as old-new-kid-on-the-block National Savings & Investments which has been put under pressure by the Treasury to get new deposits. Tough times.

Tesco Bank falls victim to UK mortgage price war (Financial Times, Nicholas Megaw, David Crow and Naomi Rovnick) shows that the mortgage price war got too much for Tesco’s banking arm as it announced yesterday that it will be pulling out of the market altogether. It blamed “challenging market conditions” for abandoning new home loans and will look for buyers of its existing £3.7bn loan book. * SO WHAT? * A price war generally benefits consumers for a period of time, but if things get too much for lenders, more of them will abandon the market leaving less choice and a potential for rates to rise again. At the moment, it seems to me like the tiddlers are suffering and the big players will just hoover up their loan books at a discount.

Tesla’s nightmares continue and British Steel nears collapse…

I mentioned Tesla’s share price woes yesterday but Tesla: robocall (Financial Times, Lex) does a really good job of laying out the problems that face the company. Basically, they can be classified into product problems and financial problems. Product problems include crashes involving Autopilot, spontaneously combusting batteries and unreliable delivery schedules. Financial problems include the frightening rate at which Tesla continues to burn cash, which contrast sharply with a share price that projects huuuuuge future growth expectations. Elon Musk has tried to divert everyone’s attention to a near-future of robo-taxis, but this seems to be very unlikely given that no-one has yet made a completely driverless vehicle. It has high hopes for selling a ton of vehicles in China, but THAT is going to be a rather delicate subject at the moment given current US-China trade tensions. To add insult to injury, Tesla could

crash to $10 in ‘worst scenario (The Times, James Dean) is a possibility outlined by Morgan Stanley’s latest report as concerns increase about disappointing demand for the Model 3, which is expected to transform the company’s fortunes. * SO WHAT? * IMHO, Elon Musk needs to talk less about robo-taxis and more about how Tesla is going to live up to its lofty promises. If it can’t do that, all the existing car makers will just fly by in the fast lane.

British Steel on verge of collapse as government talks stall (The Guardian, Jasper Jolly) is something I spoke about yesterday on my YouTube channel, but the essence of this story is that the company is waiting for a handout from the government. If it doesn’t get it, it will be toast and put 5,000 jobs (and an estimate 20,000 more down the supply chain) at risk. Some are calling for nationalisation, but I don’t think that’s the solution given that they will face restrictions on selling steel because being owned by the government would be deemed, under various regulations, to give it unfair advantage.

And finally, in other news…

I thought I’d leave you today with a new gadget to help all you procrastinators out there! Easily distracted? Have no fear, a new gadget to the rescue! (SoraNews24, CJ https://tinyurl.com/y6x3jyok) could be the answer ????

1. In TECH NEWS, Huawei gets an Android-shaped kick in the teeth
2. In CAR NEWS, Ford details job cuts, JLR unveils a record loss and Tesla’s shares hit new lows
3. In INDIVIDUAL COMPANY NEWS, Ryanair suffers Brexit blues while Goldman buys hotels and changes auditors
4. In OTHER NEWS, I tell you the real reason why you get fingernail spots. For more details, read on…

So Huawei gets hit with Android restrictions…

So a major drama kicked off yesterday in Huawei suffers hammer blow with Android ban (Financial Times, Nic Fildes and Louise Lucas) as Google, which bought Android in 2005, said it would stop supplying Huawei with Android software as part of a US government ban. Huawei’s rise had been gaining momentum as its handset sales rose by 50% year-on-year in the first quarter while rivals Samsung and Apple’s sales fell by 10% and 23% respectively, so this latest development could stop them in their tracks as new Huawei phones won’t be able to access apps such as Google Maps and YouTube while existing phones won’t be able to update. Huawei is due to unveil its Honor phone in London today but networks such as Vodafone and EE will be wondering whether they should be partnering up with Huawei in 5G given the massive political backlash it is having. Huawei Plan B to beat Trump may break Google stranglehold (Daily Telegraph, James Cook) highlights the fact that Huawei has its own operating system that it has been developing since 2012 for just such an eventuality and that this action may be the thing that pushes a third party to break the duopoly that Google and Apple have on operating systems. The tricky thing is that it’s all very well for Huawei to have its own operating system, but customers outside China are likely to be sceptical about the swap and third party developers would also need to be

on board with another system to develop attractive apps. A spokesperson for reseller website musicMagpie said that it had already seen an uptick of Huawei smartphone trade-ins of 25%. US plans temporary exemptions to Huawei blacklist (Wall Street Journal, John D McKinnon, Dan Strumpf and Yoko Kubota) highlights a few exemptions to the export blacklist for 90 days, which gives everyone a breather in this drama – but also gives the US more time to continue its mission to slag off Huawei to pretty much any government that will listen. * SO WHAT? * Google/Huawei: androids and aliens (Financial Times, Lex) says that the impact on sales will be minimal in the US and China, but Europe is Huawei’s second biggest market, with 75% of Europeans using an Android phone and the company having a 25% market share. Europeans are unlikely to give up access to YouTube and Gmail for WeChat and Tencent Video. Silicon Valley hit by fears of tech Cold War (The Times, Simon Duke and James Dean) highlights the immediate reaction of markets as share prices in Qualcomm (which makes modems and processors used in Huawei phones), Intel (which sells server chips to it) and Dialog Semiconductor (which makes power management chips) as well as Apple and Alphabet (which owns Google) all fell between 2 and 6% on the news. As far as I’m concerned, the main result of this – if it’s not resolved quickly – will be that China tech has just been given the massive kick in the pants it needs to make its own operating system (and possibly freeze out the others while they’re at it). Google and Apple should be very afraid now!

Ford, Tesla and JLR all announce bad news…

Ford to cut 7,000 jobs in bid to catch up to rivals (Wall Street Journal, Mike Colias) isn’t the most upbeat headline you’ll see (especially if you are a Ford worker) as the troubled US automaker announced plans to cut about 10% of its workforce. The cuts will save the company about $600m per annum and the layoffs will be completed by August. * SO WHAT? * These cuts won’t come as a surprise as a major overhaul was announced pretty recently as the company tries to play to its strengths in the domestic market and sort out its overseas business. It’s also not alone in trying to slim down as GM and VW are among those shedding workers as well – but this won’t be much consolation for those affected.

Tesla stock hits lowest level since 2016 as car maker’s outlook debated (Wall Street Journal, Patrick Thomas, Sam Goldfarb and Tim Higgins) highlights the gloom hanging over Tesla at the moment as long term ambitions are being scuppered in the short term by financial and

production challenges. Its share price has fallen by about 38% so far this year and one of Tesla’s biggest investors, T Rowe Price, sold off about 81% of its holding in the first quarter of the year. Tesla announced one of its worst ever quarterly losses in April and vehicle deliveries fell by 31% in the same quarter. * SO WHAT? * The tough times continue for Tesla and I bet it won’t be long before it asks for yet more money! In the meantime, its competition is growing stronger…

The gloom continues in Jaguar Land Rover reports record £3.6bn loss (The Guardian, Rob Davies) as the Tata Motors-owned car manufacturer announced its biggest ever loss last year. It was hit by a weakened Chinese market, falling diesel sales and a one-off downward revision for the value of its business. * SO WHAT? * This, again, shouldn’t be a surprise given all the newsflow we’ve been hearing. It seems to me that the company was over-exposed at the wrong time (falling global car sales) to the wrong market (China) with the wrong technology (diesel) and it doesn’t have enough scale to weather these problems as well as some of its larger brethren. It’s also falling behind competitors on the electric car front. Surely it is going to be bought by another maker for (almost) fire-sale prices?

Ryanair announces weak profits while Goldman Sachs looks at hotels and a new auditor…

Ryanair profits slide due to lower fares and Brexit uncertainty (The Guardian, Julia Kollewe) shows the travails of Europe’s biggest budget carrier as it announced its worst profits in four years on the back of tough competition in Europe and Brexit uncertainty as well as rising fuel costs and disruption caused by staff strikes. Chief exec Michael O’Leary said that the company will have to cut fares to stimulate demand. * SO WHAT? * Ryanair has the firepower to withstand the current market turbulence, which is more than can be said for the likes of Iceland’s Wow Air, Flybmi and Flybe who stopped flying because of lack of funding, collapsed and were bought by a consortium respectively. Even EasyJet reported a £275m loss last week for the first half. I would have thought that the company (like many other travel companies) will be praying for clarity on Brexit.

There were two stories concerning Goldman Sachs that caught my eye today as Goldman Sachs in talks to acquire French hotel chain for €2bn (Daily Telegraph, Lucy Burton) heralds the Wall Street bank’s interest in French hotelier B&B Hotels. This is its second foray into the industry as it previously joined up with two US hedge funds to perform a turnaround with Travelodge in 2012, saving it from collapse.

Then in Mazars strikes gold with audit contract (The Times, Tabby Kinder) we see that Goldman announced that it will become the first major bank in Britain to be audited by mid-sized accountant Mazars in Europe (but will stick with PwC elsewhere – as it has done since 1922). * SO WHAT? * This is notable because auditing is getting a right old pasting at the moment amid (long held) accusations that the Big Four (EY, Deloitte, PwC and KPMG) have got it too easy with big companies. Mazars’ appointment may shake things up a bit and encourage other firms to follow suit and break up the cosy club.

And finally, in other news…

I thought I’d leave you today with something educational in Why you get spots on your fingernails – and it’s nothing to do with calcium (The Mirror, Zoe Forsey https://tinyurl.com/y5jff5zs). Well I never!

1. In UK REAL ESTATE NEWS, London office construction and regional house prices buck Brexit gloom
2. In HIGH STREET NEWS, Arcadia looks at closing overseas stores and Mike Ashley continues his Debenhams fight whilst Thomas Cook’s woes continue
3. In MEAT NEWS, prices continue to climb but a Hong Kong entrepreneur has hopes for his vegan pork
4. In OTHER NEWS, Richard Osman weighs in on the North/South divide. For more details, read on…

So London office construction and regional house prices weather Brexit…

Office construction in London highest since Brexit vote (Financial Times, Judith Evans and George Parker) cites the latest data from a Deloitte Real Estate report which shows that over 3.5m sq ft of new offices have started construction – more than any other time since the six months to March 2016 and over 40% higher than the previous survey. Over half of the space under construction has already been let to companies including Facebook and serviced-office groups such as WeWork. The report noted that activity was “remarkable, given the magnitude of political and economic uncertainty” during the period of the survey but also observed that sentiment was more muted, which “may indicate that construction starts are likely to fall in the next six months, due to businesses being more reluctant to commit to major spending decisions amid

market uncertainties”. * SO WHAT? * I always thought that there was a tendency for a mismatch in office construction and demand as major projects can take years to come to fruition, meaning that by the time it comes to construction, the demand that prompted the construction in the first place has often evaporated. Maybe clients a few years ago just assumed that Brexit wouldn’t actually go ahead and thought they would be able to get a good deal because of the Brexit uncertainty – but it’s difficult to tell. 

House prices up in regions with ‘fear factor subsiding’ (The Times, Elizabeth Burden) cites a different survey, this time from online property company Rightmove, which shows that although house prices in London have fallen by 2.5% over the past year average asking prices in Wales, the West and East Midlands and the North West are now at all-time highs. Miles Shipside, director of Rightmove, observed that “agents in these areas say that Brexit concerns are not really on the agenda of homemovers…they are more concerned with satisfying their housing needs. These increases are the result of a combination of strong demand, buyers’ affordability headroom and a continuing shortage of suitable properties”.

Arcadia ponders overseas store closures, Ashley continues his scrap with Debenhams and Thomas Cook tries to reassure after shares fall off a cliff…

Philip Green could close overseas stores as part of Arcadia rescue (The Guardian, Sarah Butler) shows that BHS staff favourite and all-round cuddly funster Sir Philip Green is thinking about closing down overseas stores as part of a plan to save high street fashion brands including Topshop, Miss Selfridge and Wallis. He is also looking at closing around 50 UK stores, cutting rents and pension fund payments. * SO WHAT? * The consequences are looking pretty bleak because if a deal isn’t done before the company’s next rental payment in late June, Arcadia could fall into administration. The company is trying to refinance a £300m mortgage on Topshop’s flagship Oxford Circus building that also houses Nike as part of the ongoing restructuring efforts and, if a remortgage is successful, it could release cash to pay off landlords and put into the business. Still, things aren’t looking great at the moment.

Moving on from one popular company leader to another, Ashley mulls legal challenge to Debenhams’ restructuring (Daily Telegraph, Ashley Armstrong) shows that Sports Direct CEO Mike Ashley is not giving up his pursuit of Debenhams as he is looking at challenging the company

voluntary arrangement (CVA) that was recently approved by creditors and saying that support for the proposals was unrealistically high. One source close to Sports Direct said that “The CVA votes – with one receiving 95pc support and 97pc for the other – bear more resemblance to the presidential elections in North Korea than they do a fair, open and honest process”. * SO WHAT? * Debenhams could probably do without this distraction, but I must admit I thought it was a bit strange that the CVA was so overwhelmingly approved. Maybe everyone just hates Mike Ashley – it’s not that unbelievable! It’ll be interesting to see whether Ashley succeeds in his attack on the company he recently owned a big slice of. I think that it’ll just be a blip for the time being for Debenhams – but if Ashley unearths foul play, things could get escalate rather quickly and Ashley may yet be able to bag himself a bargain in the ultimate Blue Cross sale ????

Thomas Cook says it is business as usual after Friday’s 40% crash (The Guardian, Sarah Butler) smacks of rearranging the deckchairs on the Titanic as the company has been forced to react to inquiries from worried holidaymakers and suppliers by saying that it has “ample cash to operate” after its share price fell to 12p – yes, that’s 12p – on Friday. * SO WHAT? * Thomas Cook is Atol-protected, so holiday makers should be fine – but the damage to the company’s reputation could yet bite. It is currently trying to sell its airline business to reduce debt, but it seems that Lufthansa and Virgin Atlantic are dragging their feet over any deal. Thomas Cook isn’t exactly in a strong bargaining position at the moment…

Meat prices are expected to rise while one man has high hopes for his vegan pork…

Meat prices are set to climb as swine fever claims China’s hogs (Wall Street Journal, Heather Haddon and Jacob Bunge) shows that the spread of African swine fever will result in deaths (from the disease and culling) of pigs that will account for around 5% of the global meat market. US Department of Agriculture (USDA) stats say that China may have to import 33% more pork this year than in 2018 to meet its domestic demand, leaving less meat in other markets. Tyson Foods’ (the biggest US meatpacker by sales) chief exec Noel White said that prices are already trending upwards and his company is currently trying to negotiate higher prices with retailers to cover the increased meat costs. McDonald’s and Wendy’s Co are expecting meat prices to go up, as does Dine Brands (which owns Applebee’s and IHOP), which expects chicken and beef prices to rise as meat-eaters look to get their animal-based protein fix elsewhere.

Step forward Inventor of vegan pork product hopes to cash in on China pig cull (Financial Times, Alice Woodhouse) as David Yeung, founder of Hong Kong-based

Right Treat, is hoping to plug the gap with his plant-based pork product and emulate the success of Beyond Meat and Impossible Foods. Yeung has developed “Omnipork” (!) from a mixture of pea, soy and mushroom proteins and has plans to launch it in China later this year. It seems that the difference between his product and Beyond Meat and Impossible Foods’ is that his is “unfinished” and can therefore be used in recipes (the former two have “finished” products like sausages and burgers). Omnipork was launched in restaurants in Hong Kong in April 2018 and is now sold in Singapore, Thailand and Taiwan. He clearly launched it in the right market as Hong Kong has one of the highest levels of meat consumption with the average person eating 664g per person per day, with daily consumption of pork and beef four times that in the UK! * SO WHAT? * This sounds brilliant, no? And talk about a stroke of luck as the launch will coincide with the African swine fever thing (although not so lucky for the pigs, obviously). I don’t know what it looks like or what the texture is, so I can’t really say whether it will definitely be a hit or not. Still, another plant-based protein source can’t be bad – and the fact that this stuff is “unfinished” means more versatility, which could turn into more popularity. If the Chinese can get their heads around this, I think Omnipork could be massive!

And finally, in other news…

I thought I’d leave you today with the latest in the North/South debate in Richard Osman ignites fiery ‘Where does the North begin?’ dispute and no one can agree (The Mirror, Zahra Mulroy https://tinyurl.com/y3q6637m). I’m thinking where “barth/bath and grarse/grass” starts…

1. In RETAIL/HIGH STREET NEWS, Walmart continues its winning streak, Waitrose outlines online ambitions post-Ocado, Pret closes in on Eat and Thomas Cook has a Brexit shocker
2. In FINANCIALS-RELATED NEWS, Investec shuts its robo-advice business, Metro Bank’s fundraising goes well and remortgaging is all the rage
3. In INDIVIDUAL COMPANY NEWS, Huawei’s blacklisting has repercussions, Tesla gets nervy on safety and Amazon edges closer to Deliveroo
4. In OTHER NEWS, I bring you sage observations from a librarian. For more details, read on…

So we see Walmart winning, Waitrose’s online future, Pret coming on to Eat and Thomas Cook’s ongoing headaches …

Walmart extends streak of sales growth (Wall Street Journal, Sarah Nassauer) highlights continued progress for the US retailer as its sales strengthened in the first quarter, extending an upward trend that’s been going for four years straight! Sales were boosted by online purchases and solid trading over the Easter period. The company even managed to raise prices on some products to take into account higher tariffs charged as part of the current US-China trade spat. * SO WHAT? * This is another solid performance and has come about as a result of the company shifting its strategy to reducing spend on new stores, spending more on its online capability, reducing prices and boosting the provision of services in physical stores like click-and-collect. Nice one, Walmart – all it needs to do is offload Asda somehow and it will continue to go from strength to strength!

Talking about online grocery sales, Waitrose to treble online operations when Ocado deal ends (Daily Telegraph, Ashley Armstrong) highlights Waitrose’s plans to significantly increase the size of its digital business in order to hit a £1bn online sales target as the retailer looks beyond the end of its relationship with Ocado. It just signed a deal with Today Development Partners (TDP), which is led by Ocado co-founder Jonathan Faiman and Google X’s former chief business officer, to help it boost its online business. It will develop three all-singing-all-dancing automated distribution centres and has appointed current retail director Ben Stimson into the new role of “digital director” to oversee online growth and customer satisfaction. * SO WHAT? * It sounds like Waitrose is taking this online malarkey thing very seriously and has employed the services of some very big hitters. Let’s hope it works!

In Pret A Manger in advanced talks over deal to swallow up rival Eat (Daily Telegraph, Vinjeru Mkandawire) we see that the two are rumoured to be close to a deal after Eat’s private equity owner, Horizon Capital, indicated it wanted to

sell up back in February. When Horizon Capital, formerly known as Lyceum Capital, bought Eat back in 2011 it planned to treble Eat’s outlets to 300 but then proceeded to struggle with tough trading conditions. It has since tried to emulate some of Pret’s international success by opening sites in Barcelona, Malaga and Alicante airports in addition to an outlet in Paris’ Gare du Nord station. Pret is rumoured to want to convert most of Eat’s 94 stores to its Veggie Pret brand, which sells vegetarian and vegan sandwiches and salads. * SO WHAT? * Huddling together for security might be the right thing given how difficult things are on the high street at the moment. Still, I’d be quite sad about this because I think that Eat is far better! I also have doubts about having a stand-alone veggie/vegan outlet although you could say this would be one way to minimise sales cannibalisation between the two. TBH, though, given how many retail premises are standing empty these days you would have thought that Pret could expand its network quite easily organically, rather than going down what I think could ultimately be a more expensive route. This is a tough and highly competitive market.

Brexit chaos hits Thomas Cook as losses mount to £1.5bn (The Guardian, Julia Kollewe) shows how the company has been suffering from Brexit blues as the travel firm announced a massive loss for the first half of the year in its third profit warning in less than a year. It said that the loss was down to British customers postponing travel plans for the summer due to Brexit uncertainty. The share price took a 15% bath as investors took fright at the fact that it had only sold 57% of its summer 2019 holidays – and it is now having to cut the number of holidays it offers as well as giving UK customers big discounts to drum up interest. Thomas Cook is currently looking for a buyer for its airline, but there are other potential bidders looking to buy other bits of the business like the high street stores and package holiday business. * SO WHAT? * Times are tough for travel operators – and although Tui isn’t having it quite as bad as Thomas Cook at the moment, it’s not exactly shooting the lights out. I expect more uncertainty until a decision is made on Brexit. If something favourable is hammered out, however, I think that this situation could turn around very quickly – but the likelihood of that happening is pretty remote!

Investec ditches robo-advice, Metro Bank gets some relief and remortgaging rises in popularity…

Losses make Investec shut robo-advice arm (Daily Telegraph, Harriet Russell) heralds the rather embarrassing development that the company will sell its Click & Invest unit after racking up almost £13m in losses in the year to March. Investec closed the service to new clients and, in so doing, put around 50 jobs at risk. Existing customers have been advised to move their investments elsewhere. * SO WHAT? * It’s interesting to see how the much-trumpeted advent of robo-advice has come to such an abrupt end after only two years. UBS closed down its robo-advice wealth management platform SmartWealth and losses at digital wealth manager Nutmeg have also been sizeable (over £12m). Human wealth advisers will no doubt be breathing a collective sigh of relief!

Elsewhere, Fundraising call by Metro Bank raises £375m in three hours (The Guardian, Kayleena Makortoff) heralds a rare bit of good news for Metro Bank as its share placing

with existing investors closed early yesterday evening and raised more than the £350m it was seeking originally. * SO WHAT? * This is probably the best news that Metro Bank has had for some time as it has struggled with an embarrassing accounting scandal, false rumours being spread on social media and questions over the competency of its chairman. The fact that it raised more money in less time than it had planned is a positive, but now it has to go off and do something concrete with it. Showing staff how to categorise its loan book properly might be a good start ????

Then Homeowners cash in on cheap loans as remortgaging booms (The Times, Philip Aldrick) cites the latest figures from UK Finance which show that remortgaging levels are on the rise as homeowners benefit from low borrowing costs. * SO WHAT? * In the past, this has caused concern because it has often occurred amid a red-hot property market which then went on to crash spectacularly – but current conditions do not reflect bubble-times as the housing market has continued to slow down in the face of Brexit. Interestingly, while remortgaging has been on the up, lending for home purchases has been on a downer as Brexit has prompted many potential buyers to sit on their hands.

Huawei focus has repercussions, Tesla safety concerns persist and Amazon gets closer to Deliveroo…

In a quick scoot around other interesting stories doing the rounds today, US chipmakers hit after Trump blacklists Huawei (Financial Times, Demetri Sevastopulo, Kiran Stacey, James Politi, Nian Liu and Kathrin Hille) shows that US chipmakers such as Qualcomm, Intel and Microsoft, are now suffering from President Trump’s increased pressure on Huawei as he is looking to cut the Chinese telecoms equipment company out of the US entirely but then China arrests Canadians in escalation of Huawei dispute (Financial Times, Lucy Hornby) shows that China isn’t taking this lying down as it retaliates against Canada’s holding of Huawei’s CFO Meng Wanzhou. She is

currently fighting extradition from Canada to the US on charges that Huawei violated US sanctions on Iran. The tit-for-tat goes on.

Then Tesla races to quell concerns about safety after fires (Financial Times, Richard Waters and Daniel Shane) shows the company’s reaction to recent reports that its cars were catching fire as it said that it would launch new software that would revise the “charge and thermal management settings” on all of its Model S and Model X vehicles globally while Amazon leads $575m investment round in Deliveroo (Financial Times, Siddarth Shrikanth) highlights an exciting development for the UK-based food delivery group that currently operates in 14 countries. The extra cash will help it to build out its engineering team, broaden its reach and develop new products. Interestingly, Amazon operates its own food delivery service called Amazon Restautants offering one-hour restaurant delivery to Prime customers, but it canned the service in the UK. Exciting times for Deliveroo.

And finally, in other news…

I used to use libraries all the time as a kid and then back in my university days – and I’ve only come back to them once more since I’ve had kids (you really don’t need to buy them all their books – especially in the early days). They are brilliant places fighting to stay alive and so I really liked what this librarian had to say in Thousands praise library assistant for epic list of things they learnt from job (The Mirror, Courtney Pochin https://tinyurl.com/y5uo8oht). Some very poignant observations…

1. In MACRO AND TARIFF NEWS, the US economy slows while Germany’s picks up and Trump postpones car tariffs
2. In TECH-RELATED NEWS, Alibaba and Tencent smash it and an Uber rival tests flying taxis
3. In RETAIL-RELATED NEWS, John Lewis ditches final salary pensions, Walmart considers a flotation for Asda and British Land suffers mall woes
4. In LEISURE-RELATED NEWS, Tui and Cineworld disappoint while William Hill does well in the US
5. In OTHER NEWS, I bring you an expensive coffee and some dad jokes. For more details, read on…

So the US slows, Germany picks up and Trump delays car tariffs…

Slowdown surprises US as trade war looms (The Times, James Dean and Gurpreet Narwan) cites the latest official figures which show that manufacturing output (the main element of industrial production) fell by 0.5% in April versus the previous month while retail sales fell by 0.2% in the same period versus expectations of small gains in both areas. Manufacturing is suffering because of higher material costs, caused partly because of Trump’s import tariffs – but a broader economic slowdown is also proving to be a drag.

On the other hand, German economy rebounds in first quarter (Financial Times, Valentina Romei and Guy Chazan) highlights a 0.4% expansion for the German economy – a welcome turnaround from the slowdown in the second half of last year when the biggest economy in the eurozone came within a whisker of recession in the final quarter. Although there was a certain amount of relief, Germany’s economy minister Peter Altmaier wasn’t yet cracking open the champers as he pointed out that ongoing international trade conflicts had yet to be resolved. Germany benefited from solid investment in construction

and machinery as well as strengthening private consumption. * SO WHAT? * Germany’s economic performance is key for the economic bloc as a whole, so this turnaround will be broadly welcomed. The ‘zone saw revised figures published by Eurostat yesterday which show the area’s economic output up by 0.4% versus the previous quarter as Italy managed to drag itself out of its third recession in ten years in the second half of last year.

Donald Trump to delay car tariffs decision by up to 6 months (Financial Times, James Politi and Matthew Rocco) should help Germany, given the importance of its car industry, but this is just a reprieve, not a resolution and the threat of tariffs will continue to hang over carmakers. Still, share prices of US and European carmakers and suppliers rose on the news * SO WHAT? * This is probably a wise move by Trump as imposing new/higher tariffs on car imports would have been hugely damaging for trade relations with the EU, Japan and South Korea among others. The threat is still there, however, so at least there’s the possibility that any unpleasantness can be avoided. You would have thought that the longer the delay the better it could be for the likes of the EU, Japan and South Korea etc. given the proximity of the US presidential election as voters probably won’t want to see Trump bashing America’s longtime allies. China-bashing maybe – but ally-bashing could prove trickier.

Alibaba and Tencent knock it out of the park while an Uber rival has its head in the clouds…

Profits triple at Alibaba (The Times, James Dean) shows that the Chinese e-tailing behemoth’s momentum is continuing despite the US-China trade shenanigans as its profit more than tripled as revenues shot up by 51% on the success of its e-commerce business and cloud computing division.

There was more good news in China tech as Tencent posts record profits as China lifts video game ban (Daily Telegraph, Hasan Chowdhury) shows the gaming and internet giant (which owns, among other things, Fortnite developer Epic Games) getting back on track after being on the naughty step since last year when China’s government had a crackdown on the gaming sector on account of it being irresponsible regarding the damaging effect on young gamers. Despite this hobbling of the company’s powerful gaming division, it benefited from strong performances from its cloud and fintech divisions. Tencent

announced the future provision of a cloud-based streaming service for games (a “Netflix for games”) following a similar announcement by Google. * SO WHAT? * Surely this company is “gonna rock” once the gaming thing gets sorted. Tencent is humungous and has massive power in gaming so when the gaming approval bottleneck relaxes it has a whole load of titles for gamers to get their teeth/thumbs into.

Uber rival’s electric flying taxi takes to skies for first test flight (Daily Telegraph, Matthew Field) shows that Uber isn’t the only company to pursue flights of fancy as German air taxi start-up Lilium announced the maiden test flight of its five-seater jet-powered flying car over Germany. The Lilium jet has a top speed of 186mph and a range of 186 miles and could whisk you from London to Manchester in under an hour. The jet would initially be flown by a pilot but would eventually go autonomous. Both Uber and Boeing are among those who are also developing electric flying taxis. * SO WHAT? * This company has achieved some truly amazing things in the last couple of years, but I am hugely sceptical that we will see flying taxis any time soon given that there are enough problems letting drones fly freely let along bigger air taxis with people in them! Still, it sounds pretty amazing…

John Lewis abandons final salary, Walmart considers floating Asda and British Land suffers from retail woes…

John Lewis axes final salary pension (The Times, Simon Duke) heralds the end of fat pensions for employees as it becomes one of the last private sector employers to close this down. This will reduce annual pension payments by about £80m. * SO WHAT? * I think that it is amazing that John Lewis has continued so long with this scheme when everyone else has abandoned it. It’s unfortunate for future employees but is a necessary part of the company’s bid to change with the times. There will be more tough days to come…

Following on from the recent high profile failure of the Sainsbury’s/Asda merger, Walmart reveals Asda float ‘path’ (Daily Telegraph, Ashley Armstrong) shouldn’t be all that surprising given that Walmart has been taking the axe to its overseas business to concentrate on its knitting in its own backyard. Judith McKenna, chief exec of Walmart International, is just floating the idea at this stage, saying that these plans could take years to come to fruition (yeah right). * SO WHAT? * Flotation of a supermarket chain in a

hugely competitive mature market like the UK?? Good luck with selling that in today’s market. Surely the Walmart will want to get rid as soon as it can. Maybe private equity who would cut store numbers and sell off real estate perhaps? I just can’t see Walmart wanting to throw too much money at Asda now given its current overseas strategy. There were a lot of retailers (not just supermarkets) who were disappointed that the “Sasda” deal didn’t go ahead as they were hoping to snap up some of the overlapping real estate. The demand for the space is there, but I’m not sure that there will be that much appetite for the supermarkets themselves…

Following on from what I talked about yesterday re Landsec, British Land slumps to loss after writedown on value of its malls (Daily Telegraph, Jack Torrance) shows that the owner of shopping centres like Sheffield’s Meadowhall and the Broadgate complex in the City of London is just the latest company to suffer the knock-on effects of the current retail slowdown. Like Landsec, the company revealed that a revaluation of its properties dragged it into loss for the full year. Chief exec Chris Grigg tried to put a brave face on it saying that “London continues to be strong despite uncertainties associated with Brexit and the pessimism that was slopping around two or three years ago” but I suspect that there will be more gloom to come.

Tui and Cineworld suffer but William Hill sees growth in America…

In a quick scoot around some leisure-related stories today, Tour Operator Tui faces deepening losses (Financial Times, Alice Hancock) shows that the Anglo-German tour operator announced bigger losses for the first half of this year as customers held off on summer bookings because of Brexit and the ongoing effects of all those flights being cancelled because of the Boeing 737 Max groundings. * SO WHAT? * The good news is that this announcement wasn’t a profit warning (it’s already warned on profits twice this year) and that it kept its full-year guidance as it hopes that sales of high margin “experiences” will make up for weaknesses in its airline and holiday sales division. Tui needs a good holiday after all it’s been through ????

Elsewhere, Cineworld revenues fall as industry targets boost from Avengers and Star Wars (The Guardian, Mark Sweney) heralds some disappointing news re box office performance so far this year as British-based Cineworld – the world’s second biggest cinema chain – unveiled a 13% fall in global box office revenues. Although this isn’t great, it’s in line with global box office trends but films like Avengers: Endgame, The Rise of Skywalker, Lion King and Frozen 2 are expected to help it bounce back.

There was good news in American sports betting pays out for William Hill (The Times, Dominic Walsh) as the betting company made up for gloom at home following the government’s clampdown on Fixed Odds Betting Terminals (FOBTs) in the UK by the success of its US business which continues to go from strength to strength following the lifting of a ban on sports betting. Its revenues stateside shot up by 48% with the Super Bowl seeing record betting activity while Indiana and Iowa are also about to legalise sports betting, so there’s still plenty more where that came from.

And finally, in other news…

My usual search of the “other news” didn’t bring up too many nuggets today apart from this for any of you coffee fans out there: Good ’til the last drop? $75 cups of coffee sell out in California (USA Today, Rasha Ali https://tinyurl.com/y4qqdpzp) so here are a couple of dad jokes for you (I’m a dad and I like poor quality jokes, so hey):

What do you call a woman with one leg longer than the other? Eileen

What do you call an Italian man with a toe made of rubber? Roberto

And then finally, I burnt my Hawaiian pizza last night. I should have put it on aloha setting

1. In MACRO & CRYPTO NEWS, UK sees record employment and Bitcoin breaks $8,000
2. In CAR-RELATED NEWS, India’s weaker car sales prompt concerns, Nissan has a shocker and Volvo Cars signs a battery deal
3. In RETAIL-RELATED NEWS, Walmart offers next-day shipping, Next gets with Amazon and Landsec has mall troubles
4. In INDIVIDUAL COMPANY NEWS, Disney takes control of Hulu and Vodafone disappoints
5. In OTHER NEWS, I bring you an unfortunate name. For more details, read on…

So UK unemployment hits new lows and Bitcoin breaks another barrier…

UK wage growth stalls despite record employment (The Guardian, Phillip Inman) cites the latest figures from the Office for National Statistics which show that while unemployment fell from 3.9% to 3.8% in the latest quarter, wage growth actually slowed down from 3.5% to 3.3% over the same period. Mike Jakeman, a senior economist at PwC, said that “It is possible to see the shadow of Brexit in some of these figures. March was the month when Brexit anxiety was at its most acute, and it might have been the case that firms were more reticent to offer higher wages and advertise new positions in these weeks”. * SO WHAT? * The wage growth thing is obviously disappointing from an employee point of view, but at least it is still outpacing inflation. However, it remains to be seen whether this is a one-off, or whether it’s all downhill from here on that front.

Bitcoin price surges through $8,000 barrier (The Times, James Dean) highlights Bitcoin’s continued rise as it broke through $8,000 for the first time in ten months as its recent rally continues. The best explanation anyone can come up with at the moment is that there were some big trades done over the weekend that pushed the price up. * SO WHAT? * I think that it’s a bit unnerving that no-one can

really explain the recent rally properly. When I was a newbie stockbroker, I remember asking trader colleagues questions every now and then about specific price hikes and when I got the explanation “there was a big trade in the market” this was usually code for “Sorry, but I don’t have a clue” ???? (although, TBF, this was sometimes the reason). David Siemer, chief exec of Wave Financial, an investment firm that focuses on cryptocurrency technology (so he’s HIGHLY likely to be biased, given that it’s his livelihood) said that “It’s a natural hedge…It’s a non-correlated asset with the stock market and it’s proven that a lot of times”. Yeah, right – cryptocurrency as the new gold “investment safe haven” option? I think not – you can’t hack gold, right?? Like I said yesterday, there appears to be an upswing in legitimate institutions (like Fidelity) who are starting to dabble in crypto and if this momentum increases, it will bring these currencies into the mainstream. If THAT happens, crypto values will rise. IMHO, I’m a fan of the blockchain tech behind these currencies but I am still sceptical about Bitcoin (and all the other dodgier cryptocurrencies, dubbed by some collectively as “Sh!tcoin”) itself at the moment as anything other than a highly risky fringe investment.

A weaker Indian market raises questions, Nissan has a shocker and Volvo Cars signs a battery deal…

India’s stalling car market sparks wider concerns (Financial Times, Simon Mundy) takes a look at India’s car market as a bellwether for the wider economy given that car sales are driven (no pun intended) by growing urban disposable income. Massive expansion between 2015 and the first half of 2018 led to some observers forecasting that India would overtake Japan and Germany to become the world’s third biggest car market. However, the latest figures released by the Society of Indian Automobile Manufacturers show that passenger car sales last month took a whopping 17.7% hit than the same month in 2018, with “two-wheeler” sales (which is a sign of rural economic health) down by 16% and commercial vehicle sales down by 6%. The main reason behind this drop is thought to be a clampdown on non-bank financial companies (NBFCs), who have been particularly prevalent in vehicle loans and lending to SMEs. * SO WHAT? * High end urban consumption accounts for over a third of TOTAL consumption in India – and so if this segment of society is suffering, it is a big deal. If you add to that falling sales of motorbikes and tractors (which signify a downturn in the rural economy) in addition to lower sales of commercial vehicles (which reflects falling credit being extended to small businesses) then you have an even bigger problem. This is obviously a bit of a sore point for PM Narendra Modi, who is currently running a general election campaign where he is arguing that his government is presiding over a period of economic growth. For car manufacturers, India still represents a market with huge potential – but for now, its growth prospects may be limited.

Elsewhere, Nissan warns profits to fall to lowest level in more than a decade (Financial Times, Kana Inagaki) continues the generally gloomy rhetoric of Japanese car manufacturers as Nissan said that it will be abandoning the expansionist strategy espoused by its former chairman Carlos Ghosn. Current chief exec, Hitoto Saikawa, blamed falling profits on Ghosn’s efforts to expand in America and emerging markets and announced a new plan that involved 4,800 job cuts and a 10% reduction in global capacity. * SO WHAT? * This signals a strategic change in direction and will increase doubts over Nissan’s relationship with Renault as Saikawa continues to be opposed to the full merger that had been supported by Ghosn. Other than that, this just sounds like a classic kitchen-sinking exercise where a new chief blames everything old the departed predecessor. Saikawa said he needs two to three years to turn things around, but I think that his success will largely depend on who he puts in the top management jobs and whether they are able to deliver.

Volvo Cars signs electric battery deal with two Asian manufacturers (Financial Times, Peter Campbell) heralds the signing of a deal with Chinese battery manufacturer Contemporary Amperex Technology (CATL) and South Korean chemical group LG Chem to supply it with electric car batteries until 2028. Volvo aims to have half of its sales to be fully electric by 2025, so big volumes of batteries will be needed. Car makers continue to fight to secure suppliers of batteries to support predicted increases in electric vehicle sales. * SO WHAT? * This seems to be a solid strategic move by Volvo as it secures future supplies for its Polestar EV brand. It’ll be interesting to see whether the company gets anywhere close to its EV sales target, but given that it is owned by Chinese manufacturer Geely and that China is making a MASSIVE push in this area, you’d think that they have a decent fighting chance.

Walmart delivers, Next sidles up to Amazon and Landsec bemoans its malls…

In Walmart turns heat up on Amazon with next-day shipping service (Financial Times, Alistair Gray) we see that the retailer has announced plans to cut US delivery times to one day for online shoppers who spend at least $35. The new service will kick off in Phoenix and Las Vegas and then be rolled out to southern California in the coming days and everywhere else in the coming months, eventually reaching 75% of the US population by the end of the year. The company argues that this will save costs as its delivery hubs will enable deliveries to be in a single box (or as few as possible) whereas online orders from Amazon come in multiple boxes from multiple locations, which increases costs. Walmart also announced that it will be refitting hundreds of its stores and providing click-and-collect facilities. * SO WHAT? * It sounds like this sleeping giant has been well and truly poked by Amazon’s ongoing success and is AT LAST doing something concrete to get things moving online – whilst at the same time integrating and updating its existing offline business. Good moves. Let’s see whether they make more money as a result!

Talking of click-and-collect, Amazon teams up with Next for collections (The Times, Elizabeth Burden) shows that Amazon has signed a deal with Next where Amazon customers will be able to collect their orders from Next shops in a click-and-collect service called Amazon Counter. Amazon is currently looking to attract other partners to do something similar as it aims to get closer to its customers. * SO WHAT? * This sounds great like a decent strategy for both companies – Amazon gets to serve its customers even more effectively and Next gets access to more foot traffic, which should generate more sales. You do wonder how much Next is having to pay for the privilege of doing this, but clearly there must be some benefit as its chief exec Lord Wolfson is not known for frittering away cash. It’ll be interesting to see who else signs up.

Landsec malls’ value plummets (Daily Telegraph, Jack Torrance) looks at one of Britain’s biggest property companies, Landsec (which owns Bluewater in Kent and One New Change in London) as it warns of more retail sector strife with chief executive Rob Noel saying that “vacancies are rising and rents are falling fast”. The company announced a loss of £123m in the year to March which was mostly due to a £557m fall in the value of its portfolio but the company remained optimistic about growth in London. * SO WHAT? * I thought I’d include this story because it’s interesting to see what’s going on in retail from the point of view of a landlord – and I think it would be fair to say that the outlook is not looking all that brilliant.

Disney aims to take full control of Hulu and Vodafone disappoints…

In other big news today, Disney gains full control of Hulu in Comcast deal (Wall Street Journal, Joe Flint) we see that Disney has done a deal with Comcast so that it can take full control of Hulu that will see an end to the latter’s often complicated ownership structure. Disney is close to launching its own streaming service called Disney+ that will focus on content for families and children while Hulu will be expected to be aimed squarely at adults. * SO WHAT? * This sounds like a pretty good deal for all concerned as Disney gets more control, Comcast gets to crystallise its investment in Hulu whilst having a stake in its future success and Hulu gets to have one parent. Simples. Unlike the deal itself (the terms of which you can see in the full article!). 

Vodafone slashes dividend 40% to bolster balance sheet (Financial Times, Nic Fildes) is a story doing the rounds today as it piled on the disappointment that has driven its share price down from 230p at the start of 2018 to the current 130p. Spectrum auctions for 5G in Italy and Germany along with difficult trading conditions in Italy and South Africa have ratcheted up investor concerns over the size of the company’s debt and this dividend cut is partly in response to this situation as it slashes costs and sells off non-core assets ahead of a €18.4bn deal to buy Liberty Global’s German and eastern European cable assets. * SO WHAT? * This is a big deal because it is Vodafone’s first dividend reduction in almost 20 years. It faces a bumpy road ahead and makes it even more important to ensure that it gets 5G right. Short term pain for long term gain? After all, it’s not the only telecoms company that’s having to ramp up its spending on 5G…

And finally, in other news…

I thought I’d leave you today with a tricky situation faced by a mother who is a Game of Thrones fan in ‘Shocked’ mum who called daughter ‘Khaleesi’ has strong feelings over that name choice now (The Mirror, Zahra Mulroy https://tinyurl.com/y57p2gjv). Tricky!

1. In MACRO & CRYPTO NEWS, the US-China trade talks hit stocks, world economies slow and Bitcoin powers up
2. In CAR-RELATED NEWS, Uber has a rough time while Honda and Ford confirm UK job losses
3. In FOOD AND DRINK NEWS, Impossible Foods gets a cash injection and AB InBev gets a big EU fine
4. In INDIVIDUAL COMPANY NEWS, Apple faces an antitrust case and Bayer gets fined
5. In OTHER NEWS, I bring you a fun-sounding (but dangerous) slide. For more details, read on…

So US-China talks dent markets and world economies slow while Bitcoin strengthens…

US stocks fall sharply as US-China trade war escalates (Financial Times, Don Weinland, James Politi, Joe Rennison and Richard Henderson) shows that the game of chicken currently being played by presidents of two of the world’s superpowers is heating up as China retaliated against America’s recent tariff hikes with hikes of its own on $60bn of American goods, due to take effect on June 1st. This prompted the biggest fall in share prices since January as investors scrambled to put their money into safer assets as China’s currency and those of emerging markets also lost ground. I think that Bernard Baumohl of Economic Outlook Group put it best when he said that “The confrontation has now escalated to a battle of testosterone between two leaders who believe they have much to prove to their constituents. But the longer this exhibition of chest-beating lasts, the greater the odds of a US, if not global, recession”.

Talking of which, World’s big economies slowing (Daily Telegraph, Tim Wallace) cites conclusions drawn from the Organisation for Economic Co-operation and Development’s growth index which show that growth rate in the US, Japan, Canada and the Eurozone is now at its slowest since September 2009. This index is supposed to be used to predict growth patterns in the next six-to-nine

months. Interestingly, growth in China and India appears to be stable, Brazil is improving – as is France, which is a bright spot in an otherwise sluggish Europe. Economists aren’t yet predicting recession, but they are cutting growth forecasts. * SO WHAT? * Things like this shouldn’t be taken as Gospel as economists change their forecasts all the time. However, it doesn’t take a genius to predict that economies will suffer more damage the longer the US-China trade stand-off continues. Conversely, if they manage to surprise everyone with a reasonable deal, I would expect a relief rally – and then maybe localised dips as individual markets start to realise that Trump will be training his sights on them in terms of tariffs. Europe is expected to be Trump’s next “target” after he deals with China, so I would have thought that any kind of post-China euphoria will be short-lived.

I talked a bit about this yesterday on Watson’s Daily TV but Bitcoin fired up by wild weekend (The Times, James Dean) highlights recent moves for the cryptocurrency as it rocketed up to a ten-month high as its value has almost doubled from the $3,689.56 level it was at at the beginning of this year. There’s not much by way of explanation of this latest hike although some spoke of particularly big trades done over the weekend. * SO WHAT? * Fidelity, the asset management group, is due to begin trading bitcoin for institutional investors in the next few weeks – and if this gains momentum, others will follow and bitcoin will be brought closer to the mainstream as increased prevalence will give it legitimacy.

Uber’s disappointment continues while Honda and Ford announce UK job losses…

False start for Uber in first week (The Times) sums up Uber’s poor share price performance since it made its stock market debut last week. Shares fell another 10% in trading yesterday and they are now almost 18% down on the $45 they floated at on Friday. Talk about a let down after all that hype! Still, all the companies that worked on the deal made $106.2m in fees, according to a regulatory filing yesterday. Morgan Stanley, Goldman Sachs and Bank of America Merrill Lynch made $40.6m, $21.2m and $10.5m respectively. * SO WHAT? * Actually, that doesn’t sound like a lot of money really when you think of the size of the offering, but I think that getting the bank’s name on the deal helps them to get more business for other flotations that are far more lucrative. After all, $40.6m is probably what Morgan Stanley pays out to one of its teams in bonuses alone! I am sure that these advisers will also continue to make more money out of the deal as time goes on, but this just represents some of what they’ve earned so far. I think that Uber has been overhyped but then again I suspect that it’ll reach a level where investors will start to take a nibble as future growth prospects start to look more

attractive. Uber needs some kind of win soon, though, to get it out of its current rut.

There’s more bad news for workers in the automotive industry in Honda axes 3,500 jobs (Daily Telegraph, LaToya Harding) as the Japanese company confirmed that it will shut down its plant in Swindon in 2021 with the loss of 3,500 jobs following a consultation with the government and other organisations. The plant made 160,000 Civics and CR-V models last year, accounting for just over 10% of UK car production. Ford to cut hundreds of jobs in Britain (The Times, Robert Lea) is obviously on a smaller scale but around 550 managerial and white-collar jobs are to be culled at Ford UK. This is in addition to another 400 workers being axed from Ford’s Bridgend factory. * SO WHAT? * This has been on the cards for a while now as automotive manufacturers continue to suffer with a multitude of problems at the moment what with a slowing global economy, increased costs for labour, R&D and compliance with ever-tightening emissions regulations and a potential change in the way people “own” cars. Big tariffs on raw materials and car imports that are caught up in the latest US-China trade shenanigans aren’t helping sales either. With the best will in the world, it would have been difficult to see how any motor manufacturer could have come to any kind of deal given that Jaguar Land Rover and Vauxhall are also facing their own problems at the moment. 

Impossible Foods raises more money and AB InBev gets fined…

Plant-based meat group Impossible Foods raises $300m (Financial Times, Emiko Terazono) highlights the company’s latest success as this latest cash injection from a group led by Temasek and Horizon Ventures increased its value by two-thirds to $2bn. The fundraising came shortly after Impossible Foods announced its distribution tie-up with Burger King in the US where the latter is rolling out the “Impossible Whopper” to over 7,000 restaurants. Impossible was founded in 2011 by Pat Brown, a Stanford University professor and the company aims to negate the need for animals in the food chain by 2035. * SO WHAT? * This whole area of whole meat-free-substitutes is sizzling right now – rival Beyond Meat’s flotation earlier this month has been wildly successful as the share price has almost trebled. If you believe that demand for the product will continue (and it sounds like Impossible is having trouble making their burgers fast enough) then I guess that the big spends are going to be on manufacturing for the most part as well as R&D in order to make new products, so losses

may continue for some time yet. I think this is such an exciting new area with huge possibilities for health as well as the agriculture and food industry at large – but will spell longer-term trouble for farmers and meat-packers. Let’s hope that there aren’t any scandals involving the pea/mushroom protein these companies use otherwise things could go south pretty quickly.

Brussels fines brewing giant for blocking cheap beer imports (Daily Telegraph, Oliver Gill) heralds the conclusion of a three-year investigation into the supplier of Jupiler, a beer that is brewed by AB InBev. Competition Commissioner Margrethe Vestager said that “Consumers in Belgium have been paying more for their favourite beer because of AB InBev’s deliberate strategy to restrict cross border sales between the Netherlands and Belgium…Attempts by dominant companies to carve up the single market to maintain high prices are illegal”. * SO WHAT? *  Jupiler has a 40% market share in Belgium, so this has been a big deal. AB InBev got a €200m fine for their troubles, so no doubt many Belgiums will be raising a glass in celebration! Other brewers may well be checking that they won’t fall foul of the same thing now there is a precedent…

Apple faces another investigation and Bayer gets a massive fine…

Apple’s lawyers are going to be even busier than usual as Apple loses bid to end app antitrust case in Supreme Court (Wall Street Journal, Brent Kendall and Tripp Mickle) shows that consumers will be free to sue Apple as the antitrust suit ruled that consumers are forced to pay higher prices because Apple stipulates that all phone software should be bought and sold via the App. The lawsuit contends that apps would be cheaper if software developers could sell them directly to the customer and bypass Apple altogether. Apple currently takes a 30% cut of every app it sells and a 15% cut of subscriptions after subscribers’ first year. * SO WHAT? * If this goes ahead, it could change the way that apps are sold and mean that

Apple could be liable for some biiiig damages, but we won’t know for sure for at least a year or two when a final decision will be made. Anecdotally, I was actually thinking of launching Watson’s Daily as an app last year, but the steep 30% cut that Apple takes put me off – plus you have to jump through SO many hoops to even get your app on there compared to, say, getting it on Google Play. I may yet go down this road, but Apple really does take the p!ss IMHO.

In latest Roundup herbicide defeat for Bayer, jury awards California couple $2 billion (Wall Street Journal, Sara Randazzo and Ruth Bender) gives Bayer yet another kick in the teeth as a jury yesterday awarded just over $2bn to a couple who blamed Bayer’s Roundup weedkiller for causing their cancer. Bayer bought the maker of Roundup, Monsanto, last year and probably wished it hadn’t as the cases have been piling up.

And finally, in other news…

I thought I’d leave you today with something that sounds like fun but is practical (and now dangerous, apparently) in Oh, chute! 125ft slide linking streets in Spain closes after riders hurt (Sky News https://tinyurl.com/y3beor7j). It reminds me of that Barclaycard advert a few years back! Perhaps that was the inspiration??

1. In POLITICAL AND EMPLOYMENT NEWS, Trump-Xi talks continue – as does the current UK jobs boom
2. In CAR-RELATED NEWS, we look at Uber and Lyft’s woes as VW heads for a problematic AGM
3. In INDIVIDUAL COMPANY NEWS, Metro Bank tries to climb out of the hole it’s dug itself and chillaxing-Dave’s fund attracts a big investor
4. In OTHER NEWS, I bring you a numeracy test. For more details, read on…

So the Trump/Xi talks are likely to continue and the UK jobs boom rolls on…

In Trump-Xi trade talks likely at G20 summit, says US (Financial Times, James Politi, Aime Williams, Christian Sheperd and Tom Mitchell) we see that Donny T’s top economic adviser, director of the National Economic Council Larry Kudlow, said that there was a “strong possibility” that the two presidents would meet at the G20 summit in Japan next month. This comes shortly after Trump imposed more tariffs on Chinese goods on Friday (a tax hike from 10% to 25% on $200bn worth of Chinese goods) and before further tariffs that he’s expected to announce today (25% taxes to be levied on an additional $300bn of Chinese goods). Chinese retaliations are obviously expected. No talks have been scheduled between the two sides before the Japan summit. * SO WHAT? * Tariffs are damaging both sides and this will get worse the

longer negotiations drag on. This is an epic game of chicken that neither side looks like wanting to back down on any time soon. Trump is painting this as Americans reaping loads of money from the Chinese, but it’s the US importers who are going to be paying the higher prices and those higher costs are surely going to be passed on to the consumer. It’s surely in Trump’s interest to get this done before the next presidential election otherwise the country could potentially slip into recession.

Jobs boom shows little sign of fading out (The Times, Louisa Clarence-Smith) cites the quarterly Chartered Institute of Personnel and Development (CIPD) survey of over 2,000 employers which shows that the number of respondents who said that they planned to increase staff levels was greater than in the previous quarter. The survey also said that 40% of employers found it harder to keep staff in the last 12 months, particularly in the public sector. Over 50% said that they had increased starting salaries for at least a minority of vacancies while 20% said that they had increased salaries for the majority of vacancies given that unemployment is now at its lowest level since 1975. * SO WHAT? * This is good news for employees right now, but Brexit uncertainty reigns still and is no doubt stifling further investment that could keep the party going longer.

Uber and Lyft have a tough time while VW faces a tricky AGM…

Uber’s spluttering IPO: where might the blame lie (Financial Times, Shannon Bond and Nicole Bullock) takes in the immediate aftermath of the Uber IPO as the share price closed down by almost 8% from its $45 flotation price. This is particularly disappointing given that Uber priced itself at the bottom end of its previously flagged price range and Uber and Lyft face hurdle of finding and keeping drivers (Wall Street Journal, Eliot Brown) piles on the pessimism as it highlights employee unrest at both companies concerning low wages. * SO WHAT? * Although I’m not a fan of Uber as a company myself (I think they treat their employees shockingly and their stated aim is to do away with their drivers altogether with the advent of driverless taxis – thus wiping out the very people that grew their business in the first place!), I think it’s too early to be writing obituaries at this stage. There seems to be an ongoing thirst for big-talking massive-loss-making companies at the moment and so no doubt this will continue as long as investors feel pretty confident about the economic backdrop. In short, if you had to invest in a ride-hailer, you might invest in Uber because of its diverse

business interests and geographical footprint, in Lyft if you want to focus on the US (and don’t mind years of losses) and Gett if you want exposure to something that has a bit of geographic diversity (Russia, the US, the UK and Israel) but that also has a decent chance of becoming profitable by the end of this year.

Volkswagen gears up for AGM showdown with investors (Financial Times, Patrick McGee) heralds what is shaping up to be an eventful upcoming AGM tomorrow as three major advisory groups (Glass Lewis, Institutional Shareholder Services and Deminor) have urged shareholders to vote against the approval of all execs and members of the supervisory board apart from one bloke, Stefan Sommer, who joined in July. * SO WHAT? * This kind of advice shows just how frustrated investors are with the slow progress on corporate governance at the German carmaking giant four years after the diesel emissions scandal first broke – but they will probably stay that way as 90% of the company’s voting rights are held by shareholders with seats on the board. One insider said that the company’s lack of transparency is due to numerous lawsuits spanning more than 50 countries “ranging from competition law to illegal advertising, from falsifying documents to pollution” and says that they need to be resolved before VW can be more open. This sounds like a cop-out to me, but the situation is unlikely to change if the top bods can’t be removed.

Metro Bank’s problems continue and David Cameron’s current employer gets a boost…

Metro Bank explores sale of loans hit by accounting error (Financial Times, Nicholas Megaw and Madison Marriage) shows that the aftershocks of its accounting error that came to light at the beginning of this year are continuing and it is now considering plans to sell over £1bn worth of the troubled loans to get it out of its current rut in a significant U-turn. * SO WHAT? * These loans make up over 10% of its total loan book and a sale would serve to mitigate some of these losses, but would also be quite embarrassing for the challenger bank that was once a stock market darling. I would have thought that it will only be able to get a cr*p price as well given that everyone and

their dog knows that Metro is a distressed seller. And to add insult to injury, Advisors issue amber warning on Metro over high bonuses (Daily Telegraph, Lucy Burton) puts even more pressure on the embattled bank with the Investment Group, a powerful lobby group, putting its second-highest warning rating on Metro Bank for excessive pay following the scandal where it had mis-categorised loans. It never rains but it pours, eh?

There may be some amongst you who wonder what David “I-wish-I’d-take-Brexit-more-seriously” Cameron is up to these days. Well Cameron-linked fund could become biggest fintech firm (Daily Telegraph, Natasha Bernal) shows that the mighty SoftBank is on the verge of investing £500m of its Vision Fund money into Greensill Capital, a provider of supply chain finance and employer of Dave C as adviser. * SO WHAT? * If this injection went ahead, it would almost double the company’s valuation to about £3bn and give the Vision Fund a 15-20% stake.

And finally, in other news…

I thought I’d leave you today with a maths test to while away any quiet time you may have in Can you pass this test for seven-year-olds – half the population will struggle (The Mirror, Courtney Pochin https://tinyurl.com/y4d5roo8).

1. In RETAIL NEWS, Superdry starts with a warning, Morrisons tries to get closer to Amazon, Debenhams goes ahead with the CVA and Hamleys gets a new owner
2. In FINANCIALS NEWS, HSBC and Standard Chartered get tech competition and Metro Bank seeks more money
3. In INDIVIDUAL COMPANY NEWS, Uber values itself at the low end, Tata denies trying to sell JLR to PSA and Edgewell buys Harry’s
4. In OTHER NEWS, I bring you a dream job. For more details, read on…

So Dunkerton gets to work on Superdry, Morrisons wants more Amazon, Debenhams’ CVA gets approved and Hamleys has a new owner…

Superdry issues profit warning as overhaul of fashion chain begins (The Guardian, Julia Kollewe) highlights the company’s third profit warning in eight months, with this latest one coming only six weeks after co-founder Julian Dunkerton muscled his way back into the company (by the slimmest of margins). He plans on making more items available online (currently only 4,000 out of 20,000 items are available), putting more stock on the shop floor and cutting back on promotions as well as introducing 500 new products within the next six months. Full-year results are due on 4th July. * SO WHAT? * Sounds interesting, but Dunkerton’s got his work cut out and the company won’t turn around overnight. The online thing sounds like a no-brainer and you do wonder what the previous CEO Euan Sutherland was thinking – was he just trying to direct people to the shop, perhaps? Dunkerton has also abandoned his predecessor’s plans to start doing childrenswear.

Morrisons looks at closer Amazon link after loosening Ocado ties (Daily Telegraph, Ashley Armstrong) shows that Morrisons is looking at bolstering its relationship with Amazon as well as companies like Deliveroo and Uber Eats whilst simultaneously edging back from its current agreement with Ocado as an exclusive digital partner. Morrisons already supplies groceries for Amazon’s Fresh, Pantry and Prime Now services and could provide food for Amazon’s moves into physical stores in the UK. * SO WHAT? * I think that this makes sense from Morrisons’ point of view as it gives the supermarket more freedom to pursue other ways of getting product to customers. 

Ocado’s new venture with Marks & Spencer, replacing Waitrose as a food partner, starts in September next year so I think this all dovetails quite nicely.

Debenhams lives to struggle on after CVA is backed by creditors (Daily Telegraph, Ashley Armstrong) follows on from what I was saying yesterday as the ailing department store got overwhelming approval from its creditors to go ahead with its CVA despite strenuous objections from Sports Direct, which held a 29% stake that was wiped out. * SO WHAT? * I am not a fan of Mike Ashley particularly (although clearly, he is a canny operator) but I just think that Debenhams is a complete nightmare and that this vote is just precipitating the death of a thousand cuts. It needs a LOT of money, huge vision and a management that is prepared to do something drastic to even have half a chance of resurrecting this retail dinosaur – and I don’t see that happening. It’ll be interesting to see whether Debenhams will be stung into action when Ashley announces his plans for House of Fraser. We’ll need to wait and see whether the management has got anything up its sleeve…

Reliance stars in its own toy story (The Times, Robert Miller) heralds a new owner for the famous British toy retailer as India’s Reliance Industries is said to have bought it for £68m in cash from Hong Kong-listed C Banner International Holdings. Reliance Industries is in the midst of transforming itself from an energy conglomerate to a consumer group via expansion of its retail and telecoms businesses. * SO WHAT? * Hamleys has had tons of owners over the years. Toys are a tough gig given relentless online competition and the constant battle between traditional toys and digitally-based amusements – just ask Toys R Us and pretty much any toy manufacturer. This sounds like a nice strategic fit and maybe it’s a bit of a trophy asset for Reliance, but if it really wants Hamleys to thrive I think that there needs to be an overhaul and proper plan to take it forward otherwise I think it will slide into irrelevance.

HSBC and Standard Chartered face digital competition while Metro Bank asks for more…

HSBC and StanChart under attack from China tech (Financial Times, Mercedes Ruehl and Stephen Morris) highlights some big potential threats for banks in Hong Kong as Tencent (the world’s biggest gaming company and digital giant), Alibaba (e-tailing behemoth), Xiaomi (the world’s #4 smartphone maker) and Ping An (the world’s largest insurer) have just won approval from the Hong Kong Monetary Authority to launch digital banks. Customer satisfaction for incumbent banks is among the lowest for a developed economy and slightly less than 25% of Hong Kong consumers think their banks do a good job in digital banking, according to research by Accenture. * SO WHAT? * This is going to be a nightmare for the incumbent traditional banks who will not only get a kick in the pants from these new entrants, but also a punch in the face. HSBC earns over half of its profits and a third of its revenues in Hong Kong, so it will be particularly vulnerable

to attack from the incredibly deep-pocketed newcomers. This is going to be a bun fight of epic proportions IMHO as the new entrants compete with each other and the established players with tempting offers and better functionality. The incumbents need to get their act together pronto! If things work out for the new entrants, Hong Kong could be the springboard for potential global domination!

Meanwhile, Metro Bank seeks cash as it hits a new low (The Times, Katherine Griffiths) shows how desperate things are getting for the UK challenger bank as it tries to get through a difficult time following the unveiling of an accounting fiasco on January 23rd where it miscategorised loans. The shares fell by 8% in trading yesterday on concerns that the bank might ask investors for even more than the £350m they said they’d ask for back in February. * SO WHAT? * All this asking for money malarkey is likely to come at a cost. Its colourful American billionaire founder, Vernon Hill, is facing down all sorts of controversies at the moment and is up for re-election at the bank’s AGM on May 21st – and the price for asking for more money from investors could well be that it gets new senior management. The drama continues…

Uber goes conservative on its IPO, Tata denies it’s selling JLR to PSA and Edgewell buys Harry’s…

Uber prices IPO at $45 a share (Wall Street Journal, Corrie Driesbusch) has been well-flagged, but Uber decided to go conservative on its valuation which is around $82bn versus the $90-100bn that had been previously touted as appropriate. It’s still the biggest US-listed IPO since Alibaba went public in 2014, but this “modesty” has probably been prompted by Lyft’s disastrous performance since its recent flotation. Other stock market wannabes, including the likes of WeWork and Slack, will be watching Uber’s performance closely as this listing will be seen to be a bellwether for others. * SO WHAT? * It’s rare to see this sort of behaviour from a unicorn bad-boy in the run-up to a listing, but although it talks about a future where fewer people own cars and instead hire self-driving vehicles, electric bikes or scooters, investors are more concerned with slowing growth rates and ongoing massive losses. I personally think that there is better value to be had elsewhere but maybe a more conservative flotation price could bring the IPO feelgood factor back to the market.

Tata denies it is trying to sell Jaguar Land Rover to France’s PSA (The Guardian, Jasper Jolly) highlights ongoing drama among car manufacturers as JLR owner Tata Motors has been forced to officially deny that it’s about to sell to the French owner of Peugeot. Rumours about this have been going on for months amid Tata’s growing frustration with JLR’s problems. * SO WHAT? * Tata’s frustration is understandable, but surely it needs to take some of the responsibility as well. Anyway, for now the rumour is quashed and JLR can get back to trying to dig itself out of the hole it’s in at the moment.

Edgewell to buy shaving start-up Harry’s in $1.4bn deal (Financial Times, Philip Georgiadis and Myles McCormick) heralds a big (and rather expensive) move by Edgewell Personal Care, which owns razor blade brands Wilkinson Sword and Schick, to buy shaving start-up Harry’s for a whopping $1.37bn. Harry’s sells direct to consumers online via a subscription service but also has conventional store presence and has been an incredible success story since it started only six years ago. Edgewell’s share price fell by 13% on the news as investors probably thought the price was excessive. * SO WHAT? * This follows a similar deal where Unilever bought Dollar Shave Club back in 2016 for $1bn. Maybe Harry’s can help freshen up the brand – but this is a very full price to pay! We’re talking about razors here – and Edgewell already make them!!!

And finally, in other news…

I thought I’d leave you today with a potential dream job to consider: A company is recruiting people to travel the world reviewing yachts for $1,300 a week (Insider, Alison Millington https://tinyurl.com/y5tnmkvf). Nice!

1. In FINANCIALS NEWS, JP Morgan takes control of a Chinese fund, Germany’s Wirecard looks optimistic, Revolut is to be investigated and Bitcoin’s security is breached
2. In UK HIGH STREET NEWS, the Debenhams sale process is looking tricky, Mike Ashley reveals thoughts for House of Fraser’s makeover and ‘spoons suffers from rising costs
3. In RIDE-HAILING NEWS, Uber prices its IPO and Grab considers spin-offs (a la Alibaba)
4. In TOBACCO/VAPING NEWS, Imperial’s shares are dented and Walmart cracks down on tobacco and vapes
5. In OTHER NEWS, I show you how to stack your dishwasher properly. For more details, read on…

So JP Morgan nears control of a Chinese fund, Wirecard hikes forecasts, Lithuania votes to investigate Revolut and Bitcoin suffers a security breach…

In JP Morgan to be first foreign firm to control a Chinese fund (Daily Telegraph, Harriet Russell) we see that JP Morgan Asset Management could shortly become the first non-Chinese company to own a majority stake in a Chinese fund manager after its joint venture partner, Shanghai International Trust (SIT), put a 2% equity stake in China International Fund Management (CIFM) up for auction. JP Morgan already owns 49% and is expected to buy the 2%, giving it control. * SO WHAT? * This is big news as China relaxed rules to let foreign asset managers to own up to 51% of mutual fund joint ventures back in 2017, but no such deals have been done until now. No comment has been made on this stake, but this will definitely be an important development in JP Morgan’s wider China expansion strategy if it goes ahead. The auction is set to conclude on June 4th.

Germany’s Wirecard lifts profit forecast on rising payment volumes (Financial Times, Olaf Storbeck) heralds some good news for the German financial services company as it said that it would raise its operating profit forecast after payment volumes shot up by 37% in the first quarter. * SO WHAT? * This is a welcome bit of news for a company that has been rocked by an accounting scandal at its Asian operations which forced a delay in the publication of its annual report. Wirecard said that an independent investigation into the scandal by an external law firm

concluded that the dodgy transactions at its Singapore operations should have “no material impact” on its financial reports.

On the other hand, Lithuanian parliament votes to investigate Revolut Russia links (Daily Telegraph, James Cook) heralds some difficult news for the fast-growing London-based fintech start-up as allegations of its links to the Kremlin will be officially investigated in Lithuania, following a parliamentary vote. The bank’s chief exec, Nikolay Storonsky, was born in Russia and his father is a director at a division of Gazprom, the Russian national gas business that has been on the US sanctions list since 2014. * SO WHAT? * Storonsky obviously denies that Revolut is “politically vulnerable”, but if the investigation finds any links Revolut’s European banking licence – granted by Lithuania at the end of last year – could be taken away. This could seriously dent plans for the company to launch services like cryptocurrency and stock trading globally. I suspect that this will be a bit of a cloud over Revolut while the investigation is ongoing but if it is exonerated, sentiment will sky-rocket. If it isn’t, things could get nightmarish for a company that has, so far, attracted a great deal of investor interest.

Bitcoin security in question after £30m cryptocurrency raid (Daily Telegraph, Matthew Field) highlights a breach in security of Binance, one of the world’s biggest cryptocurrency exchanges, as hackers stole over £30m in 7,000 bitcoin. Binance said that it would use backup funds to ensure users didn’t lose any money. * SO WHAT? * This is obviously on a much smaller scale than the infamous 2014 hack on Mt Gox which went bankrupt after it lost £353m in bitcoin, but it will show that cyptocurrencies are still vulnerable to attacks. I suspect that this will be a one-off, but if there are any more breaches in the near future, cryptocurrencies could take a big hit.

The futures of Debenhams and House of Fraser are currently under discussion while JD Wetherpoon feels rising costs …

Debenhams sale process ends with no acceptable bids (Financial Times, Jonathan Eley) gives us an idea of the current state of affairs at the ailing department store as it heads towards a vote today on a company voluntary arrangement (CVA) having attracted precisely zero bids in a recent marketing process. Bidders would have had to refinance the company’s debts immediately – and given that these account for over £500m, you can see why no-one was particularly keen. Sports Direct to vote against Debenhams store closures (The Times, Tabby Kinder) shows that Sports Direct (which had a 29% stake in the department store) has not given up the fight yet and is preparing to vote against the CVA, which requires at least 75% in value of creditors’ approval to go ahead. * SO WHAT? * Given that Sports Direct’s Mike Ashley effectively lost £150m when Debenhams’ shares were delisted last month, you can see why he’s trying to stir things up and make it hard for Debenhams to push forth their agenda. Other creditors, however, are expected to wave the CVA through – but if he did manage to put a spanner in the works, it’s not clear as yet what he could do. We’ll see soon enough, anyway!

The Mike Ashley news continues in House of Fraser: up to seven stores to become luxury mini-chain (The Guardian, Sarah Butler) as it turns out that he’s told suppliers that he wants to divide the group into two, with a rebranded “Frasers” being more designer label-focused and “House of Fraser” being more mass market. Rebrand work is likely to commence in the group’s flagship Glasgow store, which is already called “Frasers” as Ashley is expected to spend tens of millions of pounds on the revamp. Suppliers have

been told that an official announcement will be made in the next few weeks as Ashley sees opportunity at the top end of the market. * SO WHAT? * Things have been changing at House of Fraser since Ashley bought it out of administration for £90m in August last year. On the downside, some key upmarket brands such as And So to Bed, Chanel cosmetics, Clarins beauty salons, Weekend by Max Mara and the Fragrance Shop have moved out and some stores have been in noticeable decline as whole floors have been shut down with cheap clothing from Sports Direct’s own brands such as Karrimor and Lonsdale filling the shelves. However, the company has updated the store’s tills and IT systems and cut costs by moving warehousing and distribution to its main facility in Shirebrook, Derbyshire and merging the HQ of House of Fraser and Ashley’s luxury chain Flannels. Suppliers are also positive about new trading terms under which they are being paid more quickly but it remains to be seen whether they will stay the course given that Ashley has said in the past that his turnaround plan will take two years. The drama continues…

Rising costs leave market in need of a drink (The Times, Dominic Walsh) highlights trying times at JD Wetherspoon as the share price fell by 4% on concerns that profit margins would be squeezed by rising costs despite it reporting best-in-class underlying sales growth figures. Founder and chairman Tim Martin observed that “The picture is one of higher sales and higher costs – that’s the underlying reality. Labour costs account for a third of every pint…Costs are significantly higher than last year, labour costs especially, stemming from very low unemployment. Other cost increases include business rates and repairs, the latter as a result of an ageing estate of pubs”. * SO WHAT? * It’s interesting to see Tim Martin talk about rising labour costs – and I suspect that is something being felt by pretty much every employer at the moment. It seems to be flowing through to consumption at the moment, though – which is a good thing overall.

Uber takes the cautious approach and Grab wants to emulate Alibaba…

Uber set to price IPO at midpoint of target range or below (Wall Street Journal, Corrie Driesbusch and Maureen Farrell) shows that Uber seems to be avoiding the “grab-the-money-and-run” approach to IPO pricing and pitching itself to investors at the midpoint of its previously stated $44-50 a share or below according to those close to the company, following rival Lyft’s dismal performance since its flotation. The share price will be announced later on today. * SO WHAT? * Lyft’s share price has fallen by almost 27% since it floated and Uber will be aware that this will be playing on the minds of its potential investors. The fact is that Uber is still hugely loss-making (and will be for quite some time to come) and it will be nervous that investors’ current willingness to overlook things like that at the

moment is not something that will last forever. I wonder what the disgraced founder Kalanick would have done?!? Out of all of the ride-hailers I’ve seen so far, I’m more inclined to be supportive of Gett because I think it has a better product, seems to be a nice compromise between Uber’s broader and Gett’s narrower geographic exposure and looks like it’s way closer to making a profit than then others. 

Grab eyes spin-off payments and financial services units (Financial Times, Henry Sender) shows that the Singapore-based ride-hailing company is thinking about hiving off its payments and services businesses to increase growth prospects. Grab is south-east Asia’s biggest start-up, valued at about $13bn and backed by Japan’s SoftBank. * SO WHAT? * If it went ahead with separating out its business units, it would be emulating the much bigger Alibaba, which spun off its Alipay and Ant Financial businesses with great success. Given that investors can see the precedent that Alibaba set, I’m sure that there will be a lot of interest if Grab decides to do the same thing!

Imperial Brands suffers from vaping concerns while Walmart cracks down on both cigarettes and vaping…

Profits rise but vaping fears cut Imperial share to five-year low (Daily Telegraph, Jack Torrance) highlights investor unease with vaping developments despite Imperial Brands’ pre-tax profits shooting up by two-thirds in the six months to March. This was due to a slowdown in vape sales in its key US market via its Blu vaping brand as the US Food and Drug Administration (FDA) continues its efforts to crackdown on youth vaping. * SO WHAT? * I think that, on balance, the concern is overdone at the moment given that sales of “next generation products” such as Blu and its new heated tobacco brand Pulze account for only 1% of total

revenues. Still, the FDA’s crackdown isn’t great for sentiment.

Walmart to raise tobacco age to 21, drop fruit-flavoured e-cigarettes (Wall Street Journal, Sarah Nassauer and Jennifer Maloney) illustrates concerns I highlighted in the Imperial Brands story from a different angle as Walmart, one of America’s biggest tobacco sellers, has taken measures to restrict purchases by children and teens after the FDA accused it of being the top violator of illegally selling tobacco products to minors. The new restrictions will start on July 1st across all Walmart locations. * SO WHAT? * This is a pretty big deal and will be an even bigger deal if other retailers adopt similar guidelines. I’d say that this is more of an issue for companies like Juul (and Altria, which bought a big stake in the e-cigarette market leader at the end of last year) but I guess if you like this sort of thing it will just prove to be a minor inconvenience. Who knows, maybe it’ll drive people back to traditional smokes if they are easier to get…

And finally, in other news…

I thought I’d leave you with something practical today: Ultimate four step dishwasher stacking guide – including common tablet error we ALL make (The Mirror, Zahra Mulroy https://tinyurl.com/y2egy4a2). Yes, I think you can tell that I live my life very much in the fast lane. Keeping it real for y’all ????

1. In MACRO, MARKETS AND COMMODITIES NEWS, markets get nervy on trade talks, China continues to engage, iron ore prices are set for new highs, battery metal prices rise and UK consumer spending increases
2. In CAR NEWS, UK new car sales fall, plug-in hybrids suffer and BMW’s profits fall
3. In RIDE-HAILING NEWS, Lyft sees higher revenues and Gett raises $200m
4. In INDIVIDUAL COMPANY NEWS, Facebook chooses London and Purplebricks announces changes
5. In OTHER NEWS, I bring you a dog that sings and plays the piano. For more details, read on…

So markets get nervy, China is still engaged, metal prices rise and UK consumers spend…

Markets fall worsens as trade fears grow (The Times, Callum Jones) highlights global market jitters following Trump’s tweets on the trade talks with China. They dented confidence that an agreement would be struck between the two sides imminently as Trump threatened to raise tariffs again. China agrees to resume US trade negotiations (Wall Street Journal, Chao Deng and Lingling Wei) shows that China is still going ahead with meetings in Washington, just a day later than the original schedule. The drama continues…

Metals prices to shock electric car industry (The Times, Miles Costello) looks at the potential shortage of metals and minerals used for rechargeable batteries – including copper, graphite, cobalt, lithium and nickel – due to years of underinvestment in the mining industry. There are worries

that rising demand for electric vehicles – of which China accounts for half – will lead to supply problems and higher prices. Actually, prices have already been rising as a tonne of nickel, for example, has gone from being $8,000 two years ago to over $12,333. * SO WHAT? * Any new facilities take a long time to develop, so it certainly looks like there could be a shortage before more supply comes online. Mind you, it all depends on what the take-up of electric cars will actually be – and I suspect that it will be slower than many expect because the charging network isn’t good enough. Yes, demand growth is impressive – but it’s from a VERY low base.

Outlook brightens as households and investors defy Brexit turmoil (Daily Telegraph, Tim Wallace) cites the latest figures from Barclaycard which show the rather interesting fact that, despite everything, consumer spending, profits and confidence are all rising. Spending at pubs, restaurants and supermarkets were up, consumers are feeling more confident about the economy and revenues at listed UK firms also increased, according to the Share Centre, which helped profits rise for the 10th quarter in a row. Interesting, no?

UK car sales drop, plug-in hybrid sales suffer on grant cuts and BMW’s profits plunge…

Consumers apply the brakes to UK new car sales (The Guardian, Gwyn Topham) shows that new car sales fell by over 4% in the UK last month – the second weakest April since 2012 – with consumer reluctance to splash out on big ticket items thought to be to blame. Diesel sales continue to fall and now make up only 29% of new cars versus 50% in the year prior to the breaking of the VW emissions scandal in 2015. Plug-in hybrid car sales fall after UK government cuts grants (Financial Times, Peter Campbell) shows that sales of this category of car fell by a third as the government cut buyer incentives from £4,500 to £3,500 last year – and the effects of that are now coming through. On the other hand, demand for all-electric or hybrid cars rose by 12%. * SO WHAT? * None of this is particularly surprising and it just gives us evidence of what we already know – that diesels will continue to dwindle in

popularity (mind you, the drop is not quite as sharp as it was last year), that people don’t buy cars when the economy is looking a bit uncertain and that sales of electric/hybrid vehicles drop as soon as incentives are taken away.

BMW profits plunge as €1.4bn set aside for possible EU fine (Financial Times, Patrick McGee) highlights a 78% drop in profits for the first quarter as the company set aside €1.4bn to cover an expected fine from EU antitrust authorities for colluding with other carmakers to delay the introduction of clean emissions technology. BMW issued a profit warning last month as it learned of the EU antitrust authorities’ preliminary view following a two-year investigation, so markets were expecting something bad. However, the company said that its earnings were otherwise on track. Interestingly, its flagship electric vehicle, the i3, had its best ever quarter, with sales up by 16.2%. * SO WHAT? * BMW flagged this last month, so although it’s bad, at least the company can draw a line under it all now. There are other reasons to be positive for the outlook, though – sales in the US were “robust” and those in China were up by 10%.

Lyft lifts revenues and Gett gets $200m…

Lyft reports strong revenue growth, $1.1bn loss (Wall Street Journal, Eliot Brown) shows that the ride-hailer posted strong growth in its first ever quarterly results as a public company, with revenue almost doubling from the previous year amid rising losses. It also announced an extended partnership with Alphabet’s self-driving car unit Waymo, which will said it will let people hail robo taxis via Lyft’s app. * SO WHAT? * The company still has massive

losses, but I guess that rival Uber will be relieved that Lyft’s results weren’t a complete disaster as it would be bad for sentiment when Uber comes to market later this week. 

Elsewhere, Ride-hailing firm Gett raises $200m with eye on listing (Daily Telegraph, Matthew Field) managed to raise a chunky $200m in debt and equity from current investors including VW, valuing the company at $1.5bn and the amount it has raised so far to $800m. * SO WHAT? * Gett is known for working with London’s black cab drivers and operates in the Israel, the US, the UK and Russia. It is thought to be targeting a flotation in 2020 either in London or New York and differs with the likes of Lyft and Uber in that its losses are way smaller (“only” $3.5m in 2018) and it aims to make a profit at the end of 2019. 

Facebook chooses London and Purplebricks makes some changes…

There’s good news for wannabe Facebook employees in Facebook picks London as base for WhatsApp push into payments (Financial Times, Madhumita Murgia) as the social media giant announced that London will be at the centre of an important area for future growth due to its multicultural workforce. * SO WHAT? * The app will boost its workforce by a quarter, hiring around 100 people. Senior

engineers from WhatsApp were sent to London late last year to recruit people in London and Dublin. Payments is going to be a big area for the company and this move will burnish London’s reputation as a proper fintech hub.

Purplebricks boss exits as online estate agent scales back expansion (The Guardian, Julia Kollewe) heralds some changes at the online estate agent as it kicked out its chief exec and announced that it will pull out of Australia and scale down its US business, admitting that it had expanded too quickly. The company said that it was outperforming the wider market in the UK despite tricky conditions and saw opportunity for profitable growth.

And finally, in other news…

I thought I’d leave you with this today: Dog plays the piano and howls along (Inside edition, https://tinyurl.com/y5692gya). Am loving his bow-tie!

1. In MACRO AND OIL NEWS, Trump stirs things up with China and oil prices rise
2. In FOOD-RELATED NEWS, Tyson Foods warns about African swine fever and Kraft-Heinz uncooks its books
3. In TRANSPORT APP NEWS, Lyft faces a pasting while Trainline aims for a listing
4. In INDIVIDUAL COMPANY NEWS, Apple faces investigation, Ikea opens in central Paris and the G4S buyer abandons
5. In OTHER NEWS, I bring you a fake speed camera and a colour test. For more details, read on…

So Trump pokes the hornets’ nest again and oil prices rise…

Markets slide after Trump threatens to dramatically increase China tariffs (The Guardian, Martin Farrer) highlights weaker financial markets around the world yesterday after Trump surprised everyone by saying that he would raise tariffs again on Chinese goods this week. Everything had been moving towards an agreement being reached this Friday but his latest comments have thrown a massive spanner in the works. He said that he would raise the existing 10% tariff on $200bn worth of Chinese goods to 25% by the end of the week unless China changed its negotiation tactics and added insult to injury by saying that he would take aim at an additional $325bn worth of Chinese goods with a 25% tariff (meaning that pretty much everything imported from China to the States would be affected). Interestingly, Chinese state media has remained silent on Trump’s latest outburst thus far. China’s Xi faces a ‘big gamble’ after Trump rebuke (Financial Times, Tom Mitchell and Yizhen Jia) said that sources on the Chinese side indicated that Xi’s lead trade negotiator Lui He might delay his Washington trip while a number of other representatives from major state-owned enterprises

have already been rearranging their travel plans. Chinese equities/US trade war: Beijing blushes (Financial Times, Lex) points out that both sides have much to lose as a failure to agree would damage China’s exports and employment, leading to a fall in GDP growth while an increase in tariffs on Chinese imports would raise production costs. * SO WHAT? * As far as negotiation tactics go, this is pretty crude – but par for the course for Trump. Maybe he thought that a deal wasn’t going to get done anyway so decided to make a big song and dance about it to his supporters that would make him look like a hero either way – if it doesn’t go ahead, he’ll say that he is a tough negotiator and if it does, he’ll look like a victor and all this posturing on tariffs will have been vindicated. In the meantime, American and Chinese companies get caught in the crossfire while all they want is some kind of certainty.

Oil rises as US sends carrier to Middle East (Wall Street Journal, Dan Molinski) heralds higher oil prices as the US announced that it was sending an aircraft carrier and strike force to the Middle East as a warning to Iran. * SO WHAT? * Prices rose after an initial drop on the back of Trump’s US/China trade war Twitterings, so they won’t look quite as dramatic as they would have done had he not dropped the T-bomb.

Tyson Foods cautions on African swine fever and Kraft-Heinz try to atone for Krafty accounting…

Tyson Foods chief warns African swine fever could reach US (Financial Times, Gregory Mayer) is a pretty serious warning and comes after almost 20% of pigs were culled because of the outbreak in China (that’s over 100 million animals – just to give you an idea of scale). When Noel White, Tyson’s chief exec, says “In my 39 years in the business, I’ve never seen an event that has the potential to change global protein production and consumption patterns as African swine fever does”, you know it’s baaaaad. Tyson is the biggest meat packer in the US and is one of a number of meat exporters who have seen their share prices rise as Chinese pigs have been slaughtered to contain the outbreak. * SO WHAT? * Although Tyson – and others – are benefiting now, it is certainly possible that the virus could spread given that it can survive up to a year in blood, faeces and meat. It is fatal to pigs but harmless for

humans – but if it DID spread to the US, it would be a nightmare as the virus has no treatment or vaccine and would shut down all pig exports. No doubt Tyson will use the current situation to ease sales into China as US pork currently attracts a 62% tariff in response to Trump’s actions and US chicken has been banned since 2015 following an avian ‘flu outbreak. Tricky times – and I would have thought this kind of thing should also be a boon to meat-alternatives companies such as Impossible Foods and Beyond Meat given that their products are plant-based.

Staff ‘misconduct’ makes Kraft Heinz restate years of earnings (Daily Telegraph, Alan Tovey) is a story that’s doing the rounds in today’s press as the food giant has been forced to restate its figures for the last three years after a review into buying and accounting procedures revealed “misconduct” by some employees. * SO WHAT? * This is just the latest problem that the company has faced as it announced a $10bn loss following a $15.4bn writedown as recently as February. Fortunately for them, super-investor Warren Buffett is a major shareholder in the business and was a major force in its creation. He reiterated his confidence in the company, but clearly this isn’t great news.

Lfyt’s goin’ daaairn and Trainline choo-choses to float…

Heavy losses set to deliver fresh blow to Lyft after botched float (Daily Telegraph, Matthew Field) sets the scene for Lyft’s maiden set of results today, six weeks after it floated during which time its share price has cratered by 20%. Analysts are expecting to see a big “lyft” in revenues amid humungous losses in the hundreds of millions of dollars. * SO WHAT? * Lyft has become one of America’s most shorted stocks as investors bet that its share price will fall further. Sentiment surrounding it will no doubt be foremost in investors’ minds when bigger rival Uber comes to market this week in what is expected to be the biggest US listing this year at a valuation of around $91bn. Both ride hailers face continued threats of increasing regulation in the US and Europe as well as ongoing driver unrest.

Meanwhile, closer to home, £1bn flotation is just the ticket for Trainline (The Times, Simon Duke) shows that the route-planning and ticket-buying app is close to finalising plans for a stock market float that could value it at around £1bn. Some say that it could list as soon as next month in what would be the biggest listing of a UK-based company this year. Trainline is currently owned by American investment giant KKR, who picked it up in 2014, and a successful flotation would make it a fat profit. The-website-formerly-known-as thetrainline.com is now called Trainline and processes over £3bn of ticket sales a year in 45 countries and employs about 600 people in London, Edinburgh and Paris. It is the UK’s most popular service for buying tickets and has ambitions to expand in Japan and North America. * SO WHAT? * This all sounds pretty good but the company has refused to comment on flotation rumours and its official stance is that there is “no fixed sale plan at this point”. If it DID float, however, it would garner a lot of attention given that IPOs have been rather thin on the ground due to Brexit uncertainty.

Apple faces investigation, Ikea opens in central Paris and G4S’s Canadian bidder pulls out…

Apple braces for EU investigation after Spotify complaint (The Guardian, Daniel Boffey) heralds some potential legal headwinds for Apple as the European Comissioner for Competition, Margrethe Vestager, is about to launch an inquiry over claims by Spotify that it has abused the dominant position of its App Store to push people onto its Apple Music service. A lawyer at Hausfield, which brought successful antitrust complaints against Google said, in Brussels may widen competition proble to Apple news and video (Daily Telegraph, Matthew Field), that “Such a case can and arguably should be extended to other media such as video streaming and news. It is very hard for providers to compete with Apple, who both owns the platform and offers rival services”. * SO WHAT? * If an investigation goes ahead, Apple could face a fine of up to

10% of its global turnover if it doesn’t change its behaviour. And we all know that Vestager likes a fight – just ask Google. Things could get interesting…

In other news, Ikea opens first store in central Paris as part of €400m push (Financial Times, Harriet Agnew) shows that Ikea continues to follow through on plans to bring the out-of-town store downtown in its ongoing efforts to change its business model (other city-centre outlets are scheduled in Lyon and Nice) while Canadian rival bids adieu to G4S offer (The Times, Dominic Walsh) heralds the end (at least for now) of Canadian security firm Garda World Security’s interest in G4S, which is expected to send the latter’s share price into freefall today. Garda World was considering making a cash offer for a company and made an approach about a month ago. Stepping back now means that it won’t be able to have another crack at G4S for at least six months. * SO WHAT? * This is going to be really bad for the embattled G4S as investors will probably be rattled about what Garda found in its due dilligence checks. Who knows, maybe Garda will be able to pick it up on the cheap in six months’ time if it is still interested…

And finally, in other news…

I thought I’d leave you with two things today: Fake speed camera is actually a bird box in disguise (Metro, Richard Hartley-Parkinson https://tinyurl.com/y4qs3wpr) and a very interesting test for your eyes in How good is your colour vision? Take the quiz (Espresson Communication, https://tinyurl.com/yxsgz6xd).

1. In SOCIAL MEDIA NEWS, Facebook goes crypto and Verizon looks to offload Tumblr
2. In MONEY-RAISING NEWS, Beyond Meat’s IPO flies, Slack edges closer to flotation and Tesla asks for money AGAIN
3. In MANUFACTURING NEWS, Bombardier has bad news for Belfast and Rolls-Royce settles engine claims
4. In INDIVIDUAL COMPANY NEWS, Paddy Power makes strides in the US and Wesfarmers buys into Lithium
5. In OTHER NEWS, I bring you a cheap and very tasteful flat-pack home. For more details, read on…

So Facebook looks to build a crypto-based payment platform and Verizon looks to offload Tumblr…

Facebook to build cryptocurrency-based payments system (Wall Street Journal, AnnaMaria Andriotis, Liz Hoffman, Peter Rudegeair and Jeff Horwitz) heralds a very interesting development whereby the social media giant is getting financial firms and online merchants together to launch a cryptocurrency-based payments system which, if it all goes to plan, would have a massive impact on e-commerce and be a huge step forward to legitimacy for cryptocurrencies in general. This slots in quite nicely with its recent announcement of users being able to trade within their apps and would also address criticisms of data privacy. This initiative, code-named Project Libra, has been going on for over a year and will have a digital currency at the centre of it that users can send to each other and make purchases both within and outside Facebook. * SO WHAT? * This is a really exciting development, IMHO. It’s good for Facebook because it’ll make its service that much more compelling in that it will go some way to addressing previous criticisms and it’ll be a good way for traditional payments companies – such as Visa, Mastercard and First Data Corp – to dip their toes in this area without having to

fully commit resources themselves. You could argue that if it all works, those companies could become the equivalent of turkeys voting for Christmas (because an alternative payments system like this could completely upend their business models), but you could also say that this is a great way to ease them into alternative payment options. I would have thought that this will benefit Bitcoin as well. Even if Facebook goes with its own coin (“Facecoin”?) rather than Bitcoin, the fact that a company as mainstream as Facebook has enough confidence to use a blockchain-based system will surely have a halo effect of legitimising other virtual currencies. Interesting times!

Verizon looks to unload Tumblr blogging site (Wall Street Journal, Benjamin Mullin and Sarah Krouse) highlights Verizon’s desire to sell blogging website Tumblr as part of its efforts to make its media business, which has been struggling revenues-wise, more focused. Tumblr was bought by Yahoo in 2013 (for $1.1bn!) and Yahoo was bought by Verizon in 2017, so Tumblr was a legacy from that. * SO WHAT? * Tumblr has attracted loads of interest in the past as it was one of a number of start-ups, such as Pinterest and Reddit, that investors were scrambling over but Tumblr has struggled to generate revenues. Who knows, with current interest in companies that promise a lot and are perennially in the red, Verizon may well be able to find a very willing buyer.

Beyond Meat has a juicy market debut, Slack gets closer to flotation and Tesla asks for yet more money…

Beyond Meat’s full-blooded Wall Street debut (The Times, James Dean) shows us the success of Beyond Meat’s debut on the Nasdaq as its shares stormed up by a whopping 150% despite being priced at the top of its previously hiked range. The company has a number of high-profile backers such as Leonardo DiCaprio, Bill Gates and Don Thompson (the former chief exec of McDonald’s), among others. The shares were priced at $25, opened at $46 and finished the day at $65.75! * SO WHAT? * Clearly, this was a very successful debut for a company in a very hot area (meat-alternatives). Although there are other players in this area vying for attention (like Impossible Foods, for example, which is also high-profile), the potential market is absolutely enormous so I would have thought that there is enough room for everyone. I guess that the race is on to distribute their respective products as widely as possible so they can get profitable. The quality of product is just getting better all the time, so unless there is some kind of pea/mushroom protein related scandal, I would expect a very bright future.

Slack plans May 13 online presentation for prospective shareholders (Wall Street Journal, Katie Roof) highlights yet another unprofitable tech player’s plans for flotation as it aims to make its market debut some time in June. It has filed for a direct listing on the NYSE which means that it won’t raise capital but it will enable existing shareholders

and employees to sell stock to the public. Direct listings don’t have lock-in periods which prevent shareholders from selling their shares, unlike conventional listings, so it will be interesting to see how volatile trading will be. * SO WHAT? * Slack will be the latest tech company to list, following Lyft, Pinterest, PagerDuty and Zoom Video Communications. Slack will be heartened by the warm reception that Zoom got recently, but unlike Zoom, Slack is not profitable. That said, when it recently shared its financials with the Securities and Exchange Commission as part of its filing, it showed impressive revenue growth of 82% in the latest fiscal year versus the previous one. At least it has something proper to sell that actually makes a difference!

Tesla seeks to raise $2.3bn after concerns it is running out of money (The Guardian, Dominic Rushe) shows that the electric car company is having to swallow its pride and raise a ton of money from the sale of bonds and shares as fears increase that it is running out of cash. Founder Elon Musk had previously said that he would not resort to this, but clearly he’s had to do a U-turn. Tesla’s share price has fallen by almost 30% in the last six months as investors have become increasingly antsy about its future. * SO WHAT? * Tricky times for the plucky EV pioneer. Given investors’ seemingly insatiable desire to pour money into loss-making companies at the moment though, you can’t blame Tesla for giving it another go can you! However, it still has to address problems with production, spontaneously-combusting vehicles and Musk’s predilection of posting problematic tweets. I maintain my view that it should swallow its pride even deeper and merge with a “proper” car company.

Bombardier has bad news for Belfast and Rolls-Royce addresses its troubles…

In Bombardier factory sale puts 4,000 jobs at risk (Daily Telegraph, Alan Tovey) we see that the Canadian company, which is the largest private employer in the Belfast region, has put its factory up for sale as part of a big restructuring in its aerospace division. The factory makes wings and fuselages for airliners and will worry the company’s highly skilled staff about their futures. * SO WHAT? * A sale may be made more difficult because of Brexit but obviously this

is what the politicians (and employees, I would imagine) want.

Rolls-Royce settles Trent 1000 engine compensation claims (Financial Times, Sylvia Pfeifer) shows that Rolls-Royce has drawn a line under its recent engine problems by settling compensation claims stemming from problems with the engine that powers Boeing’s 787 Dreamliner commercial jets. On the plus side, the company said that it has started to win new orders for the Trent 1000 and left its guidance for the full year unchanged. * SO WHAT? * Rolls-Royce is still undergoing a massive restructuring that will involve the shedding of 4,600 middle-management jobs, but this announcement about compensation will do a lot to address concerns over what has become a huge cloud over the company.

Paddy Power’s American bet pays off and Wesfarmers buys into lithium…

In other news bits-and-pieces, Paddy Power revenue races ahead as US opens up market (Daily Telegraph, Oliver Gill) shows that although European operations posted modest revenue growth of 4%, overall quarterly revenues shot up by almost 20% powered by a 47% rise in the States. Aussie brand Sportsbet also pumped revenues up by 20%. * SO WHAT? * Clearly, Paddy Power’s Stateside bet is paying off as it piled into a market that last year relaxed a ban on sports betting. These results do not include the effects of the crackdown on Fixed Odds Betting Terminals (FOBTs),

but the company is less exposed to this versus some of its listed peers due to its smaller high street presence.

I know that this bit of news is going to sound a bit random, but I thought that Wesfarmers/lithium: stored value (Financial Times, Lex) was worth mentioning a) because everyone’s after a bit of lithium these days because of its use in car batteries and b) because many of you will associate the company with DIY stores (it owned Homebase until relatively recently and is famous for Bunnings in Australia), so is something that you might not have expected. Wesfarmers does actually have chemical and fertiliser operations, so the purchase of mining company Kidman Resources is not actually that outrageous. * SO WHAT? * The purchase wasn’t cheap at $800m in cash, but I guess that Wesfarmers is looking to the future.

And finally, in other news…

Given house prices these days, I thought I’d leave you today with Flat-pack home costs just £30k, only takes SIX hours to build and is stunning inside (The Mirror, Zahra Mulroy https://tinyurl.com/y4no8cmk). Nice!

1. In MACROECONOMIC NEWS, the US keeps rates on hold, UK factory orders fall and the housing market remains subdued
2. In TECH NEWS, Apple nudges above $1tn again and Hulu closes in on Netflix
3. In RETAIL NEWS, Sainsbury’s dusts itself down after the Asda debacle and Next benefits from warmer weather
4. In INDIVIDUAL COMPANY NEWS, Boeing supplier Spirit suffers collateral damage, GSK focuses on quality and Metro Bank has a shocker
5. In OTHER NEWS, I bring you a Sonic trailer. For more details, read on…

So the US keeps interest rates unchanged while UK factory orders and the UK housing market suffer…

Fed keeps rates steady, signals concern over sluggish spending, low inflation (Wall Street Journal, Nick Timiraos) shows that the Fed stayed firm, didn’t bend to President Trump’s appeal on Tuesday to cut rates by 1% and left the federal funds rate unchanged at 2.25-2.5%. * SO WHAT? * Some observers voiced concerns that disappointing recent inflation figures might be early signs of a weakening economy but Fed Chairman Jerome (aka “Jay” to his besties) Powell batted away these concerns saying that they were just a short term blip. Trump obviously wants the Fed to cut rates because doing so will power markets upwards, which will make him look good when he seeks re-election as President.

Meanwhile, back home, UK factory exports tumble as Brexit chaos takes toll (The Guardian, Richard Partington)

cites the latest figures from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) which show that UK manufacturers’ exports fell at their second-fastest rate since October 2014 and in Factories dumped from global supply chains (The Times, Philip Aldrick) IHS Markit’s Rob Dobson observed that some companies have started to “re-route their supply chains away from the UK in advance of Brexit”. * SO WHAT? * I doubt anyone will be surprised by this. Clarity on Brexit is obviously needed to arrest this decline otherwise businesses could be damaged permanently as supply chains just cut us out completely.

In another bit of news that isn’t very surprising, Housing market growth subdued since EU referendum (Daily Telegraph, Sophie Smith) cites the latest figures from Nationwide which show that Britain’s housing market displayed slowing growth for the fifth month in a row due to Brexit uncertainty although first-time buyer eagerness is continuing with 360,000 first-time buyers in April – the highest number for 12 years. This frenzy at the lower end has been fed by a tight jobs market, wage growth, low mortgage rates and long mortgage terms.

Apple gets a boost while Hulu tries to bridge the gap with Netflix…

Apple rallies above $1tn on improved revenue forecast (Financial Times, Richard Waters) shows that investors are buying into the story that Apple is forecasting a quicker rebound than expected after six months of declining revenues caused by sluggish handset sales in China. Apple CFO Luca Maestri observed that “We saw during the course of the quarter an improvement in our iPhone performance, particularly in the past few weeks” and added that this recovery was particularly noticeable in China following price cuts and the introduction of new installment programmes for buyers. Chief exec Tim Cook also said that Apple could benefit from people having more money in their pockets due to efforts by the Chinese government to stimulate spending, which include a cut in VAT, as well as a calming in trade tensions between the US and China. * SO WHAT? * This sounds good, but I just get the feeling that China will continue to disappoint given that there are so

many local mobile phone players with offerings that are far cheaper in comparison and the company is always going to be a political football over there. I hope that I’m wrong and that the decline really is slowing down in this key market, but there’s a long way to go before services can make up for the declining revenues from handset sales.

Hulu closes gap with Netflix in the US (Financial Times, Anna Nicolaou) heralds some good news for Hulu as it announced that it had added almost 4m paying subscribers so far this year as the Disney-owned streamer plays catch-up with Netflix in America. It now has 26.8m paying subscribers (it’s only available in the US) versus Netflix’s 149m subscribers globally, so I don’t think this is too shabby at all. Interestingly, Hulu’s growth continues apace whereas Netflix’s growth is slowing down – Netflix added 1.7m subscribers in the first quarter of this year versus Hulu adding 3.8m in the same period. * SO WHAT? * This all sounds good, but Hulu is still loss-making. Disney has a 60% stake and Comcast has a 30% stake and Disney execs have said in the past that they may take full control one day. It expects Hulu to become profitable sometime around 2023 or 2024. Still, Hulu is going in the right direction for now!

Sainsbury’s licks its wounds while Next benefits from the warm weather…

Sainsbury’s boss digs in after aborted Asda tie-up (Daily Telegraph, Oliver Gill and Michael O’Dwyer) takes a look at the supermarket in the aftermath of its failed bid for Asda. Everyone’s obviously gossiping about whether Sainsbury’s chief exec Mike Coupe will have to leave following his failure to get the deal over the line, but he said yesterday that he continued to have full support of the board as he unveiled annual pre-tax profits that fell by over 40%, largely due to one-off costs. Interestingly, the share price rose by 4% on the results announcement as investors were actually expecting worse! The company said that it would release £100m to tart up its 400 supermarkets and invest an additional £550m over the next year that should hopefully sort out its integration of Argos once and for all and the

transfer of its bank to Lloyds. A strategy update on what Sainsbury’s will do next is now due in September. * SO WHAT? * I would be willing to bet that this strategy update will involve closures of loss-making stores and job cuts in order to appease investors who maybe want Coupe to do what “Drastic Dave” Lewis did at Tesco. Let’s hope he doesn’t decide to open a new discount format – I think that would be disastrous as it would just be doing it for the sake of it and cannibalise its main brand.

In Warm weather gives Next glow of growth (Daily Telegraph, Michael O’Dwyer) we see that Next’s sales benefited from unusually warm weather in the first quarter but the retailer has refused to get too excited and kept its full-year guidance of a 1.7% increase in sales unchanged. * SO WHAT? * This is good, but is probably flattered by the fact that the same period last year had some unseasonably COLD weather that kept shoppers away. Online sales continued to strengthen, with an 11.8% rise. It’s good to see that it’s not all doom and gloom for fashion retailers!

Boeing’s woes are affecting suppliers, GSK goes for quality and Metro Bank has a shocker…

In a quick scoot around some of the other stories today, Boeing woes hit supplier Spirit as it suspends guidance (Financial Times, Slyvia Pfeifer) shows that the Boeing nightmare is spreading as Spirit AeroSystems, which is Boeing’s biggest parts supplier and produces 70% of the 737’s aerostructure, announced that it is suspending its full-year guidance and frozen share buybacks. Glaxo boss chooses quality over quantity (The Times, Alex Ralph)

highlights the ongoing restructuring at Glaxosmithkline as it unveiled a strong first quarter trading update that came in above market expectations and then Metro Bank reveals ‘horrible’ results after loan fiasco (Daily Telegraph, Lucy Burton) highlights a shocker for the British challenger bank which announced that its profits halved in the first quarter due to a loans fiasco which caused an exodus of big customers. The bank’s share price has fallen by 54% since the blunder came to light in January this year. You’ve got to admire the front of the chairman Vernon Hill who said that “Bumps in the road do happen, we have to learn from them”. Funnily enough, he could be facing a shareholder revolt at the AGM next month.

And finally, in other news…

I thought I’d leave you today with Good God the live-action Sonic the Hedgehog movie trailer looks weird (SoraNews24, Casey Baseel https://tinyurl.com/y2bf6tms). The title says it all!

1. In MACROECONOMIC NEWS, the Eurozone economy surprises on the upside
2. In FAANG NEWS, Apple disappoints and delights while Facebook has a revamp
3. In BURGER NEWS, McDonald’s unveils a strong performance while Beyond Meat aims for a juicier IPO
4. In TRANSPORT-RELATED NEWS, Airbus profits from Boeing’s woes while JLR decides to manufacture the new Defender in Slovakia
5. In OTHER NEWS, I bring you some bizarre Tommy Lee Jones TV ads. For more details, read on…

So the Eurozone surprises on the upside…

Eurozone growth rate makes surprise rally after gloomy forecasts (The Guardian, Phillip Inman) heralds some good news for the bloc as a rapidly expanding Spanish economy and a turnaround of sorts in Italy has helped to boost the eurozone’s growth rate by 0.4% in the first quarter. This is double the rate of expansion from the final quarter of 2018, but observers remain cautious for the rest

of the year given political uncertainty and the slowing momentum of manufacturing. * SO WHAT? * This is good news for the bloc but, at the risk of sounding like a party-pooper, Spain’s 0.7% growth is from a very low base and the 0.2% growth in Italy is hardly earth-shattering (plus the leadership in Italy is all over the place – so it’s difficult to get too positive as things could change very quickly). There are still many fundamental problems within and Germany – usually the engine – continues to lag. I would get more excited if Germany was going from strength to strength – but it’s not.

Apple announces poor sales but splashes the cash on investors while Facebook has a big revamp…

In Apple defies record fall in iPhone sales (The Times, James Dean) we see that, on the one hand, the company announced its steepest ever drop in iPhone sales, but then on the other it pepped up investors by announcing an upbeat sales forecast, major $75bn share buyback programme and boosted the dividend. The shares were up by 5.1% in after-hours trading. * SO WHAT? * iPhones still make up almost 60% of revenues, so a 17.3% fall in sales in the second quarter is not good news. It’s good that Apple is going to use some of its vast cash pile to support the shares and give money to shareholders, but the fact is that its China sales are shrinking and, according to Morgan Stanley, mobile phone replacement cycles will stretch from the current three years up to four years by the time 2019 is out. The company continues to emphasise the growth of its services business (including Apple Music, Apple Pay and iTunes etc.) and is obviously switching its focus to monetising its existing installed base. There is plenty of upside for this and the provision of more services may even help to keep Apple users loyal – but the competition is intensifying all the time. Hopefully, the massive share buy back programme will help to ease that transition to earning more from services but this still doesn’t take away from the fact that Apple still needs to sort out its handset offering (maybe this could be addressed by the introduction of its own bendy phone!) and come up with a proper strategy on

how to crack India and China – two of the biggest markets with arguably the most potential. 

Facebook tries a new look as Zuckerberg proclaims a new era (Wall Street Journal, Jeff Horwitz) highlights a major revamp of the Facebook website and mobile app as Zuck tries to change the way users engage with the platform by placing more emphasis on private groups and visual stories and less on its News Feed which has been a hotbed of trolling and abuse in the last few years. This is the biggest revamp for five years and is part of a broader strategy of giving people more individual ways of communicating. There would be more emphasis on privacy, with increased use of encryption and ephemeral messaging across its Facebook, WhatsApp and Instagram platforms. The increasing emphasis on Groups will make self-policing easier and should go some way towards preventing harassment. * SO WHAT? * This sounds quite reasonable on a strategic basis and should help to shift responsibility for content policing towards the Groups and away from Facebook itself. However, on a more commercial note, Facebook’s challenge to Amazon (Daily Telegraph, Laurence Dodds) highlights the announcement of new shopping features for WhatsApp, Instagram and its online Marketplace which will enable its 2.4bn users to browse products, get recommendations, organise shipping and make payments WITHIN its apps. I have mentioned this before, but clearly its introduction is now imminent. This will be great news for influencers and could be a decent boon to Facebook’s revenue streams. I guess that we’ll have to see what the new-look site is like, but I think that the ideas are good. It went live yesterday but users will see the updates in the next few weeks.

So McDonald’s puts in a decent performance while Beyond Meat readies for flotation…

I thought I’d bring you stories from both sides of the meat divide today! Veggie Wrap and bacon help boost McDonald’s sales (Daily Telegraph, LaToya Harding) highlights the success of the new Veggie Wrap and Big Mac with bacon which helped power McDonald’s in the UK and Ireland to a “very strong” first quarter. Its McCafe range also did well and the company said that its investment in digital capability was also going well with its app and delivery service making up almost 10% of its first quarter sales. Stateside, Donut Sticks and bacon drove like-for-like sales up by 4.5% (yes, there was a “Bacon Event” in January which let customers add bacon to any order!) and global sales put in a 15th consecutive quarter of growth, although revenues were down by 4% due to changes in franchising. * SO WHAT? * A strong performance in tricky and competitive markets. Who knew bacon could be so powerful?!?

Beyond Meat looks to raise up to $240m in upsized IPO (Financial Times, Emiko Terazono and Nicole Bullock) heralds the flotation later this week of the plant-based meat substitute company Beyond Meat. The California-based group decided to increase both the size and the price range of its offering meaning that it will now sell 9.6m shares at $23-25, raising up to $240m. The original offering was for 8.75m shares at $19-21, raising $184m. Beyond Meat’s burger accounted for 70% of its revenue last year (you can see my “reaction” video here to me eating one!), is based on pea protein and uses beetroot juice to mimic the blood in a meat burger. The company also makes sausage and chicken substitutes. Beyond Meat says it’ll use the proceeds from the IPO on more manufacturing facilities as well as R&D. * SO WHAT? * As regular followers of Watson’s Daily will know, this is a subject that I find quite exciting (and for those of you who don’t know – I am very much a meat-eater). Naysayers will probably say that this whole vegan/veggie thing is just a fad, but I think that when the substitutes are this good and have so many health and environmental benefits they deserve to be taken seriously. 

Airbus benefits from Boeing’s troubles and the new Land Rover Defender won’t be built in the UK…

In transport-related news today, Boeing’s 737 Max problems hand no 1 spot back to Airbus (The Times, Robert Lea) just confirms what we probably already knew – that Airbus is on track to become the world’s biggest maker of commercial aircraft for the first time in a decade due to Boeing’s current woes regarding two recent crashes.

Then in land-based transport, New Land Rover Defender to be built in Slovakia, not the UK (The Guardian, Gwyn Topham) is a story doing the round in a lot of the broadsheets as this is yet another kick in the teeth for UK automotive production. The last Land Rover Defender was produced in Solihull almost continuously for 70 years.

And finally, in other news…

I thought I’d leave you with something a bit bizarre in Tommy Lee Jones cries, says sayonara to the Heisei era in epic new Boss coffee commercial (SoraNews24, Oona McGee https://tinyurl.com/y5fhroqv). Let’s hope he got paid a lot to do this stuff…

1. In TECH NEWS, Samsung and Google disappoint while Spotify hits 100m paying subscribers
2. In LEISURE/RETAIL NEWS, Marriott takes on Airbnb and Airbnb takes on hotels while UK shopping centre investment sinks to 16-year lows
3. In INDIVIDUAL COMPANY NEWS, Andarko moves to accept Occidental’s offer, a major Boeing customer threatens to go to Airbus and massively loss-making WeWork files for an IPO
4. In OTHER NEWS, I bring you Japan’s first micropig-themed cafe. For more details, read on…

So Samsung and Google fall short while Spotify hits a new milestone for paying customers…

Samsung’s profit falls amid delays for Galaxy Fold phone (Wall Street Journal, Timothy W.Martin) highlights a chunky 57% fall in first quarter net profit as a global slowdown in spending has tempered demand for its data server and smartphone memory chips. This is the company’s lowest net profit figure since the third quarter of 2016 when it had to issue a recall of its Galaxy Note 7 handsets due to overheating batteries. Margins also dropped from 36% a year ago to 25% and then there’s the whole embarrassing debacle of the flimsiness of its $2,000 phone, the Galaxy Fold. It was scheduled for an April 27th release but has been postponed, potentially opening the door for Huawei to get its folding phone to market first. * SO WHAT? * Samsung got about 75% of its operating profit from semiconductors in 2018, so the fact that prices for its main chips – DRAM and NAND Flash – have fallen by about 20% in the first quarter of this year has hit hard. However, Samsung’s share price has actually risen by 19% this year on the belief that chip prices have bottomed out. Although the Fold thing is a pain, actually the company acted before the phone was properly released and they were never going to sell in big numbers anyway because of the price tag. I’m sure it’ll be fine when they get the problems sorted and other phones in the range will benefit from a halo-effect of the flagship product.

Google misses Wall Street Forecasts (Daily Telegraph, Margi Murphy) shows that Google’s parent company, Alphabet, reported a fall in profits and missed forecasts as it felt the effects of that chunky €1.5bn fine from the European Commission imposed last month for its Adsense advertising division breaching EU competition rules. * SO WHAT? * The company has been spending money on expanding employee numbers of late and so it would have made a loss anyway – without the fine. The shares were off about 5% after trading on the news, but the good thing is that ad revenues were up. This sounds like a blip to me.

Then there was some altogether more positive news in Spotify reaches 100m paying subscribers worldwide (The Guardian, Jasper Jolly and Mark Sweney) as the music streaming company continues to grow despite increased competition from the likes of Amazon, Apple, YouTube and Tidal. Numbers of paying users for Spotify increased by 32% in the first quarter of this year versus the same quarter last year. * SO WHAT? * This is great news and the company is continuing to evolve as it signed a deal with Samsung in March to pre-install its app on devices and recently launched in India in a bid to get a foothold in a potentially very lucrative market. The company said that over one million users in India signed up in launch week and the subscriber numbers have since more than doubled, although failed negotiations with India’s oldest record label will mean that 120,000 songs from Indian artists and Bollywood film soundtracks are about to be pulled. The company has also been buying up podcast firms Parcast, Gimlet and Anchor as founder Daniel Ek believes that, in future, up to 20% of all listening on Spotify will be non-music content.

Marriott looks to encroach on Airbnb’s turf while Airbnb dabbles with hotels while UK shopping centres see investment falling off…

Marriott to take on Airbnb in booming home-rental market (Wall Street Journal, Craig Karmin) heralds a new direction for the world’s biggest hotel operator as it has seen what Airbnb has done and wants a piece of the action. The company announced that it will be offering accommodation in around 2,000 high-end homes in 100 markets across the US, Europe and Latin America from next week. In doing this, it will become one of the first major hotel companies to create a US home-rental platform and guests will be able to book reservations via the Marriott website, earning and redeeming reward points. On the other hand, Airbnb has long-term hopes for hotel deal (The Times, Tom Knowles) shows that there’s interest going the other way as Airbnb has got together with RXR, a property developer, to convert ten floors of a skyscraper in the Rockefeller Centre in New York into “high-end apartment-style suites”. RXR will be responsible for renovation and room management while Airbnb’s platform will be used for marketing and booking. * SO WHAT? * While Hilton Worldwide Holdings and Hyatt Hotels have

also been looking at doing something similar, Marriott has actually gone ahead and executed. It’s interesting to see that the offerings of Airbnb and a major hotel group are starting to overlap, but I think that if you believe that the global economy is entering a downturn Airbnb would be the more defensive place to invest because it has more exposure further down the scale, isn’t paying for having empty rooms and owns less property.

Talking about downturns, UK shopping centre investment hits 16-year low (Financial Times, Judith Evans) is a sign of the times as only £20m of shopping centres were bought and sold in the first quarter of this year, according to the latest data from CoStar, versus a ten-year quarterly average of £783m. Mark Stansfield, head of UK analytics at CoStar, said that it was the weakest quarter since 2003 and “probably this century” as the retail landscape continues to change due to shopper behaviour and Brexit uncertainty. * SO WHAT? * Retail property has historically been a core holding in many a real estate investor’s portfolio but this resolve has wobbled in the face of major retailer tenant withdrawals (e.g. the likes of Debenhams, House of Fraser – and now Arcadia) and the proliferation of CVAs across the whole sector. I think that the general consensus here is that there is worse to come before the situation improves. There’s going to be a whole load of space to fill in future as retailers continue to abandon physical presence in malls and on the high street.

Andarko looks likely to accept the Occidental offer, a major Boeing customer threatens to go to Airbus and WeWork is the latest massively-loss-making company to eye an IPO…

Andarko set to accept $55bn offer from Occidental (Financial Times, James Fontanella-Khan, Eric Platt and Ed Crooks) signals what will probably be a swift conclusion to M&A drama in the shale sector as Andarko looks set to accept the hostile bid from US rival Occidental Petroleum that trumped the original $50bn bid from Chevron. * SO WHAT? * Hostile bids aren’t always successful, but in this case “Oxy” offers more cash than Chevron’s original offer. It’s unclear whether Chevron will make a counter offer – but the prize up for grabs is Andarko’s vast portfolio in the Permian Basin, the most productive shale oil deposit in America.

The Boeing saga continues in Major Boeing customer threatens to switch to Airbus (Financial Times, Patti Waldemeir, Simeon Kerr and Sylvia Pfeifer) as the chief exec of Emirates airline, who also happens to be president of Dubai’s Civil Aviation Authority, said he would seek compensation for the grounding of 14 737 Max aircraft at

its low-cost sister airline Flydubai. The latter has over 230 on order and the chief exec threatened to order Airbus planes as replacements. * SO WHAT? * I’m not really sure whether this threat can be carried out, but it will certainly be a headache for Boeing if everyone starts doing the same thing. The pressure continues and it looks like the job of Boeing’s defiant chief exec, Dennis Muilenburg, will be on the line. 

I think that the IPO market is going crazy at the moment with one massively loss-making company after another scrambling to list on the stock market. WeWork files for New York listing despite $2bn losses (Daily Telegraph, Laurence Dodds) shows that the short-term office rental company, which was most recently valued at $47bn, last night said it had filed the paperwork for a listing back in December, enabling it to list if “market and other conditions” allowed. * SO WHAT? * OK, so this company burns cash ridiculously quickly and does something that has low barriers to entry (assuming you’ve got enough money to buy and invest in properties), but the thing is that it has physical tangible assets and some massive backers. If things just go down the toilet, there will at least be stuff the company can sell and its investors have deep enough pockets to cover any minor blips. I don’t like this company, but it’s not as bad as some of the others that have listed recently.

And finally, in other news…

Turn up the cuteness factor to 11 because Japan’s first-ever micro pig cafe opens in Tokyo (SoraNews24, https://tinyurl.com/y6a7ur7q). OMG. It’s almost cute enough for me to give up bacon sarnies ????. Almost.

1. In AIRLINE NEWS, we see how the industry is being affected by oil, the Boeing 737 Max groundings and Boeing’s new admission
2. In OTHER INDUSTRY NEWS, US meat companies gain from China’s hog cull and the music industry seeks more royalties from Fortnite
3. In INDIVIDUAL COMPANY NEWS, we look ahead to Apple’s results, JLR’s potential offer for Addison Lee and the success of the Ivy Collection restaurant chain
4. In OTHER NEWS, I bring you a bad breakfast. For more details, read on…

So airlines suffer from high oil prices, the Boeing 737 Max grounding and Boeing’s failure to notify…

Airlines facing a £900m hit from the rising price of oil (Daily Telegraph, Oliver Gill) takes a look at the finances of some of Europe’s biggest airlines and concludes that they could suffer a £900m profit squeeze for the first quarter of this year because of continued high fuel prices. According to its analysis of analyst forecasts, International Airlines Group (which owns British Airways) is expected to be hit hardest as its fuel bill shot up by about €250m in the quarter, eclipsing Lufthansa’s recent announcement of a €201m fuel bill rise. Air France-KLM is projected to be hit by a €174m hike and EasyJet by €72m. Basically, this has happened because oil prices have vacillated between $50 and $85 a barrel in the last 12 months and the airlines’ hedging strategies haven’t been sufficient to cover this.

The industry is also likely to be hit with other recent developments as per Airlines face profit hit over Boeing 737 Max grounding (Financial Times, Patti Waldmeir and Josh Spero) where a number of US and European airlines have said that the grounding of their respective 737 Max fleets in the wake of the recent air crashes will make a big dent in their profits. This will inevitably lead to big compensation claims from the airlines to Boeing, but it is

more likely that the company will offer it in the form of discounts for future aircraft purchases and/or agree to defer purchases rather than giving them cash. All Max aircraft have been grounded globally since March 13th.

Boeing is going to have a very fiery annual meeting today in Chicago, especially considering that Boeing didn’t advise airlines, FAA that it shut off warning system (Wall Street Journal, Andy Pasztor) is the conclusion being reached government and industry officials. This meant that the manuals for the aircraft were incorrect! * SO WHAT? * Boeing is already in deep sh*t and this sort of revelation isn’t going to help it. However, it seems to me that everyone (including President Trump) has been trying to brush this under the carpet – you’ll recall that the US was the last to ground its fleet. However, when your own investigators come up with stuff like this, you do wonder how Boeing will get out of the situation. As for not offering cash payouts, I suspect that airlines will not be amused. If they are facing pressure from higher fuel prices and a global economic slowdown (that usually leads to less people opting to fly) then you would have thought that they won’t be interested in getting discounts or the option to defer as some of them might not be around in a few years! I suspect that Boeing will just try to front it out for as long as it can (and this might work given its size) and it may well be able to cope with a few compensation claims in cash – but if everyone tries it, they could be in trouble. What Boeing has done, however, is despicable. It just remains to be seen whether it will continue to behave in the same way.

The US meat industry is benefiting from the Chinese hog cull and the music industry seeks out more royalties…

In US meat companies gain from hog culling in China (Wall Street Journal, Jacob Bunge and Kirk Maltais) we see that the recent outbreaks of African swine fever that have resulted in the mass killing of pigs in the world’s biggest pork market is benefiting US meatpackers and farmers by hiking the prices. * SO WHAT? * The latter have been suffering of late because of record meat production and China’s tariffs on US meat but hog carcass prices have shot up by 40% in the last two months! China’s agricultural ministry recently said that the country has 19% fewer hogs in the country than the previous year – which is incredible when you think that it is home to around 50% of the world’s pig population. Companies like Tyson Foods are trying to get in on the export action and Smithfield foods, owned by China-based WH Group, is now reconfiguring some of its plants to ship more product to China. Poultry processors like Pilgrim’s Pride Corp will also benefit as the shorter lifespan of chickens means that they can up production

quite quickly as consumers feed their meat cravings with with more poultry. Another interesting thing to note is that China is starting to place orders for entire hog carcasses rather than the feet, hearts and heads they have been buying in the past. This could mean that prices for bacon and sausages will go higher as China buys more different cuts of meat, but they haven’t yet “fed” (see what I did there) through to higher prices at restaurants and supermarkets.

Music industry takes aim at Fortnite over song royalties (The Guardian, Mark Sweney) highlights a new trend where songwriters and composers are looking to use new copyright laws to get royalties from music featuring in online gaming. PRS for Music, the body that ensures 140,000 songwriters, composers and publishers in the UK get paid royalties when their music is played, reported a 4.4% rise in music royalties as it included its first revenues from licencing deals with the likes of Facebook and Instagram. The new laws will mean that companies such as Google and Facebook will be forced to seek licences from press publishers and the music industry to use their content online. * SO WHAT? * This is a very interesting new area that is clearly attracting attention as games like Fortnite attract millions of users around the globe. If this can be properly monetised, it could prove to be a very lucrative revenue stream for artists. No wonder the platforms are objecting!

We look ahead to Apple’s results, JLR’s potential purchase of Addison Lee and the success of the Ivy Collection…

Apple set to boost buybacks as iPhones falter (The Times, Simon Duke) attempts to second-guess what might happen at its annual results, to be announced tomorrow. Basically, analysts expect Apple to use some of its $130bn cash pile to do some share buy backs as there’s probably not going to be much in the way of iPhone sales boosts to get excited about. The company is trying to put increased focus on the growth of its services business – which includes music streaming, photo and document storage and its app store – and although it’s growing, it’s not growing anywhere near fast enough to compensate for maturing iPhone sales.

Jaguar Land Rover ponders bid for minicab firm Addison Lee (The Guardian, Gwyn Topham) shows that JLR is seriously considering buying private hire firm Addison Lee as it tries to broaden its outlook and position itself for a

future of shared ownership and driverless cars. Addison Lee is currently owned by American private equity firm Carlyle Group, which is trying to offload the hire firm for over £300m. JLR is just one of a number of others in the current bidding process. * SO WHAT? * This looks like desperation to me. The company is getting pasted at the moment from having too much exposure to the wrong tech (diesel) and falling demand in its largest market (China) and has announced some big job cuts as a result. Although things like having a contract with Waymo to supply 20,000 self-driving I-paces are nice, a purchase of Addison Lee sounds to me like it could be a massive waste of money at a time where it needs to concentrate on its own offering rather than tinker around with peripheral stuff.

Ivy Collection climbs while peers hit the wall (The Times, Dominic Walsh) heralds some rare good news for casual dining as a mix of Ivy Brasseries and Ivy Cafes is proving to be a hit up and down the country. According to a filing at Companies House for the year to July 29th, turnover is up by a whopping 124% following 14 openings and underlying earnings have shot up by 145%. * SO WHAT? * This just goes that you can still be successful in the restaurant business with the right offering and proper execution – even against the current economic backdrop.

And finally, in other news…

I’ve talked today about pork – so I thought it only fitting to bring you a pork-related story to end on today in Man mocked for ‘shameful’ breakfast with ‘worst fried eggs in the world’ (The Mirror, Zoe Forsey https://tinyurl.com/yx8tbnes). It’s not good.

1. In FINANCIALS NEWS, Deutsche Bank and Commerzbank merger talks collapse, UBS has a shocker and Nomura announces its first full-year loss in ten years
2. In RETAIL NEWS, Sainsbury’s/Asda gets blocked, new fraud rules threaten online retailers, Amazon’s growth slows and Laura Ashley has a profit warning
3. In TECH NEWS, we look at Huawei fuss while Microsoft becomes the third listed US firm to hit the $1tn mark
4. In INDIVIDUAL COMPANY NEWS, Baoshan triggers steel oversupply concerns, Ford profits trump estimates and Starbucks puts in a decent performance
5. In OTHER NEWS, I bring you a useful parenting hack. For more details, read on…

So Deutsche Bank, Commerzbank, UBS and Nomura all have shockers…

Merger collapse plunges Germany’s biggest banks into uncertainty (Financial Times, Olaf Sorbeck, Guy Chazan and Stephen Morris) signals the end of six weeks of talks between the two entities to create a German “superbank” in what has been unkindly dubbed in some circles as the potential “merger of weakquals”. Germany’s #1 and #2 lenders said that there were too many unresolvable issues to move forward to create what would have been the eurozone’s second biggest lender. * SO WHAT? * So it’s back to the drawing board for Deutsche Bank chief exec Christian Sewing as he’ll now be expected to come up with a plan B. Olaf Scholz, finance minister and cheerleader-in-chief of the merger, got it in the neck from his fellow politicians for backing the wrong horse and both banks will now have to take a serious look at cutting costs and arresting revenue declines. This will all have to happen against the backdrop of interest rates at zero, tough domestic competition and high funding costs. German labour unions (and employees of both banks) will probably be breaking out the Bolly and patting themselves on the back for putting the mockers on this, but I suspect that there will be a ton of job cuts to come – this merger setback will just delay things slightly as I would think that European banking consolidation is highly likely given the backdrop I just mentioned – it’s not just German banks that are suffering after all. Other banks, such as Italy’s UniCredit (which owns HypoVereinsbank) and Dutch lender ING (which owns a 15% chunk of Commerzbank) look like they could be interested in merging with Commerzbank, but I guess it’s early days.

Meanwhile, UBS investment bank suffers 64% fall in profits (Financial Times, Stephen Morris) highlights a big drop in first quarter profit at UBS’s investment banking division, with a 48% fall in advisory and capital markets being the main culprits. Fixed income and currency trading did OK but its flagship wealth management unit did not, as earnings from the latter fell by 21% despite attracting record new inflows from Asia. This disappointing start to 2019 follows a cr*ppy end of 2018 as wealth and asset management clients made hefty withdrawals against a stormy market backdrop. * SO WHAT? * Revenues really need to turn up in the second half of this year and investors will be relieved that the company’s share buyback programme is still intact. However, others are calling for deeper cost-cutting measures to get back on track given the current economic backdrop. As I said in the previous story, things like this just show the ongoing weaknesses in European banking and how M&A activity among them is getting more likely to increase as the prospect of huddling together for survival becomes ever more compelling. 

Then Nomura reports first full-year loss in a decade (Financial Times, Leo Lewis) heralds ongoing bad news for Japan’s biggest broker as it tries to evolve its business amid tricky global economic circumstances and a declining domestic population. This announcement of a $897m loss for the year ending March 31st came only one week after chief exec, Koji Nagai, announced big job losses in London as part of a global $1bn cost-cutting drive. * SO WHAT? * Basically, management will be streamlined and it will close at least 30 of its 156 domestic retail branches – the latter of which has always been seen as a sacred cow. It remains to be seen whether Nomura will rein in its global ambitions and be an Asian regional player. TBH, given the trends in global regulation and weakened global growth, more focus in what it does best looks like the smart course of action at the moment.

“Sasda” falls flat, new fraud rules threaten e-tailers, Amazon’s growth momentum slows and Laura Ashley has a profit warning…

I mentioned this in a red “newsflash” in yesterday’s Watson’s Daily, but Sainsbury’s merger deal with Asda is blocked by Watchdog (Daily Telegraph, Ashley Armstrong) just puts a bit more flesh on the bones of the story as the Competition and Markets Authority stopped the proposed merger from going ahead following an investigation that lasted almost a year. Sainsbury’s share price still fell by 4.6% despite many already believing that the deal was dead. * SO WHAT? * This means that Sainsbury’s is going to have to soldier on, creating value the old-fashioned way, while Asda owner Walmart was keen to limit speculation that it would sell Asda quickly, saying that it would “ensure Asda has the resources it needs” to continue to battle on. I still think that Walmart will try to offload Asda pretty sharpish because its international strategy has been shifting over the last year or so as it tries to concentrate on more profitable markets.

I thought that I would include Fraud checks on online shopping could wipe out £60bn of sales (Daily Telegraph, Tim Wallace) because it sounds to me like it’s the sort of thing people don’t really think about until it’s just about to come into force (like GDPR!). Basically, from September 14th, purchases over £30 will require “two-factor authentication” to cut fraudulent transactions. * SO WHAT? * The British Retail Consortium believes that businesses aren’t sufficiently prepared and could lose out on as much as £60bn of sales via cards online and will be calling for action by the financial regulator, the FCA. The chairman of

the Federation of Small Businesses, Mike Cherry, warned that “rolling out the system before businesses and shoppers are prepared for it will be bad for all concerned. We’re a few months away from enforcement and hardly anyone has even heard of it”. Clearly a proper campaign and snappy name is needed here otherwise there could be carnage.

Talking of online retailing, Amazon makes $1bn a month as growth slows (The Guardian, Dominic Rushe) highlights Amazon’s reputation as a massive profit-making machine as it made $1bn in profit per month for the first quarter of this year, which was more than double the level this time last year and represents the fourth quarter in a row of making record profits. Its growth seems to be slowing, however, as North American revenues were up by 17% versus 46% the same time last year with international growth falling from +34% last year to +9% this year. Even the company’s fast-growing cloud service division AWS, which hosts data for the likes of Netflix, Unilever and Airbnb (amongst many others), showed a slowdown in the pace of its sales growth from 49% last year to 41% this.

At the other end of the feelgood scale, Laura Ashley issues warning amid ‘challenging trading’ (Daily Telegraph, LaToya Harding) shows the embattled soft-furnishing-and-fashion retailer announcing its second profit warning in two months after “very demanding” trading conditions in the third quarter and said that it expected results to be “significantly below expectations”. The share price fell by over 20% initially on the news but recovered to close “only” 3.6% lower at the close of trading yesterday. * SO WHAT? * The company’s suffering from consumers shying away from big ticket purchases like furniture plus it’s had a problematic shift to a new digital platform. Chairman Andrew Khoo is continuing to implement his turnaround plan which involves closing 25% of its stores.

We take a quick look at what’s behind all the Huawei-bashing and see that Microsoft reached the $1tn mark…

Given all the hoo-ha surrounding Chinese telecom equipment making giant Huawei, What are the main security risks of using Huawei for 5G (Financial Times, Yuan Yang) does a good job of summarising the risks that involving Huawei in our 5G network build-out could pose. The US government says that Huawei is a threat to global cyber security and has threatened not to share intelligence with countries who go ahead anyway and use its equipment. You should definitely read this article if you want to know more detail, but it is possible for data to be hacked (although it’s possible to limit this by only giving Huawei access to the periphery of the network), individuals can be hacked (although this can be minimised by involving Huawei equipment in certain parts of the network) and, if attacked, one country’s compromised network could quickly spread to other countries’ networks. So, is using Huawei’s equipment going to increase security risks? Vodafone’s chief exec Nick Read said that painting

Huawei’s equipment as being “bad” and everyone else’s being “good” it too simplistic because the telecoms networks themselves have high levels of security in place and Michael Howard, senior research director at IHS Markit for carrier networks said that “any and all equipment from any vendor can be compromised by any knowledgeable rogue person”. My conclusion? There may be slightly more risk using Huawei’s equipment, but it doesn’t sound any way near as clearcut as the US is making out.

I thought that I’d include Microsoft becomes third listed US firm to be valued at $1tn (The Guardian, Angela Moneghan and Graeme Wearden) because, you know, it is the sort of fact that might come in useful at a pub quiz at some point in the future – but also because it signifies a milestone (reached by Amazon and Apple previously) that its strong quarterly results had a helping hand in. Microsoft beat its sales and profit expectations in the latest quarter thanks in some part to the strength of its cloud computing business (it signed up Kroger and Walgreens Boots Alliance during the quarter, amongst others). Revenues were up by 14% and net income increased by 19%. * SO WHAT? * Great performance – and it shows that cloud computing continues to be a really strong earner across the board (as Amazon is also finding).

Fears increase of steel flooding the market again while Ford and Starbucks put in good performances…

In a very quick scoot around other big stories today, Chinese group sparks oversupply fears in steel market (Financial Times, Christian Shepherd, Anna Gross and Neil Hume) shows that plummeting profits at China’s biggest steel producer, Baoshan Iron and Steel Co, were caused by

a dramatic slowdown in domestic demand for steel. * SO WHAT? * The resulting overage has stoked fears that Baoshan will once more flood overseas markets with cheap steel but the fall in China demand will also affect other steel producers like ArcelorMittal.

Elsewhere, there’s some good news for a change for the blue oval in Ford’s profit beats estimates on stout truck, SUV sales (Wall Street Journal, Mike Colias) as the company managed to limit overseas losses and consolidate domestic success and Starbucks boosts US China sales (Wall Street Journal, Heather Haddon) shows that there’s still plenty of fight left in the coffee purveyor as it beat profit expectations in the quarter.

And finally, in other news…

I thought I’d leave you today with a very useful parenting hack in Mum shares genius tip for removing splinters from kids’ fingers painlessly (The Mirror, Nicola Oakley, Zoe Forsey and Emma Gill https://tinyurl.com/y5wh94ug). Keepin’ it real here at Watson’s Daily ????

1. In NEWS ON CARS, both Tesla and Nissan disappoint
2. In RETAIL NEWS, Boohoo and Primark do not
3. In M&A NEWS, the US shale boom triggers a bidding war and the Deutsche Bank/Commerz thing looks far from being a done deal
4. In INDIVIDUAL COMPANY NEWS, Boeing puts a cost on the 737 Max impact and Facebook allocates a chunky sum for the expected FTC fine
5. In OTHER NEWS, I bring you a teenager’s cautionary tale. For more details, read on…

So both Tesla and Nissan disappoint…

Tesla earnings: company posts surprisingly large losses in delayed report (The Guardian, Kari Paul) highlights disappointing first quarter results for the company as it continued to struggle with production and had to raise prices on a number of its cars. Its reported loss per share was more than double market expectations and was clearly sheepish about it as it waited over an hour after the market closed to make the announcement (these announcements are usually made within the first 30 minutes of the market close). CEO Elon Musk said that poor sales were due to the phenomenon that “People just don’t like buying cars in winter”, which is a fair point – but not something that should be surprising (I also wonder whether it was because of the bad press that Tesla vehicles got from owners not being able to open their car doors because the recessed door handles froze). * SO WHAT? * Tesla has had a bit of an erratic time over the last year what with Musk’s involvement in various scandals, the sudden U-turn he had to make recently after initially saying he was going to shut down virtually all of his sales outlets to go online-only – to then changing his mind and increasing the prices of models other than the S – and then the most recent spontaneously combusting parked Model S, the video of which went viral in China. Fans continue to say he’ll turn things around, but the fact is that he continues to attract disasters while all the other established car manufacturers are coming out with new, appealing alternatives that work, don’t catch fire and don’t have their delivery dates constantly galloping off into the

future. As I keep saying, I think that the best thing for Tesla would be to team up with a proper manufacturer. If you coupled Tesla’s technical strengths with a traditional car maker’s production capacity and know-how, you could have a world-beater IMHO. Mind you, it would be difficult to see that happening as surely Musk would find it hard NOT to be the only decision-maker and he would be difficult for other senior execs to work with given his rather erratic mindset (the price of genius?).

Nissan issues second profit warning in two months (Financial Times, Kana Inagaki and Siddarth Shrikanth) highlights a rather tricky time for the carmaker since its former boss Carlos Ghosn was ousted as it announced yesterday that it had to cut its net profit guidance by a hefty 22%. It also cut a whole load of forecasts across the board mainly due to particularly poor sales in the US. Full year results are due out on May 14th. Meanwhile, Renault (which is Nissan’s biggest shareholder with a 43% stake) is continuing in its attempts to have a full merger with the company. * SO WHAT? * You would have thought that rubbish numbers like this (which Nissan says are due to one-off factors, although it’s debatable that they are quickly solvable) will make Nissan’s bargaining position much weaker in any merger negotiations. You may well think I am mad for saying this but I would not be surprised if Nissan struggle stubbornly on in a bid NOT to give the French the upper hand in power terms over a merged group – but given the current environment for car manufacturers, this could mean a lengthy period of pain where BOTH of the companies suffer. I think they will need to get over themselves and sort it out because surely they are stronger together than going solo. A bit like the Spice Girls, perhaps ????

Boohoo and Primark dress for success…

Boohoo bucks gloomy UK retail trend with soaring sales (Financial Times, Kate Beioley) shows that it is still possible to win in UK fashion retailing as online retailer Boohoo announced rising revenues and solid profits last year due to the happy marriage of its products, celebrity influencers and social media marketing. It reported revenues yesterday up by 48% on the previous year, topping market expectations of 45.5%. Revenues more than doubled at PrettyLittleThing and were up by 96% at Nasty Gal – the company’s low-cost ranges – and overall pre-tax profits were up by 38% on the year. * SO WHAT? * There is some doubt in the market as to the sustainability of Boohoo’s performance from here and I suspect that there will be some who might take their share profits off the table (Boohoo’s share price has risen by 40% over the last 12 months) and funnel the proceeds into the underperforming Asos (which is larger and whose share price has had a disastrous time of late – it fell by 40% IN ONE DAY after announcing that its half-year earnings had plunged by 90%) in the hope that the latter’s woes are surmountable.

Going from an online retailer to an (at the moment almost entirely) offline one, Primark helps cushion ABF as profits from sugar dissolve (Daily Telegraph, Ashley Armstrong) shows how the cheap-and-cheerful fashion retailer owned (rather randomly) by Associated British Foods managed to put in a strong performance for the half-year that more than compensated for the parent company’s disastrous performance in its sugar business. Primark’s operating profits were up by 25% in the period thanks to more efficient stock control and exchange rates that worked in its favour. In all, Primark’s performance meant that ABF’s guidance for the year remained unchanged. * SO WHAT? * This goes to show that there’s life in UK fashion retailers yet – and that you don’t have to be all over online to succeed! Although Primark has a website, you still have to go to the shops to buy the merch. There was recent talk about the company making moves online but ABF’s chief exec played it down, saying that introducing online delivery was still a “couple of years away”. As long as it continues to put in strong performances like this, no-one will care. However, I suspect that the moment that the retailer shows any signs of wavering the question of selling online sooner-rather-than-later will come up.

*** NEWS JUST IN – THE SAINSBURY’S/ASDA MERGER WILL NOT GO AHEAD. IT’S BEEN BLOCKED BY THE REGULATOR AND THE TWO SUPERMARKETS WON’T APPEAL AGAINST THE FINDINGS. BACK TO THE DRAWING BOARD! ***

Occidental launches a $55bn hostile bid for Andarko while Deutsche Bank/Commerzbank talks aren’t getting any closer to a conclusion…

American shale boom triggers merger battle (The Times, James Dean) highlights the current bidding war for one of America’s biggest shale oil producers, Andarko, as Occidental Petroleum swooped in yesterday with an offer to buy Andarko in a deal worth $57bn, trumping a previous offer of $50bn from Chevron, America’s second biggest oil company after Exxon Mobil. * SO WHAT? * This could biggest oil deal since Shell agreed to buy BG Group for £47bn in 2015 and shows how interest in the Permian

Basin (an area that straddles New Mexico and Texas that is seen as being the most exciting shale oilfield in the world) is hotting up. Expect more drama to come!

In Deutsche Bank, Commerzbank merger talks hit stumbling blocks (Wall Street Journal, Jenny Strasburg and Dana Cimilluca) we see that high profile talks between the two German banks to form a big “national champion” are stalling over various issues including lukewarm support from investors and outright hostility from labour unions. * SO WHAT? * Many had been expecting a merger to be announced at Deutsche Bank’s earnings announcement tomorrow, but sources close to the banks said that both sides are far from agreement at this moment in time. It is obviously possible that it could happen further down the line, but it won’t go ahead for the time being until more of the issues are ironed out. Formal merger talks have been going on for the last six weeks.

Boeing sets aside a heap of cash for the 737 Max debacle and Facebook does the same for an expected FTC fine…

Following on from its recent disasters, Boeing sets aside $1bn after fatal crashes (The Times, James Dean) shows that the company has had a first stab at putting a figure on the impact of the grounding of its 737 MAX aircraft in the wake of two major crashes and subsequent investigations. The company announced a 21% fall in its first quarter profit, cut its full year guidance and suspended its share buyback programme. Boeing set aside $1bn in the first quarter to cover charges related to fixing the problem and related higher production expenses. *SO WHAT? * It’s good that the company put a figure on this, but given that it’s not over yet, there is a very big risk that this figure could be way out. I suspect that there will be more turbulence ahead and that the world’s second biggest aircraft manufacturer, Airbus, will benefit from Boeing’s misfortune.

Facebook sets aside $3billion to cover expected FTC fine (Wall Street Journal, Jeff Horwitz) is a story doing the rounds in today’s broadsheets as it obviously makes a more exciting headline than something along the lines of “Facebook continues to smash it” etc. ????. Basically, the company’s underlying business is doing well (it posted revenues up by 26% on the year) but its profits were more than halved as it put aside $3bn to cover an expected fine from the Federal Trade Commission over the collection of personal data. * SO WHAT? * Facebook actually talked about an FTC fine being somewhere between $3bn and $5bn – and you will see that a number of newspapers have focused on the $5bn figure rather than the $3bn one. Whatever it is, it will be eminently affordable for a company that holds over $42bn in cash and marketable securities. Facebook’s share price rose by 8% in after hours trading, but has risen by about 35% year-to-date. Not too shabby! The company still continues to face other regulatory issues both at home and in Europe, but the underlying business continues to march forth.

And finally, in other news…

I thought I’d leave you today with an example of what must be in every teenage boy’s top three nightmare scenarios: Mum’s furious text as she catches son doing something very naughty on her work iPad (The Mirror, Zoe Forsey https://tinyurl.com/y68q6aaf). Oh dear!

1. In ONLINE/STREAMING NEWS, Twitter, Snapchat and eBay put in strong performances while Amazon Prime’s momentum slows
2. In IPO/M&A NEWS, Starbuck’s China nemesis Luckin Coffee plans a US flotation, UBS and Deutsche Bank asset management talk about merging while bid rumours lift Thomas Cook
3. In INDIVIDUAL COMPANY NEWS, Google gets the go-ahead for delivery drones, Revolut faces losing its banking licence and Majestic Wines mulls its options
4. In OTHER NEWS, I bring you a really useful hat. For more details, read on…

So Twitter, Snapchat and eBay smash it while Amazon Prime’s momentum slows…

Forecast-beating results from Twitter and Snapchat (Daily Telegraph, Laurence Dodds) heralds strong performances from Snapchat and Twitter that helped power the Nasdaq and S&P 500 to new highs. Both companies posted solid revenues and user growth for the first quarter showing that they are gaining ground on Facebook and Google in advertising. Twitter’s chief exec Jack Dorsey was preaching to the converted when he said that the company was “taking a more proactive approach” to trolling, with a view to “reducing the burden on victims”. * SO WHAT? * This was a strong performance from both companies and shows that it IS possible for them to increase ad revenues despite the continued dominance of their more sizeable competitors in this space. What was particularly impressive was Snapchat adding 4m daily active users (from 186m to 190m) in the quarter – its first net increase for 12 months. Twitter also managed to arrest a decline in users over the last six months and add 8m more following a crackdown on abusive or fake accounts. Twitter’s share price got a 16% boost on the back of the news, while Snapchat’s rose 12% in after-market trading.

EBay lifts guidance as revenue, number of buyers rise (Wall Street Journal, Patrick Thomas) continues the feelgood newsflow as the company raised its revenue and profit forecasts after announcing stronger-than-expected first quarter results, with the number of active buyers on its

platforms growing by 4%. * SO WHAT? * This performance has come at a critical time for the company as it is currently undergoing an operational review following pressure from activist investors. This pressure followed a long period of weakness where the company continued to battle with Amazon and diversify away from being “just” an online auction house. EBay’s shares are up by 30% so far this year, but this is still down about 12% over the last 12 months. It doesn’t sound to me like they are going to do anything particularly drastic to boost performance (I would have thought this could change once they’ve finished the review) but investors will like the fact that the company plans to spend $5.5bn on share buybacks and dividends this year – they love a bit of this because it effectively underwrites a lot share price downside for a certain period of time.

Amazon Prime growth cools as battle with US rival Netflix ignites (Daily Telegraph, Hannah Boland and Natasha Bernal) highlights findings from UK research company Ovum which show that UK subscriber growth numbers are slowing down considerably from Amazon Prime. Germany and Japan have recently overtaken the UK in terms of market size for Amazon Prime and India and China are making ground up fast. Ovum analyst Tony Gunnarsson observed that “The reason why UK growth is slowing down is basically because, we think, after being available for several years in the UK, Amazon has reached the top side of how far it can penetrate UK households” and is now pushing other services and products like Fire TV, Echo devices etc. in preference to Amazon Prime. The streaming business is also being put under constant pressure by the likes of Netflix and others.

Huawei sticks two fingers up at the US, Samsung’s Fold woes and TikTok as a marketing tool…

In Chinese coffee start-up Luckin files for US IPO (Financial Times, Nicole Bullock) we see that the Chinese coffee start-up that’s taking on Starbucks announced plans to list in the US just days after raising $150m from investors as part of a funding round that valued the company at $2.9bn. No more details were given on price or the number of shares to be sold. Luckin Coffee aims to overtake the number Starbucks outlets in China by the end of this year by opening 2-300 outlets per month. Starbucks has over 3,300 outlets in China and has been there for 20 years, whereas Luckin Coffee started in June 2017! The main difference between the two is that you can sit down at a Starbucks whereas Luckin Coffee focuses on delivery and takeaway coffee, so not all of its stores have seating. This means that its outlets are smaller and can expand more rapidly in number. * SO WHAT? * The exponential growth of this start-up is phenomenal. However, it is currently sacrificing profitability for customer growth at the moment and offering hefty discounts to new customers, hence its thirst for investor cash. The party will get real once it pauses to sort out its profitability, however. Mind you, until then I suspect that there will be many who will want to jump on this growth train for at least a few more stops – and an IPO will give them a chance!

In merger and acquisition chat, UBS and Deutsche Bank asset managers in ‘serious’ merger talks (Financial Times, Arash Massoudi, Peter Smith, Olaf Storbeck and Stephen Morris) heralds what could be a major development as a merger of the asset management arms of UBS and Deutsche Bank could create a “European champion” in the investment industry. Talks have been going on for a few months, according to some close to the companies. * SO WHAT? * If created, it would overtake France’s Axa and the UK’s Legal & General and rival Amundi, which is currently Europe’s largest money manager with over €1.4tn in funds under management. It would also form a company that could compete more favourably with the likes of BlackRock and Vanguard. Clearly a deal between the two isn’t guaranteed and an announcement is not imminent, but that won’t stop tongues wagging!

Closer to home, Bid talk breathes life into Thomas Cook (The Times, Dominic Walsh) highlights rumours of a takeover of the travel group by Fosun International which powered the share price up by 18.3% yesterday. * SO WHAT? * There is talk of other suitors in the wings, but the fact that Thomas Cook didn’t make a formal statement about this yesterday would suggest that a deal is not yet finalised. This takeover frenzy started when the company put its airline business up for sale in February, but two recent profit warnings and a big debt pile have added to its woes, dragging its share price down by over 75% in the last year.

Google gets the go-ahead for drones, Revolut might lose its banking licence and Majestic mulls its options…

Google wins first FAA approval for regular drone delivery of consumer items (Wall Street Journal, Andy Pasztor) heralds an important moment for drones as Alphabet’s Wing Aviation unit got US Federal Aviation Administration approval to operate a fleet of unmanned aircraft to perform consumer goods deliveries – but only in a rural area in Virginia. * SO WHAT? * Loads of other companies, including Amazon, are trying to get similar approvals but I don’t think everyone should get too excited just yet about a sudden prevalence of drone deliveries. However, this is an important first step and sets a precedent that everyone will be watching closely.

Revolut may lose banking licence (Daily Telegraph, James Cook) is a dramatic-sounding headline as the high-profile British digital bank (founded by Nikolay Storonsky, who was born in Russia) only just got granted European banking licences through the Bank of Lithuania in December. Basically, the Lithuanian parliament will debate on the company’s alleged links to Russia and whether they could make Revolut “politically vulnerable”. * SO WHAT? * If Lithuania finds that there has been Russian influence, the company could lose its European banking licences which would make its geographic and further service expansion much more difficult. Storonsky has obviously denied allegations of Russian influence. The drama continues…

Majestic Wine could sell all UK stores in shift online (The Guardian, Jasper Jolly) looks at the current situation with Majestic Wine, which is currently looking at selling all of its 200 UK outlets and going online-only under the Naked Wines brand. Various options are on the table, but the situation is ongoing…

And finally, in other news…

Do any of you find yourself falling asleep on your daily commute? Well this hat could come in useful: The amazing hat that keeps you from missing your Subway stop (103.5KTU, Wendy Wild https://tinyurl.com/y67ygpn3). A very useful bit of kit!

1. In COMMODITY NEWS, Oil rises on the expiry of Iran waivers and the US approaches a UK firm to supply rare metals
2. In TECH NEWS, Huawei defies US pressure with rising revenues, Samsung’s Fold hits a hitch and TikTok gets used as a cheap marketing tool
3. In INDIVIDUAL COMPANY NEWS, Tesla is on fire with its cars (literally) and promises of robo taxis while Kraft Heinz gets a new CEO
4. In OTHER NEWS, I bring you a gorilla selfie. For more details, read on…

So the US stirs things up in oil and rare metals…

Oil prices jump as Trump halts waivers on Iran sanctions (The Times, James Dean) is a story doing the rounds in the broadsheets as the US stated yesterday that it wouldn’t renew waivers that let eight countries (Italy, Greece, Turkey, China, India, Japan, South Korea and Taiwan) import Iranian oil without US reprisals following the reimposition of sanctions on Iran in November last year. The waivers let these countries buy oil for Iran for six months without breaching US sanctions if they could show that they were winding down their purchases. They are due to to expire on May 2nd and will not be renewed, but it is understood that Italy, Greece and Taiwan have already reduced their Iranian oil imports to zero. The Americans have said that they are working with Saudi Arabia and the UAE to supply the oil that Iran would have done to ease the pressure. * SO WHAT? * This statement led to oil prices rising by around 3% as the inevitable conclusion is that demand for oil from non-Iranian sources will increase, thus squeezing supply.

US government taps UK firm to secure rare metals (Daily Telegraph, Hasan Chowdhury) is an interesting story that highlights news that the Overseas Private Investment Corporation (OPIC), a US government agency, is currently in talks with London-based mining company TechMet with a view to investing in the firm in order to ensure better supplies of rare metals needed for the mass-production of electric vehicles. Concern is growing in the US over the control that China has over supply and processing of materials such as cobalt and lithium, so it is looking to get its supply from non-China related sources. TechMet is also pursuing a joint venture with the US military to recycle lithium ion batteries, which could increase the amount of lithium supplies considerably. * SO WHAT? * The US is quite right to be concerned about the stranglehold that China has on rare metal supply. For instance, over 60% of the world’s cobalt comes from the Democratic Republic of Congo, where Chinese mining companies are overwhelmingly prevalent. Everyone is trying to secure their own supply but I think that the recycling thing is icing on the cake and could be a winner for both sides as mass moves towards electrification of transport continues globally.

Huawei sticks two fingers up at the US, Samsung’s Fold woes and TikTok as a marketing tool…

Huawei revenue rises 39% despite US pressure on 5G (Financial Times, Louise Lucas) shows a strong performance from the under-pressure Chinese telecoms equipment company despite attempts by the US to kill its growth due to security risk concerns. The 39% revenue increase was comfortably above last year’s 19.5% rise and the net profit margin was also higher than last year’s level. Huawei overtook Apple as the world’s #2 supplier of smartphones in the second quarter last year and remains on track to topple Samsung in the top spot. * SO WHAT? * Huawei’s vast resources have seemingly been able to weather the US onslaught and its massive investment in R&D has clearly been paying off. Still, I have to say that I would be surprised if Huawei can carry on like this given the number of countries that have decided to cut them out of 5G plans completely, with others restricting their involvement. Call me cynical, but Huawei is privately held and its numbers are unaudited so you’d think that there is opportunity for a bit of turd-polishing here…

There’s embarrassing news in Samsung Galaxy Fold delayed after folding feature breaks screens (The Guardian), which shows that the South Korean consumer electronics giant is having to make an embarrassing climbdown as it has been forced to postpone the launch of its $2,000 wonder-phone (it was due to launch this Friday) following reports from reviewers that the phones were breaking. * SO WHAT? * At least Samsung discovered the

phone’s shortcomings early. They must be uber-twitchy given that whole Galaxy Note 7 debacle a few years back where devices ignited so frequently that they were banned from many commercial flights! This isn’t going to do sales a whole lot of good given the bad PR, but then again given that the Fold was priced at nigh on $2,000, they weren’t going to be all that strong anyway. Once it irons out the problems, I would have thought that it will still have the “halo-effect” on other more affordable phones in its lineup as its notoriety will no doubt continue to attract curious customers to have a look when they are in mobile phone shops.

Top brands increase their use of video-sharing app for marketing (Daily Telegraph, Matthew Field) is an interesting article because it shows that there’s a cool new kid on the block when it comes to advertising as the video-sharing app TikTok (developed by Chinese tech giant Bytedance) is gaining in popularity among major companies wanting to reach its young audience. Digital agency Social Chain estimates that a TikTok influencer with between 1m-2.5m followers could make £500-800 for their posts – something that would cost advertisers £8-10,000 on Instagram. Given that TikTok was the most downloaded app on Apple’s App store last year with over one billion downloads worldwide, you can see the attraction for companies like Sony, Fifa, Calvin Klein, Huawei and Coca Cola as they try to get more bang from their advertising buck. * SO WHAT? * This sounds great, but TikTok is currently facing a few issues to do with what it’s doing with data from its core demographic (under-18s), some of its shadier content and relations with influencers. Still, that’s not a problem for the advertisers who will no doubt continue to use the platform!

Tesla promises robo-taxis on the one hand and is investigating fire hazards on the other while Kraft Heinz gets a new CEO…

Tesla’s Elon Musk promises robot taxis by New Year (Wall Street Journal, Tim Higgins) makes for a very exciting-sounding headline as Elon Musk said yesterday that by the middle of 2020, over a million Tesla vehicles on the road will be able to operate without a human driver. He went on to say that Tesla vehicle owners could use a smartphone app to put their vehicles into commercial service and pick up passengers on the company’s network. Tesla would then get 25-30% commission of the fare. Wild, right? The presentation was made ahead of the company’s unveiling of its first quarter results tomorrow. Having said that, Tesla investigates video of Model S car exploding (The Guardian) would suggest that Musk has other more pressing matters to attend to as a team from the company is looking into a video that was shared on Chinese Twitter-like Weibo on Sunday evening which showed a parked Tesla Model S exploding. The company said in a statement that “We immediately sent a team onsite and we’re supporting local authorities to establish the facts. From what we know, no one was harmed”. There have been at least 14 instances of Tesla cars combusting since 2013,

although most of them have occurred after a crash. * SO WHAT? * Musk’s vision has to be admired, but I just don’t think self-driving taxis are ready at the moment. I like the idea that you can farm out your car to earn some money while you are not sat in it but a) I’m not sure how comfortable people would be to jump into a driverless taxi at the moment and b) I don’t really think that local authorities will be falling over themselves to be an “early adopter” in a technology that is still flawed. I think that the combustion thing could be serious but I have no doubt that Tesla will do its utmost to brush this under the carpet and say that it’s just a blip.

Kraft Heinz brings in new chief executive after share price slump (The Guardian, Simon Goodley) heralds a new dawn for the company behind ketchup and Amoy ready meals as it announced the hiring of Anheuser-Busch InBev veteran Miguel Patricio to take over from current chief Bernardo Hees. The company’s share price has been taking a hammering due to its allegedly questionable accounting practices and so something had to give – and that thing was the chief exec. Patricio said that he wanted to take the company in a new direction after a long period of cost-cutting. * SO WHAT? * God knows what the new guy will do, but he will no doubt benefit from having zero baggage on the accounting scandal and the fact that he is coming after the company has cut costs to the bone and seen a 40% share price drop over the last year. Surely he’s got to do something truly hideous to muck this up and not look like a messiah! One to watch…

And finally, in other news…

I thought I’d sign off today with an epic selfie I saw over the weekend in Gorillas appear to pose for selfie with park ranger in the Democratic Republic of Congo (Sky News, https://tinyurl.com/y3wtmsal). Love it!

1. In STREAMING NEWS, Disney prices up its new streaming service and cord-cutting savings narrow
2. In RETAIL NEWS, Primark dip its toes into online retailing, Ted Baker and Arcadia have a shake-up while WH Smith enjoys big rent reductions
3. In INDIVIDUAL COMPANY NEWS, Uber admits it may never make a profit (!) and Boeing parts makers suffer fallout
4. In OTHER NEWS, GoT’s Kit Harington shaves his beard after reading yesterday’s Watson’s Daily 😂. For more details, read on…