1. In TECH NEWS, US senators grill the tech titans with Facebook in line for Libra inquisition
2. In CAR-RELATED NEWS, Yandex and Uber buy Russia’s #1 taxi company and Jaguar Land Rover gets a loan
3. In DEAL NEWS, AB InBev gets canned and Thomas Cook’s deal looks shakey
4. In INDIVIDUAL COMPANY NEWS, Sports Direct postpones its results and GSK has good news on an ovarian cancer drug
5. In OTHER NEWS, I bring you some amazing examples of anamorphic art…

So senators get to grill the tech giants on everything including Libra…

In US senators to question tech titans on ‘tremendous’ power (Daily Telegraph, Laurence Dodds) we see that Apple, Google and Amazon are going to have to defend themselves in front of a Senate justice committee today who will accuse them of using their dominance to obliterate any competitors both domestically and in Europe. This comes a week after the Federal Trade Commission (FTC) approved a $5bn settlement with Facebook regarding the Cambridge Analytica scandal and amid rumours that the FTC and US Justice Department are looking into conducting competition inquiries. Critics of big tech say that they should be broken up. There will also be a separate hearing for Facebook who will be in front of the Senate banking committee to answer questions about Libra, as per Facebook confronts bipartisan resistance to cryptocurrency plans (Wall Street Journal, Dave Michaels,Kate Davidson and Sam Schechner), which highlights the

enormity of the task for Facebook convincing the naysayers of its proposed new cryptocurrency. The G7 industrialised nations will also be discussing Libra and other cryptocurrencies this week in France. * SO WHAT? * Big Tech is facing a wave of vocal criticism concerning its enormous power and stranglehold on the markets in which it operates as well as how the data it collects is utilised and protected. Having said that, I really don’t know how one would go about breaking up a company like Google, for example – and I imagine that, given that the companies concerned are unlikely to be willing participants, any efforts to do so will be dragged out by lawyers for as long as possible. As far as Libra is concerned, Facebook is going to take a lot of heat given its reputation for what it does with the data it skims from users and it seems to me that there are too many parties that stand to lose out from Facebook’s success with Libra. Governments and central banks would have no control over its movements and legislators are worried that Libra – and other cryptocurrencies – could be used for malign purposes. That said, I think it still has some powerful backers and remains an interesting concept, so I would expect some kind of compromise to be reached. It’ll be interesting to see how this all unfolds.

Yandex and Uber buy Russia’s #1 taxi service and JLR gets a loan…

Yandex and Uber buy Russia’s largest taxi company (Financial Times, Max Seddon) heralds the purchase of Vezyot, that will dramatically increase the market share of Yandex Taxi, the joint venture between Russian search giant Yandex and Uber. Vezyot has 12.3% market share versus Yandex Taxi’s 10.4%. * SO WHAT? * This sounds like a bold move and will clearly ruffle the feathers of Mail.ru-backed Citymobil, which has been on a growth track of late. This deal will give Yandex Taxi a big boost outside the big cities.

JLR’s electric dreams get boost from taxpayers (Daily Telegraph, Alan Tovey) highlights a final flourish from Theresa May in her last days in office as JKR will get a £500m loan from UK Export Finance, the state-backed credit agency, that will help to ease the strain on JLR’s balance sheet significantly. The outgoing PM said the loan would help the company to boost exports of its new generation of electric cars. * SO WHAT? * Nice idea, but is this just throwing half a billion quid into a black hole? I also wonder how this would be seen by others – some countries get pretty angsty about governments giving companies “unfair advantages”. Mind you, JLR is a tiddler in the scheme of things, so maybe it’ll just go under the radar.

ABInBev postpones the IPO of its Asian business and Thomas Cook’s rescue looks shakey…

I must admit that I should have put this in yesterday’s Watson’s Daily as I do recall seeing this bit of news over the weekend BUT here it is: AB/InBev/Asia IPO: glass struggle (Financial Times, Lex) highlights the postponement of what would have been the largest Initial Public Offering this year as the parent company decided to pull the sale of a minority stake in its Asian business because investors thought the asking price was too high. The company will wait for better market conditions (presumably once the US-China trade dispute gets sorted) and the share price hardly moved on the news. * SO WHAT? * This is a bit embarrassing for the company and will prompt pessimists

to say that this could stifle its growth prospects, especially in the Asian region. It could have done with getting $10bn from the IPO to pay down some of its $100bn of debt, but clearly it’s going to have to wait.

Thomas Cook rescue under threat (Daily Telegraph, Alan Tovey) shows that the drama ain’t over for the troubled tour operator as Fosun’s offer to take a majority stake to rescue the company still requires the approval of the banks and hedge funds that hold £1.6bn of Thomas Cook debt. Citigroup analyst James Ainley sent Thomas Cook shares off a cliff two months ago when he said that the business was worthless and has since said that its shares would be worth just 3p. * SO WHAT? * Thomas Cook must have been relieved with the lifeline thrown to them by Fosun given the turbulent time it’s been having and any uncertainty thrown up by a City analyst will obviously not be welcome at all. It just goes to show that this is not yet a done deal and Thomas Cook could yet come crashing down.

Sports Direct has a shocker and GSK announces a breakthrough…

Sports Direct delays results amid House of Fraser woes (The Guardian, Sarah Butler and Julia Kollewe) highlights woes at Sports Direct as it postponed its results, warning that it could miss its profits forecasts due to the impact of its acquisition of House of Fraser. Investors took fright at the news, selling the stock down 10% and Appetite for acquisitions: Ashley’s new interests (The Guardian, Sarah Butler) highlights other acquisitions/investments that the company has made that are still being digested and that could also cause it problems. They include Evans Cycles, Sofa.com, Game Digital, Goals Soccer Centre, French

Connection and Findel. * SO WHAT? * This is very bad news – companies don’t do this unless something really serious is going to happen. If Ashley goes down, there’s a chance that he could take a big chunk of the UK high street down with him. Yes, he’s only one guy, but he’s the face of the company and very much the one in charge of his sprawling empire.

GSK hails encouraging trial of new drug to fight ovarian cancer (Daily Telegraph, Julia Bradshaw) shows that GSK had some promising results from a late-stage trial of cancer drug Zejula, which it inherited when it bought US oncology biotech firm Tesaro for over $5bn last year. The price it paid then raised eyebrows, but these latest results seem to have vindicated their decision to invest. Ovarian cancer is the fifth most common cause of cancer death among women, so this breakthrough could be big.

And finally, in other news…

I thought I’d leave you today with this: Anamorphic art makes the beach your canvas (Stars Insider, https://tinyurl.com/yyg4fkzf). Inspiration for when you next go to the sea-side!

1. In MACRO & CURRENCY NEWS, China’s economy faces challenges and Huawei-bashing sees consequences while emerging markets could be facing another currency crisis
2. In UK CONSUMER NEWS, high street footfall weakens and the housing market’s not looking too hot either
3. In INDIVIDUAL COMPANY NEWS, a karaoke machine maker aims for a flotation
4. In OTHER NEWS, I bring you quite possibly the cutest kitten ever…

So China has some issues and emerging markets face another potential currency crisis…

China’s soaring pork inflation threatens key central bank rate (Financial Times, Hudson Lockett) sounds like a joke title for an article – but it’s not. China’s pig stocks are still suffering in the wake of the outbreak of African swine fever and prices are accelerating so quickly that the country’s consumer price index (CPI) is on track to exceed the central bank’s target rate. * SO WHAT? * China’s pork market is the biggest in the world and pork has a major influence on China’s CPI. It seems that outbreaks are now slowing down after a huge cull (although there appears to be widespread evidence of under-reporting) but the last time something like this happened in 2008, the pork price shot up by over 80% and pushed the CPI to 8.7%. China’s agricultural ministry estimated in April that the pork price could rise by more than 70% in the second half of this year.

China growth at its slowest since 1992 as Beijing struggles to juice economy (Wall Street Journal, Chao Deng) shows that China’s GDP growth fell 6.2%, its slowest pace since at least 1992. This figure undershot market expectations but Mao Shengyong, a National Bureau of Statistics spokesman, said that China had “sufficient policy reserves” to sort things out in the second half, including more tax cuts and an increase in infrastructure spending. * SO WHAT? * It just goes to show how much the US-China tariff war is now feeding through to the economy as investments for the quarter were weak and exports fell.

Talking of which, Manufacturers move supply chains out

of China (Wall Street Journal, Austen Hufford and Bob Tita) shows how American companies are moving production outside China (we’ve already seen Japanese companies like Nintendo do this) as trade tensions between the two countries continue. Interestingly, many companies have said that once they move, they will stay moved – but then again, I think that this was bound to happen anyway given that rising wages mean that China isn’t as cheap as it used to be and Vietnam, India, Taiwan and Malaysia have all become more attractive production destinations in relative tersm. Companies that make Crocs, Yeti beer coolers and GoPro are among those making the shift. Mind you Huawei plans extensive layoffs in the US (Wall Street Journal, Dan Strumpf) shows the other side of this as the constant Trump administration Huawei-bashing continues to have an effect as the company announced that it will be cutting a lot of staff, particularly in its US-based R&D subsidiary Futurewei Technologies. * SO WHAT? * Markets may well get excited each time Xi and Trump look like even touching a telephone, but the fact is nothing’s really going to change until a real deal is on the table. We’ll just have to wait and see. When/if they get to an agreement, there will be the mother of all relief rallies IMHO, but who benefits long term will obviously depend on the detail.

Then in Inflation rise fuels currency crisis (Daily Telegraph, Tom Rees) we see that Nomura believes that the currencies of Argentina, Turkey, Pakistan, South Africa, Sri Lanka and Ukraine are all potentially in danger due to its proprietary indicator, which has a strong track record for predicting currency crises, showing them up as being particularly vulnerable. Turkey’s lira took a pasting last week after President Erdogan p!ssed of the Americans and in Argentina, the peso dropped by 35% as inflation hit an eye-watering 60%.

The UK high street sees lower traffic and the housing market continues to look downbeat…

High street suffers ‘summer slump’ as Brexit and wet weather bite (The Guardian, Rupert Jones) cites the latest figures from the British Retail Consortium (BRC) which show that customer footfall was at its lowest level for June for seven years. Mind you, as the BRC’s chief exec Helen Dickinson pointed out, “Poor footfall this June led to a significant fall in the sales figures for the month…Last year’s World Cup and glorious sunshine set a high bar which 2019’s slow consumer spending and Brexit uncertainty failed to live up to”. Disappointing, but hardly surprising!

Then in Survey hits hopes of housing market recovery (The Times, Miles Costello) we see that asking prices for

residential property have fallen for the first time in a year, according to the latest monthly survey by online estate agent Rightmove, with particular weakness in houses with four bedrooms or more. * SO WHAT? * The interesting thing about this is that it stands in contrast to recent stats from RICS (which last week showed its strongest reading since August last year) and Nationwide (which found that house prices had risen slightly in June) although Halifax said that house prices had fallen slightly. The differences in each survey come down to the different methodologies used and demographics. For instance, Halifax and Nationwide base their findings on approved mortgages but Halifax has more customers in the north and Nationwide’s are more in the south. The RICS measure uses property valuations of chartered surveyors and is based on the balance of those reporting rising prices and those reporting falling prices and Rightmove looks at asking prices – NOT what the houses actually sold for. You can see why it’s best not to rely on any one of the above, but to know what you are looking for (e.g. trends in asking prices in the north of England) and pick the most appropriate survey!

Roxi has something it wants to sing about…

Yes, I will admit that it is an unusually slow news day today, but Music service sitting pretty on float plans (The Times, Simon Duke) makes the cut today as the “upstart” music streaming business backed by Robbie Williams and Sheryl Crow is aiming for a stock market flotation in the autumn for a valuation of about £50m. Roxi Music makes a karaoke

machine that connects to your TV and offers music streaming, games and karaoke for £99.95, including 12 months’ access to its 30m-strong song catalogue. Once you’ve gone over the year, it costs £5 a month and the device is targeted specifically at the older user who wants something simple. * SO WHAT? * Sounds like a reasonable enough idea but I would say that its appeal is quite niche at the moment. There are so many other apps out there that can do roughly the same thing, so although Roxi has a hardware device, I think it needs to expand into something else. If Spotify turned around and decided to get into karaoke, for instance, Roxi would be dead IMHO.

And finally, in other news…

Many of you will know that I am very much a dog person – but I do actually like cats as well! I defy any of you not to at least want to say “ahhhhh” when you see Tiny munchkin kitten sleeps like an angel in the cutest position, winning hearts of Instagram (SoraNews24, Dale Role https://tinyurl.com/y2ju83cf). A nice way to start the week!

1. In BREXIT NEWS, the Bank of England warns of a No-Deal shock
2. In BIG TECH NEWS, a UK/US clash is in the offing on digital tax, Amazon aims to futureproof its staff, Facebook wants to go shopping for gaming studios, Nintendo jumps on Switch Lite while Google and Apple have privacy issues
3. In INDIVIDUAL COMPANY NEWS, Reckitt pays to settle an opioid case and M&S loses yet another fashion chief
4. In OTHER NEWS, I bring you an annoying picture…

So the Bank of England sounds a no-deal warning…

Bank of England warns no-deal Brexit could trigger economic shock (The Guardian, Richard Partington) highlights the central bank’s thoughts on what could happen if we had a no-deal Brexit – that it could result in a massive shock to the UK economy and disrupt EU companies by cutting them off from London-based banks. The Bank’s governor, Mark Carney, said that “Although such disruption would primarily affect EU households and businesses, it could amplify volatility and spill back to the UK in ways that cannot be fully anticipated or mitigated. * SO WHAT? * No-one knows what’s going to happen because something of this magnitude has never

been done before – and that includes the “experts”! I have to say that this all reminds me of the Millenium Bug (remember that, anyone??) where everyone was getting hysterical about systems failing and planes falling out of the sky because they couldn’t cope with going from 1999 to 2000 – and then nothing happened. I really think that even if we get a no-deal, countries will try to work together to make things happen – because they have to. It’s all very well for the politicians in Brussels and Westminster to squabble amongst themselves as part of a massive (and expensive) game of chicken and who has the biggest cojones – but people on the ground are going to have to deal with some pretty dramatic stuff at borders and in supermarkets etc. and I believe they will make things work. Yes, there will be disruption, but I am hoping that everyone will come to their senses and minimise any potential madness quickly otherwise things could get very nasty. 

The UK is about to poke the bear with a sharp stick, Amazon aims to retrain, Facebook aims at gaming takeovers, Nintendo gets a Lite boost while Google and Apple have privacy problems…

Britain set for clash with US on digital tax (The Times, James Dean) shows that we have decided to go ahead with a special tax on Amazon and Google, amongst other tech giants, despite Trump telling US trade rep Robert Lighthizer to investigate where a similar plan by France was “dicriminatory or unreasonable”. France yesterday approved a 3% digital sales tax in the Senate, which will apply retrospectively from the beginning of this year. * SO WHAT? * US tech giants pay tiny amounts of tax in Europe because they funnel all their sales through places that have very generous tax regimes, like Ireland and Luxembourg. Chat about imposing a digital sales tax ostensibly started after the US put tariffs on steel and aluminium imports from the EU last year (but there have been rumblings about this for ages). The new UK digital sales tax will come into force in April next year and apply to companies with over £500m in global revenues and over £25m in UK revenues. This tax is going to be an interim measure while talks with the OECD continue over how to tax companies in a digital age. Call me cynical, but I wonder whether this tax will ever really see the light of day. The timing of this announcement comes BEFORE the next Prime Minister has been chosen, it’s an “interim measure” and it’s already p!ssed Trump off as he gets closer to election year – surely this is a massive gift to whoever ends up in Downing Street? I say that because it could be used as a lever to get a trading deal/some concessions from the US (who have thus far given us nothing). The incoming PM can probably kill it IF a better trade deal is hammered out with the US, but they could also use it for getting a better deal with the Europeans – i.e. we’ll kill this tax if you don’t give us a better deal and leave you on your own (which could lead to big tech companies coming to the UK, especially if we brand ourselves a new tax-friendly country). Obviously, it wouldn’t be as clearcut as I’m describing it, but I certainly think this tax could be a useful negotiation tool. BoJo must be loving it as this could hand him (if he gets the top job) an instant win with his BFF Donnie T.

Amazon mass retrains US staff for tech future in £558m drive (Daily Telegraph, Natasha Bernal) highlights Amazon’s plans for the future as it has earmarked over $700m to up-skill over a third of its workforce (100,000 out of 275,000 full-time workers in the US) by 2025 as it pushes to automate tons of manual roles. This will be with a view to them using these skills within Amazon or outside it. It’s unclear at the moment whether this would be rolled out overseas. * SO WHAT? * This is a massive declaration of intent that it will be automating big time. Although

current robot capability is limited, it is obviously going to grow. At least Amazon is offering the opportunity for employees to do this, rather than just wittling them down over time. I suspect that other companies planning to automate processes won’t be quite as generous.

In gaming, Facebook looks to raise game with takeovers (The Times, Tom Knowles) signals the social media giant’s desire to get more of its 2.3/2.7bn users (depending on whether you measure this by “just” Facebook, or whether you include Insta, WhatsApp and FB Messenger) playing games on its virtual reality headsets, sales of which have been disappointing since it bought Oculus for $2bn in 2014. It looks like they have set aside about $1bn to make acquisitions of entire gaming studios to boost their offering. The new Oculus Quest costs $399 and doesn’t require a computer and Facebook has already signed deals to make VR versions of games such as Assassin’s Creed and Tom Clancy’s Splinter Cell. * SO WHAT? * What’s taken it so long?? This sounds great, but I also think that VR headsets are still too big and clunky for truly widespread adoption. At least the games offering is likely to get better – which may tempt more people into the joys of VR. Gaming is going to get very exciting over the next few years what with the advent of Google Stadia (the “Netflix of games” platform), Apple’s Arcade (a gaming subscription service) and Snap’s moves in this area – and 5G is going to give it the tech backdrop it needs to all become possible.

Nintendo shares jump after Switch Lite announcement (Financial Times, Daniel Shane) highlights Nintendo shares hitting a nine-month high in trading yesterday on the announcement of a new, cheaper version of its popular console. It will be released on September 20th, will sell for $199.99 and have more basic functionality than its older and pricier sibling. * SO WHAT? * Investors are clearly hoping that this will boost demand for the Switch and lengthen the life of this hit product!

Then it appears that there are some privacy issues that need to be ironed out in Google contractors listen to recordings of people using virtual assistant (Wall Street Journal, Sarah E.Needleman and Parmy Olson) as Belgian public broadcaster VRT NWS said in a report this week that Google employs contractors around the world to listen into recordings of people’s conversations with Google Assistant. * SO WHAT? * I guess that they have to do this in order to improve voice recognition functionality, but it is spooky nevertheless. Not great PR, but I don’t think people will be abandoning their smart speakers en masse.

Talking about privacy, Apple pulls walkie-talkie app after glitch creates eavesdropping vulnerability (Wall Street Journal, Sebastian Herrera) shows that Apple has temporarily disabled the Walkie-Talkie app on Apple Watches to solve a glitch which can let someone listen in to someone else’s iPhone conversation without consent. Apple remained tight-lipped on the details while it tries to fix the issue. * SO WHAT? * This just goes to show how data privacy is an issue for even large, deep-pocketed firms.

Reckitt pays a massive $1.4bn to settle an opioid case and M&S loses yet another fashion chief…

In Reckitt pays $1.4bn to settle opioid case with US government (Daily Telegraph, Julia Bradshaw) we see that Reckitt Benckiser has agree to pay $1.4bn to the US government to settle the investigation into its alleged involvement in dodgy sales and marketing of an anti-addiction drug, Suboxone Film. * SO WHAT? * This will lift

some of the cloud off the stock for the moment, but its spinoff Reckitt Pharma (renamed Indivior), is still facing a $3bn fine in a related criminal case. However, this current deal would suggest that another deal could be done with Indivior – and if that is the case, there will be a lot of relief at Reckitt.

M&S ousts boss of its struggling fashion arm (Daily Telegraph, Laura Onita) highlights the ongoing turmoil at M&S as it continues to try to get its fashion offering right. Jill McDonald has been ousted after less than two years in the job. The turmoil continues…

And finally, in other news…

I thought I’d leave you with Can you spot the bee in this flower-filled brainteaser (MSN, Gili Malinsky https://tinyurl.com/y26qms5x). I warn you – this is very annoying!

1. In MACRO & MARKETS NEWS, the UK economy returns to growth and Wall Street buzzes on rate decrease hopes
2. In CAR NEWS, sales in both China and India weaken while JLR continues to suffer
3. In UK HIGH STREET NEWS, we look at Superdry’s downbeat outlook, Wetherspoon’s relative success and the probe into Heineken
4. In OTHER NEWS, I bring you an optical illusion…

So the UK economy returns to growth and Wall Street gets a boost on hopes of an interest rate cut…

UK economy returns to growth as carmakers end Brexit shutdown (The Guardian, Richard Partington) cites the latest figures from the Office for National Statistics (ONS) which say that UK GDP went up by 0.3% in May versus the previous month as production stoppages by carmakers that coincided with the original Brexit “leave” date fired back up again. Carmakers normally shutdown over the summer period for maintenance but this was brought forward in order to avoid difficulties related to border delays. On the services side of things, growth remained steady at 0.3% in the same time period, although the ONS pointed out that the sector – which accounts for about 80% of UK GDP and includes areas such as banking, hospitality and leisure – has seen a notable slowdown since July 2018. The British Chambers of Commerce head of economics, Suren Thiru, observed that “The continued slowdown on the underlying three-month measure is

further evidence that the UK economy is faltering under the weight of relentless Brexit uncertainty and tougher global economic conditions”.

In Wall Street climbs with cuts on horizon (The Times, James Dean) we see that US Federal Reserve chairman Jerome Powell said that a combination of Brexit uncertainty, international trade wars, sluggish global growth and inflation is leaving the American economy vulnerable – and markets strengthened on hopes that interest rates would be cut at the next meeting of the Fed which concludes on July 31st. Separately, Powell also dampened enthusiasm for Facebook’s new digital currency, Libra, by saying that he was concerned about its potential impact on consumers and markets and that there were “many serious concerns regarding privacy, money laundering, consumer protection and financial stability”, which took a bit of the shine off Bitcoin’s recent rally. * SO WHAT? * Everyone monitors the Federal Reserve’s actions and observations very closely due to its huge influence on world markets being the central bank of the world’s largest economy. The last meeting prepared the ground for an interest rate cut, so it seems that Powell’s remarks are edging closer to making this a reality.

China, India and Jaguar Land Rover all face weakening car sales…

No turnaround in sight for China car sales (Wall Street Journal, Trefor Moss) heralds continued weakness in car sales in the world’s biggest market following thirty straight years of growth. The latest data from the China Association of Automobile Manufacturers showed June sales down by 9.6% versus the previous year, falling for the 12th month in a row as consumers continued to tighten the purse strings against the US-China trade war backdrop. US automakers Ford, GM and FiatChrysler’s Jeep division suffered the most among the foreigners – and European competitors such as VW are also suffering – but domestic players such as Zhejiang Geely, which announced a profit warning on Monday this week, are also suffering a rough ride. On the flipside, Japanese makers Honda and Toyota actually saw sales rise. * SO WHAT? * Clearly, economic uncertainty exacerbated by the US-China trade conflict is making potential buyers sit on their hands so I think it’s just a case of the manufacturers having to weather the current conditions. There’s not really much they can do apart from

keep their operations lean IMHO.

If that’s not bad enough, India car sales plunge by a quarter as credit crunch bites (Financial Times, Benjamin Parkin and Hudson Lockett) shows a MASSIVE drop in Indian car sales – the biggest in over ten years – as a credit crunch bites into the whole country. * SO WHAT? * The latest figures from the Society of Indian Automobile Manufacturers show three continuous months of decline of 20% or more as credit growth has dried up, suddenly leaving customers with fewer financing options. Given that non-banks had come to account for 40% of new vehicle loans, according to Capital Economics, this sudden drop-off is hardly surprising. Tough times ahead for car sales in India – and it’s not being made any better by unemployment being at its worst level in decades.

Jaguar Land Rover sales add to British motor industry woes (Daily Telegraph, Alan Tovey) highlights poor sales figures for the embattled car maker as its global sales fell by 11.6% in the latest quarter versus the same time period a year ago. Sales of the new Evoque are helping to stem the decline, but then again sales are suffering to some extent because customers are waiting for the new version of its popular Discovery Sport model. * SO WHAT? * The tough times continue…

Superdry gets bleak, Wetherspoon outpaces rivals and Heineken gets investigated…

Superdry founder dampens early revival hopes amid $85m loss (Daily Telegraph, Laura Onita) shows that things continue to be tricky for the Japanese-themed fashion retailer as it made £85.4m in losses for the year to April versus a profit of £65.3m the previous year. Returning co-founder Julian Dunkerton obviously blamed the cr*p performance on the previous management and said that a turnaround would take up to two years. * SO WHAT? * I think that the company needs a MASSIVE overhaul. There are surely only so many t-shirt/polo shirts/hoodies you can sell – the company surely has to come up with something new otherwise I fear it could go the way of previous stars such as French Connection.

Elsewhere, Wetherspoon still leads the pack despite refusal to increase prices (Daily Telegraph, Oliver Gill) shows that the pub group is still managing to pull ahead of peers such as Young’s and Greene King despite its refusal to increase prices squeezing their margins. Despite this, it is still investing in upgrades to its pubs and buying up freeholds of sites where it used to be a tenant. Then in Heineken’s pub and bar business investigated by PCA over ‘beer tie’ (The Guardian, Rob Davies) we see that Heineken’s pub chain is going to be under scrutiny by the Pubs Code Adjudicator for imposing unfair terms on landlords who try to cut links with the brewer. * SO WHAT? * If the PCA finds against Heineken, it could be fined up to 1% of UK turnover – about £11m. This could also lead to other similar investigations in the sector.

And finally, in other news…

I thought I’d leave you with A new optical illusion on Twitter has people mistaking a car door for the beach (Insider, Gabbi Shaw https://tinyurl.com/yxkvswbv). What do you see?

1. In MANUFACTURING-RELATED NEWS, Airbus is on track to overtake Boeing, Switch production goes to Vietnam and BMW pulls some engine production from the UK
2. In STREAMING NEWS, China’s DouYou aims to raise almost $1bn in a US IPO and live event streaming hots up
3. In UK HIGH STREET NEWS, M&S warns of more store closures, as does Patisserie Valerie’s owner
4. In OTHER NEWS, I bring you a solution to excess baggage…

So Airbus is on track to beat Boeing, Nintendo Switch production goes to Vietnam and BMW pulls some engine production from the UK…

Airbus poised to overtake Boeing as biggest plane maker (Wall Street Journal, Doug Cameron and Robert Wall) shows how the whole 737 MAX disaster is denting Boeing as Airbus looks set to replace it as the world’s biggest plane manufacturer after seven years of being the bridesmaid. Boeing said yesterday – for the third consecutive month – that it had no new orders for the MAX. As things stand, most analysts think that the aircraft won’t fly again until at least the end of September as Boeing fixes the aircraft’s flight control systems. Boeing’s second quarter earnings are due out on July 24th, so more detail will be available on the cost of the MAX’s grounding. * SO WHAT? * Whoever gets to be the world’s biggest aircraft manufacturer, they are both facing a slowdown in orders as tensions continue between the US and China – the biggest markets – so a resolution between both sides would surely help widen the current order bottleneck.

Nintendo Switch to be made in Vietnam (Financial Times, Kana Inagaki) shows another consequence of the US-China trade wars as Switch consoles will be made in Vietnam for the first time as Nintendo moves away from reliance on China. * SO WHAT? * Apparently, Nintendo had been talking about diversifying some of its production away from China  anyway (where it currently makes virtually all of its consoles via contract manufacturers including Foxconn), but I’m sure that the escalation of tensions gave this chat a kick up the backside. Although this is just one company, given who it is, you would have thought it would give cause to others such as Sony and Microsoft to at least consider something similar as all sorts of companies face the same difficulties. Vietnam continues to benefit from the ongoing trade dispute…

BMW moves some engine production out of UK over Brexit fears (The Guardian, Jasper Jolly) shows ongoing consequences of Brexit uncertainty as the carmaker said that it had moved manufacturing of engines destined for South Africa from the Hams Hall factory in the West Midlands to Germany. * SO WHAT? * This is just more evidence of how Brexit uncertainties are continuing to hit UK manufacturing – especially in automotive.

China’s DouYu aims to raise money in the US and live event music streaming looks like The Next Big Thing…

Chinese streaming site DouYu seeks up to $944 in US IPO (Financial Times, Hudson Lockett) shows that the Tencent-backed game-streaming start-up – which streams esports matches and other game-related content – is trying to raise a chunky slug of money on the Nasdaq despite ongoing US-China trade tensions, especially in the field of technology. It is rumoured that DouYu is trying to raise money to build a warchest to take on competitors like Huya as well as giving an early angel investor an exit route. * SO WHAT? * It’s particularly interesting that a Chinese tech company still wants to list in the US despite all the trade shenanigans going on at the moment. SenseTime and Megvii, two Alibaba-backed rival facial recognition companies, have already reconsidered and other expected

listings of ByteDance and Didi Chuxing have also failed to come forward this year. After the listing, Tencent will have about 37% of the outstanding shares via its wholly-owned subsidiary Nectarine.

Music-streaming services tap live events (Wall Street Journal, Anne Steele) highlights ongoing trends in streaming and music as both come together to build massive audiences for fans. Apple and Spotify have been trying out various types of live events (concerts, album-listening parties and fan Q&A sessions) to keep subsribers happy – and Taylor Swift’s concert tonight in New York City will be live streamed via Amazon’s Prime Day promotion. * SO WHAT? * I think this is a great new revenue stream for all concerned. The streamers get great content that justifies the subscription without having to pay the stars (they get massive exposure instead and promotion on the websites concerned) and fans get more access more often to their idols. I think that the Marshmello concert hosted on Fortnite back in February was a real landmark and this area is only going to grow. Just think – if you could add VR into it as well, it will be buzzing!

Both M&S and Patisserie Valerie warn of more store closures…

M&S warns even more stores at risk as £350m savings ‘on track’ (Daily Telegraph, LaToya Harding) cites chief exec Steve Rowe as saying that the company is now suffering because of “not shutting stores 10 or 20 years ago” and that the original plan to shut down 110 shops could increase. The company has a £350m savings target as part of its current bid to overhaul the business but was also keen to highlight the future potential of its tie-up with Ocado. * SO WHAT? * What a load of BS. M&S has had all sorts of highs and lows over the years – and to say now that they should have shut a load of stores 10 or 20 years ago is just a useless thing to say. It seems to me that M&S does quite well for a bit, then slides as it gets more boring, someone new comes in to revamp formats etc. and then it

happens all over again (I’ve seen this happen over the last 20 years or so!). M&S is currently in “consolidation mode” – but the difference this time around is that consumer behaviour undergoing a seismic shift. At least the chief exec can kitchen sink everything and blame predecessors for now, but he’s got to come up with the goods sooner or later. The Ocado deal is a step in the right direction, but he’s going to have to do more than that.

Patisserie trims fat with another 14 closures (The Times, Dominic Walsh) shows that Patisserie Valerie’s “new” owner, Irish private equity firm Causeway Capital, will be closing 14 cafes in addition to the 71 that were closed by KPMG when the company went into administration. Causeway Capital said “Patisserie Valerie has today confirmed it has closed 14 of its smaller patisseries. The difficult decision was reached following a detailed review of the size, trading performance and location of each store over the past five months”. Sad news, but hopefully good for the future of the firm.

And finally, in other news…

I thought I’d leave you today with Man puts on 15 layers of clothing rather than pay airline’s excess baggage fee (Newsweek, Daniel Avery https://tinyurl.com/yypxx3p3). This reminds me of something that happened to me back when I went to Tokyo to study for a couple of years at uni. Unfortunately, my baggage allowance was still 25kg even though I was going there for a year (initially), so I was wearing all my heavy clothing (hiking socks, Timberland boots, trackie bottoms, jeans, polo shirt, cricket jumper, leather jacket) to save on weight. Unfortunately, it was August and when the plane touched down at Narita at about 7.30am it was already about 30 degrees C with 100% humidity. This was made worse because the airline had left my luggage at a connecting airport – so I ended up having to wear the clothes I was standing in for three days 😱😱😱. Tough (and sweaty) times 😜

1. In BANKS NEWS, Deutsche suffers after the cull and banks are slow to endorse Facebook’s Libra
2. In CONSUMER/RETAILER NEWS, spending hits the skids, online shopping is expected to overtake high street shopping in ten years, Jack Wills brings in KPMG and Matalan falls under the weather
3. In INDIVIDUAL COMPANY NEWS, BA gets a hefty fine and Virgin Galactic aims to float
4. In OTHER NEWS, I bring you a dancing cockatoo…

So Deutsche sinks after the cuts and banks are slow to get involved in Libra…

Deutsche falls 5% on fears global restructuring is not enough (Financial Times, Olaf Storbeck) shows the initial reaction to yesterday’s dramatic announcements, reflecting doubts that its revenues may fall faster than its costs given that it is likely to lose customers. Deutsche’s CFO, James von Moltke, didn’t pump up the feelgood factor by saying that after sinking into loss this year, the bank could well continue to lose money in 2020, citing “significant uncertainty” about profit forecasts. On the other hand, life goes on in Deutsche commits to the City after cuts (The Times, Katherine Griffiths) as the embattled bank stated that it would continue to press ahead with moving into its new London HQ at 21 Moorfields in the City in 2023. Before yesterday’s cuts, it had 7,000 staff in London and 1,000 in Birmingham – but the new building has space for 5,000 (so I guess any Deutsche employees who knew this would have seen the writing on the wall). * SO WHAT? * Obviously, it’s early days in terms of determining whether the cuts that were made will be enough to satisfy investors who had long been baying for blood, but it would seem that the initial reaction, at least, would be scepticism. Mind you, given Deutsche’s recent track record, you can forgive investors for not really giving them the benefit of the doubt.

In Banks in no rush to join Facebook’s crypto project (Financial Times, Laura Noonan, Robert Armstrong, Nicholas Megaw and Stephen Morris) we see that banks are, unsurprisingly, not keen on endorsing Facebook’s new cryptocurrency. This is unsurprising because they don’t want to rub the regulators up the wrong way (regulators really don’t like Libra at the moment, so banks will feel that they might be collateral damage if they jump on the Libra bandwagon too joyfully), Libra is viable competition to their own cryptocurrency projects and it could also harm their position in the financial “food chain” as “the gatekeepers of the global financial system”. Having said that the leader of Facebook’s Libra project, David Marcus, said that “We have had conversations with banks. We still have conversations with banks. And my expectation is that by the time this thing launches next year you will have banks that are going to be members of this”. * SO WHAT? * I think that traditional banks are going to find this a tough one because of all the baggage of previous financial crises – but given that it’s “only” a $10m buy-in to get into the Libra Association, surely some challenger/digital banks will be all over this. And if THAT happens, I would have thought it will only be a matter of time before other “traditional” banks join the Libra party. There’s a long way to go yet, though, and Facebook will face very intense scrutiny given its track record thus far in trustworthiness!

Consumer spending hits new lows, online shopping is expected to overtake high street shopping while Jack Wills and Matalan have problems…

Consumer spending at weakest since mid-90s amid Brexit chaos (The Guardian, Larry Elliott) cites the latest figures from the British Retail Consortium (BRC) which show that annual consumer spending is at its weakest level since records began in the mid-90s. Surprise, surprise – Brexit uncertainty is being blamed for this one. Helen Dickinson, chief exec of the BRC, said that “June sales could not compete with last year’s scorching weather and World Cup, leading to the worst June on record…the picture is bleak: rising real wages have failed to translate into higher spending as ongoing Brexit uncertainty led consumers to put off non-essential purchases”. The report also showed that online shopping continues to rise and Shopping online to overtake high street in next decade (Daily Telegraph, Tim Wallace) mentions a report by Retail Economics that

takes it a step further by saying that by 2028 over half of all shopping will take place online. * SO WHAT? * This just shows how important it will be for retailers to get the balance of their online and offline offerings right ASAP – otherwise they will be toast. In the short-term, though, Brexit clarity is obviously sorely needed.

The high street gloom continues in Jack Wills appoints advisers to assess all options – including sale (The Guardian, Sarah Butler) which shows that the preppy apparel retailer continues to be problematic and has brought in KPMG to look at options, including selling itself. It is currently owned by private equity company Bluegem Capital, who bought it in 2016, but trading isn’t looking great. Then Matalan warns that profits could be hit by discounting (Daily Telegraph, Laura Onita) shows that Matalan is having to use big discounts to lure customers into its shops, which will put pressure on profits in the second quarter. Matalan is often compared to Primark, but as Sofie Willmott of research firm GlobalData puts it, “Unlike Primark, Matalan is also able to capitalise on retail spend shifting online with its digital channel significantly boosting overall performance”. Still, not great…

BA gets a massive fine and Virgin Galactic aims for the stars a listing…

BA to appeal against £183m fine over customer data hack (Daily Telegraph, Oliver Gill) highlights the handing down of a massive fine against the company for a customer data breach last year which resulted in the details of 500,000 customers being accessed by hackers. The fine was larger than everyone had been expecting and BA will appeal. * SO WHAT? * Airlines are having a tough old time at the moment, so the timing of this fine isn’t great. BA will presumably want to string this out for as long as it can in an effort to pay less, but Information Commissioner Elizabeth Denham said that “People’s personal data is just that – personal. When an organisation fails to protect it

from loss, damage or theft it is more than an inconvenience. When you are entrusted with data you must look after it”.

Richard Branson’s space unit to go public (Wall Street Journal, Maureen Farrell) heralds The Bearded One’s latest PR opportunity as Virgin Galactic is preparing for a public listing. Social Capital Hedosophia Holdings Corp, a special-purpose acquisition company, is going to invest about $800m for a 49% stake which Virgin Galactic reckons will give it enough money to play with until spaceship operations become commercially viable. Virgin Atlantic is currently engaged in a space race with the likes of Jeff Bezos’ Blue Origin and Elon Musk’s SpaceX. * SO WHAT? * Sorry, but I think this sounds like a humungous money pit. I expect delays, massive expense and, ultimately, failure. Branson has a chequered history with listing his companies, so success is most definitely not guaranteed!

And finally, in other news…

After all this rather downbeat news, I thought I’d leave you with Snowball: Cockatoo who can pull off 14 different moves is first non-human animal known to dance to a beat (The Independent, Phoebe Weston https://tinyurl.com/y5wf2al4). Man, this cockatoo has some moves!

1. In FINANCIALS NEWS, Deutsche Bank takes drastic action, digital banks grow up and fintech evolution continues
2. In CAR-RELATED NEWS, SUVs “pile up” on the sales lot, energy suppliers pledge to get EV fleets and JLR’s chief says batteries are key to UK car manufacturing’s future
3. In INDIVIDUAL COMPANY NEWS, Boeing loses a chunky order to Airbus and Tesco experiments with Amazon Go-style shopping
4. In OTHER NEWS, I bring you Mariah Carey’s bottle cap challenge attempt…

So Deutsche Bank cuts deep, digital banks aim higher and fintech gets crowded…

Deutsche Bank to exit equities trading in radical overhaul (Financial Times, Stephen Morris and Olaf Storbeck) heralds some sobering news for Deutsche Bank employees as the company announced it is to cut 18,000 jobs and siphon off €74bn of its riskiest assets into a “bad bank”, effectively canning its ambitions to be a Wall Street-beater. This will involve the shutting down of its loss-making equities trading business and the downsizing of its bonds and rates trading operations. Job cuts are to kick off this morning in London and New York and will trim numbers from the current 91,500 to around 74,000. The company said that it won’t be raising any additional capital, won’t be paying a dividend for the next two years and concluded that these actions “are designed to allow Deutsche to focus on and invest in its core, market-leading business of corporate banking, financing, foreign exchange, origination and advisory, private banking and asset management”. * SO WHAT? * This has been a while in coming, but should go some way to address critics who have been saying that reforms of the troubled German lender have not gone deep enough. Only time will tell whether this has been sufficient, but it should at least buy management some breathing space. No doubt employees of other banks will be feeling more nervous as they fear getting replaced by “better” and/or now cheaper Deutsche bank casualties – or because competitors will use Deutsche’s example to make more culls of their own.

Digital banks seek to turn popularity into profits (Financial Times, Nicolas Megaw) looks at the evolution of the “digital disruptors” in the banking space like Monzo, Revolut and N26 as they strive to move towards profitability – although they’ll be making more losses in the meantime. Interestingly, these three banks have a higher valuation than the “challenger banks” who launched in the wake of the 2008 financial crisis but they now need to morph their popularity seamlessly into doing the boring “banky”-type stuff – i.e. providing a service to its customers whilst actually making some money. One of the ways they are

diversifying their revenues is by providing different services via premium subscription like travel insurance, savings accounts, insurance or mortgage broking from third party providers. * SO WHAT? * All this extra service stuff looks to me like fiddling around the edges, but it does seem that the digital banks are getting better at convincing customers to use them as their “main” bank (which is no mean feat) and broadening their appeal from the early adopters. I’m sure that, over time, this will only get better – but it won’t happen overnight. The main key here, though, is to make sure that they make enough progress towards profitability in order to survive a downturn. 

Are we at peak fintech, or is this actually just the start (Daily Telegraph, James Cook and Matthew Field) poses the question as we start London Fintech Week today. Fintech has become an increasingly crowded area in the last few years and the number of related advertising campaigns have served to increase customer awareness. Having said that, customers in the challenger banking space still seem to be slow to switch everything over and as Accenture fintech expert Julian Skan observed, “We’re probably at peak interest. They are attracting a very high percentage of people opening bank accounts and the question is how long that continues”. British fintechs have so far raised $1.3bn in funding, according to PitchBook data – a record year – but the number of deals has actually slowed. * SO WHAT? * I completely disagree with the Accenture guy – I think that we are nowhere near “peak interest” at all! I think that interest in digital banks etc. is growing all the time. Let’s face it, there was some statistic way back when saying that people are more likely to get divorced than change their bank account (in the UK, anyway) – so it’s pretty impressive that these banks have managed to make any dent at all in the incumbent banks’ business. Although it’s probably a bit of a slow burn, once customers get the hang of the way these things work, the trust will build and build and more customers will get sucked in. In the meantime, I think that there will be a LOT of consolidation either among the disruptors themselves or by the big banks wanting to accelerate their game. I would have thought that big banks would do better to preserve the branding of their more exciting acquisitions so they could have the best of both worlds – a forward-thinking digital offering backed by a “boring” bank that everyone knows.

SUVs “pile up”, energy suppliers commit to an EV fleet and car batteries are the future…

SUVs are bumper-to-bumper on dealer lots, with more on the way (Wall Street Journal, Ben Foldy) highlights the opinion that we are reaching SUV saturation as customers are faced by more and more models from all the manufacturers who have been keen to tap into the current penchant for big vehicles. Sales of crossovers and SUVs are losing momentum and are taking longer to sell, meaning that there are more deals around for savvy buyers. And it’s not going to end there – manufacturers are lining up even more new SUV models as they focus in on this more profitable segment. Putting this all in numbers, 70 individual models of SUVs were available in the US in 2014, versus 96 now that will, according to a Bank of America report, rise to 149 by 2023. * SO WHAT? * The problem with all this is that if there are too many SUVs going on sale, the competition amongst manufacturers to sell them will be so fierce that prices will have to fall, making them less profitable – which is why they built them in the first place! Crossovers and SUVs currently make up over 47% of the new vehicle market in the US, with sales of sedans and hatchbacks only representing 30% of the market (versus 50% in 2012). It’ll be interesting to see how this plays out, but you do get the feeling that SUVs are becoming the norm these days!

You may recall that last week I said that big companies need to switch their fleets to EVs to encourage wider adoption – well, in Energy suppliers vow to switch all of their vehicles to electric (Daily Telegraph, Julia Bradshaw) we see that two of the UK’s biggest energy suppliers – Centrica and SSE – have said that they will convert their entire fleet of commercial vehicles to electric by 2030. Centrica has the UK’s third largest commercial fleet in the

UK and SSE has the seventh – and they both said that they’d install charging services for employees and customers. Services company Mitie is also aiming to go down the same road and by the end of 2019, it will have switched 20% of its vehicles to electric and installed 800 new charging points. * SO WHAT? * This is a big deal, no? If more companies decide to do this – and, importantly, sort out the charging network – the EV thing could really take off. Still, it’s not going to be overnight. Like I’ve said before, if I were to buy a car now, I’d buy petrol (because I don’t want to do diesel, don’t do high mileage and think that the current charging network is useless) – but I think that the one after that would probably be a hybrid (not electric – although let’s see how the charging network develops!).

UK car industry future hinges ‘not on Brexit, but on batteries’ (The Guardian, Jasper Jolly) highlights the belief of JLR boss Ralph Speth that “if batteries go out of the UK, then also the automotive production will go out of the UK”. * SO WHAT? * Manufacturers are scrambling amongst themselves to increase their EV model line-ups and these new cars will need lithium ion batteries. Interestingly, the UK has already come close to leading the world in battery technology as the lithium ion battery was actually invented at Oxford University in the late 70s – but then Sony took the baton and commercialised it. We have some battery capacity in the UK at the moment – AESC in Sunderland and Hyperbat, a JV between Williams (the F1 lot) and Unipart – but this needs to be upped considerably. The scale of the task is huge – but with China having already poured billions in to this area, the need to improve our capabilities is growing all the time. I would have thought that the government has to step up big time to give this area the boost it needs – although I do wonder whether we should hedge our bets and possibly invest more in solid state tech, which is more stable (won’t blow up on you) and which is currently pretty expensive. Surely we can add more to that area than the rather crowded field of lithium ion batteries…

Boeing loses more orders and Tesco trials Amazon Go-like tech…

Boeing loses MAX deal to Airbus (Wall Street Journal, Robert Wall) highlights Boeing’s latest chunky loss in the wake of the 737 MAX disaster. The discount airline arm of Saudi Arabian Airlines Corp, Flyadeal, switched from its original Boeing order to buying up to 50 Airbus A320neo planes, as Boeing’s 737 MAX planes continue to have problems following two terrible crashes. The deal was thought to be worth over $5.5bn – so not an insignificant amount. * SO WHAT? * I expect this to continue. No doubt when Boeing sorts its problems, it’s going to have to offer big discounts to entice customers back, which will also affect profitability for a while. The tough times continue for Boeing while Airbus gets an unexpected tailwind.

Spurred by Amazon, supermarkets try swapping cashiers for cameras (Wall Street Journal, Parmy Olson) shows us that Tesco is experimenting with Amazon Go-like technology that lets customers walk in, pick up their goods and go without faffing around with a cashier. It’s using the same idea as Amazon in its cashierless shops – using loads of cameras – and any developments in this area will be monitored with interest by American counterparts. Tesco says that it plans to offer “frictionless shopping” to the public next year, after testing with employees, with a view to rolling the system out to its smaller stores. It says that the tech it is using differs from Amazon’s in that it only uses cameras, whereas Amazon Go stores use cameras and sensors. French retailer Carrefour is also running similar trials. * SO WHAT? * This all sounds great but I think it will take quite some time for it to become normal. Still, it sounds fun though – no? This could be quite an interesting way for Tesco to differentiate itself from its rivals.

And finally, in other news…

Last week, I alerted your attention to the bottle cap challenge where various stars of a martial arts-persuasion unscrewed bottle caps via a spinning kick. Well diva-in-chief Mariah Carey had a go in Mariah Carey hilariously masters the bottle cap challenge using just her voice (Yahoo! Rachel DeSantis https://tinyurl.com/y48njgjw). Nice 👍

1. In HIGH STREET NEWS, William Hill announces shop closures and Primark eyes US expansion
2. In CAR-RELATED NEWS, UK plug-in car sales disappoint and India’s Ola gets a London licence
3. In TECH-RELATED NEWS, Samsung forecasts a big fall in operating profit and Niantic could do better
4. In OTHER NEWS, I bring you the “invisible challenge”…

So William Hill wields the axe and Primark looks to the US…

William Hill to shut 700 shops (Daily Telegraph, Michael O’Dwyer) heralds the inevitable move by the bookmaker following the government’s crackdown on fixed-odds betting terminals (FOBTs) which cut the maximum bet from £100 to £2 in April to limit gambler losses. Betting shops earned huge amounts of money on these things – often referred to as the “crack cocaine” of gambling – and so their sudden demise has hit hard. GVC, which owns Ladbrokes and Coral, also plans to close up to 900 of its shops for the same reason. In all, this will put nigh on 10,000 jobs under threat. * SO WHAT? * The betting shops have seen this coming for ages, so this should come as no surprise. From a business standpoint, though, things could be worse as the US sports betting market opened up this year due to a change in the law and so British bookmakers have been scrambling over themselves to get a piece of that growing (American) pie. In the meantime, though, store closures will hit costs and put yet more holes in our high street.

Primark still hot despite wet start to summer (The Times, Ashley Armstrong) highlights strong sales at the Associated British Foods-owned clothing retailer despite experiencing a wet May. Fun fact: ABF owns brands like Ovaltine, Ryvita, Jordans and Twinings but makes over half of its sales and profits from Primark (hey – I’ve got your back on interesting conversation topics 👍). Actually, while I’m at it, did you know that Primark is Britain’s #1 retailer by volume and #3 in terms of value after M&S and Next?? Anyway, trading was strong despite the weather and tough comparisons with the same time the previous year which saw a royal wedding, the World Cup and a heatwave. ABF left its full-year outlook unchanged. * SO WHAT? * I think that this is an impressive performance on the domestic front given current difficult trading conditions. Outside the UK, Primark targets Chicago for next stage of US expansion (Financial Times, Jonathan Eley) looks at the company’s US ambitions which follow a difficult period where it had to cut space at a number of its stores to improve sales density. The US market has been the graveyard of many a UK retailer – the most recent casualty of which has been Philip Green’s Arcadia which is closing Topshop there – so clearly it has its work cut out.

UK plug-in sales suffer and Ola gets a London licence…

Subsidy cuts blamed for fall in UK sales of electrified vehicles (The Guardian, Jasper Jolly) shows that – surprise, surprise – when punters are faced with higher prices for electric vehicles, they don’t buy them. And yes, bears do indeed sh!t in the woods. Anyway, the latest figures from the Society of Motor Manufacturers and Traders show that sales of alternative-fueled vehicles (which includes hybrids as well as fully-electric) fell by 11.8% in June versus the same month last year. The geniuses at SMMT put this down to the government reducing the subsidy for electric vehicles from £4,500 to £3,500 and eliminating the hybid subsidy altogether in October. Funnily enough, sales of diesels continued to fall – this time by 20% year-on-year – given that this is now seen as the fuel of Satan. * SO WHAT? * The SMMT consistently belly-aches over falling car sales, but the fact of the matter is that people just aren’t spending money (from their higher wages) on big ticket items like cars because of economic uncertainty. Also, the quicker manufacturers shift production away from diesel the better. God knows what’s going to happen to all the old secondhand diesels out there that everyone bought because we were all told the wrong information! FWIW, I

think that a major force in boosting sales of electric vehicles would be for company car fleets to increasingly go electric. This would also increase the impetus for building a viable charging network which is, let’s face it, probably the biggest issue when people are faced with the choice between electric, hybrid or “traditional”. I would personally go down the hybrid route if you wanted to go green, but to be honest if I had the money to go and buy a car tomorrow I would buy petrol because I don’t do massive mileage and I just think charging capability in this country isn’t capable – and won’t be for years to come.

Ola wins licence to take on Uber (Daily Telegraph, Natasha Bernal) signals the arrival of Indian ride-hailing company Ola in London where it will compete with that little-known taxi thingamajig Uber. The Softbank-backed company got its licence from Transport for London yesterday and is expected to start offering its services in September and joins the likes of Bolt, Kapten and ViaVan as new challengers to Uber. Ola says it will differentiate itself by focusing on passenger safety and letting black cabs use the service. Ola launched in Bristol last year and now has 10,000 drivers in Liverpool, Birmingham, Cardiff, Reading, Bath, Bristol and Exeter. * SO WHAT? * Nice one – but it is a rather crowded market! Still, Ola has some major backers in the form of Japan’s Softbank, car makers Hyundai and Kia, China’s Didi Chuxing and Sequoia Capital India. That doesn’t guarantee success (because many of these investors also invest in other ride hailers) but it does mean that it should be taken seriously by the competition.

Samsung has a downbeat profit outlook and Niantic falters…

Samsung Electronics expects quarterly operating profit to fall more than 50% (Wall Street Journal, Eun-Young Jeong) highlights a rather disappointing announcement from the consumer electronics giant. It said that its second quarter operating profit would take a 56.3% hit from the previous year due to poor demand for memory chips, with profits and revenues also taking a dive. Having said that, market expectations for its operating profits turned out to be too pessimistic as Samsung’s current situation was improved by a weaker-than-expected domestic currency and a “one-time gain related to the display business” (thought to be from compensation fees from Apple, which uses Samsung’s OLEDs in some of its iPhones). * SO WHAT? * Falling chip sales hit Samsung badly because it’s where it earns most of its operating profit – 75%  in 2018, to be exact – so you can see why the current slowdown is

painful. The company has also suffered fallout from the US-China spat because, although it’s a competitor to Huawei in smartphones, Huawei also buys Samsung’s memory chips.

I must say I thought that Niantic, the maker of the wildly popular Pokemon Go who recently released a new Harry Potter augmented reality game, would have been taking the plaudits by now but Mobile gaming: spell check (Financial Times, Lex) shows that the reception of Harry Potter: Wizards Unite, has been largely disappointing (according to market research company Sensor Tower, the Harry Potter game is expected to make $10m in its first month versus Pokemon Go, which made over $200m). What is interesting, though, is that Niantic is creating a platform for other augmented reality products – something that Epic Games, creator of Fortnite, is also doing. I think that AR is like VR in the sense that although many look at the respective technologies in terms of gaming, it actually has other much broader and better uses in training and other areas – IMHO, gaming is the cherry on the cake.

And finally, in other news…

I thought I’d leave you this week with The “invisible challenge” is the internet’s latest dog craze (BestLife, Diana Bruk). When I find a cat equivalent, I’ll let you know (but tbh, I think cats would work this out quite quickly). Have a great weekend!

1. In CRYPTOCURRENCY NEWS, US lawyers get medieval on Libra and the UK regulator plans a ban on crypto for retail investors
2. In DISRUPTOR NEWS, Spotify does an about-turn and things get interesting for corporate travel
3. In INDIVIDUAL COMPANY NEWS, Deutsche faces big restructuring costs, Broadcom closes in on Symantec and Purplebricks abandons its American Dream
4. In OTHER NEWS, I bring you world leaders with football manager hair. Stay with me on this – it’s worth it…

So Libra faces a crackdown and the UK regulator wants to cut retail investor access to crypto products…

US lawmakers seek ‘immediate’ halt to Facebook’s digital coin (Financial Times, Hannah Murphy) highlights an open letter published on Tuesday by lawmakers who are calling for Facebook to hold off the launch of its digital currency Libra until regulators and Congress have had time to examine the risks properly. They cited “privacy, trading, national security, and monetary policy concerns” given Facebook’s tarnished reputation on the privacy of user data following the Cambridge Analytica scandal. The letter went on to say “Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail”. * SO WHAT? * Fair enough, I say. The G7, the international Financial Stability Board and our very own Financial Conduct Authority have all said that they plan to look into the project very closely. The House financial services committee and the Senate banking committee are to meet in mid-July to discuss Libra. I would want everyone and their dog looking into Libra properly because it is the sort of thing that – if it goes wrong – the consequences could be massive. I think that any company trying to introduce something as big as this would be under intense scrutiny, but I guess that Facebook’s recent scrapes re data privacy have made convincing regulators that much harder. Germany shows Facebook might be on to something with Libra (Financial Times, Martin Arnold) gives an interesting

anecdotal spin on the whole Libra thing as the author outlines his recent experiences on holiday in Germany where he was caught short while trying to pay a restaurant bill but couldn’t pay by card and couldn’t use his UK bank card to withdraw cash. As a result, apparently, the average German carries around €107 in cash – according to a recent Bundesbank survey – versus €32 for the French and a paltry £22 for your average Brit. This, he argues, is a situation that needs changing. If it’s not Libra, it needs to be something else – but if Libra fizzles out, at least it will hopefully have prompted banks to innovate.

In Regulator plans retail ban on cryptocurrencies (The Times, Ben Martin) we see that the UK’s Financial Conduct Authority (FCA) said that it is planning to ban the sale to retail investors of financial instruments that let people bet on bitcoin and other cryptocurrencies. The proposed ban, which is currently under consultation, will include derivatives like Contracts For Difference (CFDs), futures and options and exchange traded notes. The FCA said that the difficulty in valuing cryptoassets means that it is even harder to ascertain the value of the derivatives that are linked to them. It added that the tokens on which these assets are based “have no inherent value and so differ from other assets that have physical uses, promise future cashflows or are legally accepted as money…They are opaque, complex and unreliable as reference assets for investment products”. * SO WHAT? * Bad news for retail investors who are crypto-converts, but I’m sure there will be some way around it for the most determined. It’s just going to get that bit harder.

Spotify makes a U-turn and corporate travel is ripe for a shake-up…

Spotify drops plan to pull in independent artists (Financial Times, Anna Nicolaou) heralds an about-face for Spotify who last year told investors that they would disrupt the music industry by cutting out the record companies and putting artists in front of fans directly. The company promptly released a tool that let artists release their music without a label or third-party distributor but now, less than a year after their bold statement of intent, Spotify has decided to wind its neck in and said in a blogpost that “The best way for us to serve artists and labels is to focus our resources on developing tools in areas where Spotify can uniquely benefit them”. * SO WHAT? * Investors initially cheered the thought of Spotify’s course of action because they thought it would give them long-term revenue streams and reduce the company’s reliance on big music labels. However, in the end, it didn’t generate enough stars and rubbed the labels up the wrong way – so it is understandable that it has decided to walk away. Analysts have long said that Spotify really needs to get its own content to generate better margins and, for now, it looks like focusing its efforts on getting big in podcasts. The company is planning to spend $500m on acquisitions in this area and RBC analyst Mark Mahaney believes that this could ultimately help the company generate $500m in annual revenue for Spotify by 2022. That’s clearly something “for the future”, but the more immediate event that will impact Spotify’s profitability is the negotiation currently going on between Spotify and the record labels re licencing costs. Presumably this latest announcement will go some way towards appeasing annoyed record labels who thought that Spotify was going to nibble away at their lunch.

I thought I’d mention The start-ups trying to shake up corporate travel (Financial Times, Alice Hancock) because it goes to show what a disruptor can do to a generally staid and boring area of business. TripActions is only four years old but raised $250m last week, giving it an implied valuation of $4bn. The start-up says that it can predict travel preferences by going through previous employee bookings and can automatically rebook things if flight schedules change and inform customers quickly. It claims that it has cut the time spent on booking the average business trip from one hour to just six minutes. However, it is one of many such companies vying with each other to simplify the business of business trips given the fragmented nature of the market in its current state (others include TravelPerk and Rocketrip). * SO WHAT? * Currently, the biggest operator in this space in the UK is American Express Global Business Travel which has a whopping 17% market share and turns over 1.5 times as much as the #2. Upside is definitely there for the taking for the newbies but the potential difficulty is going to be customer service. Business travelers are understandably demanding and if they have no-one to call/blame when things go wrong they won’t come back for more. Customer service capability ups costs considerably, so is something that needs to be addressed properly in order for the start-ups to be able to take on the incumbents. I would expect there to be consolidation both among start-ups but also for “traditional” operators buying them out to freshen up their existing offering. However, consolidators will have to be particularly brave to pour cash into this area at a time when global trade is slowing down (ultimately leading to fewer business trips).

Deutsche Bank faces big restructuring costs, Broadcom closes in on Symantec and Purplebricks pulls out of the US…

Given it’s ongoing nightmares, Deutsche Bank faces restructuring costs of up to €5bn (Financial Times, Olaf Storbeck) shouldn’t come as too much of a surprise but its plans to cut deep into its investment banking division are going to cost a lot as it embarks on its biggest shake-up in over twenty years. Over 20,000 jobs cuts are rumoured and over €50bn of its assets are to be siphoned off into a “bad bank” as part of the process. * SO WHAT? * Current CEO Christian Sewing is trying to cut costs whilst at the same time transitioning the bank away from the volatile fortunes of investment banking and towards more stable businesses of retail banking and asset management. This is all going to be very painful and will take time. It is thought that those involved in the US equities trading and rates divisions will be hit hardest by the cuts, at least in the short term.

Broadcom nears $15bn deal to buy Symantec (Financial Times, James Fontanella-Khan, Richard Waters and Tim Bradshaw) highlights the proximity of an acquisition of ailing cyber security company Symantec for $15bn. The chip-making giant is looking to get an agreement on the deal asap but it is thought that a decision may not come until after the July 4th holiday. * SO WHAT? * There aren’t really any overlaps in terms of business areas for the two companies – however, one good thing is that they both preside over big and largely stationary customer bases. Symantec could do with some help at pulling it out of its current rut, so it’ll be interesting to see if Broadcom can come up with the goods.

Purplebricks to exit US market as losses almost double (Financial Times, Judith Evans) shows that the online estate agency has decided to pull the plug in the ‘States after almost doubling its full-year loss and concluding that it had tried to expand too quickly. * SO WHAT? * It remains to be seen whether damage done by an overambitious growth strategy will be terminal but at least it can focus its efforts more closely on its operations in the UK.

And finally, in other news…

You know there are times when you see something on the internet and think to yourself “some people clearly have too much time on their hands”? Well I actually think that whoever did this spent their time wisely in Someone is putting football managers’ hair on politicians and it’s glorious (Metro, Joe Roberts https://tinyurl.com/y6e3dgmf). My own favourites are Donald Trump with Steve McClaren hair and Vladimir Putin sporting a Louis van Gaal do. Nice ???? Which combination do you like best? Any suggestions for other winning mash-ups??

1. In MACRO & INDUSTRY NEWS, Australia cuts interest rates again, China announces good news for foreign securities companies and UK construction slows right down
2. In IPO NEWS, ABInBev lines up an Asian belter and the Aramco IPO looks like it’s back on the cards
3. In HIGH STREET-RELATED NEWS, Yo! Sushi announces US ambitions, Five Guys expands in the UK and Majestic gets another potential suitor
4. In TRANSPORT-RELATED NEWS, US auto sales weaken, Tesla delivers and Trainline ticket sales fly
5. In OTHER NEWS, I bring you unusual personal trainer requests…

So the Aussies cut their interest rates again, China relents on foreign ownership and UK construction slows right down…

Australia cuts rates for second time in two months (Daily Telegraph, Chris Johnston) heralds the first back-to-back interest rate cut since 2012 for Australia’s central bank. This brings it to a record low of 1% with the possibility of more cuts to come in order to stimulate an economy that is running out of steam. On the plus side, property prices in Sydney and Melbourne, that had weakened considerably, are now bottoming out and iron ore prices are going up – which is good for Australia because they produce a lot of it! * SO WHAT? * Australia has not had a recession (two consecutive quarters where the economy contracts) since 1991 – and by the looks of things, it is doing its level best to maintain that record with a decent enough outlook. Australia really needs the US-China thing to end, though, for things to get back on an even keel.

In China to allow foreign ownership of securities companies in 2020 (Financial Times, Siddarth Shrikanth) we see that Chinese premier Li Kequiang announced in a speech at the World Economic Forum in Dalian that foreigners would be allowed to have majority ownership domestic securities companies by 2020. This signals the opening up of China’s financial sector one year ahead of schedule. Chinese regulators approved JP Morgan and

Nomura’s applications to establish majority-controlled brokerages in March, having given UBS the go-ahead last year. * SO WHAT? * Foreign companies have, up till now, been limited in how much “control” they can have over a Chinese company, so this news will at least give them more freedom to expand their China interests. China is going to become a net debtor this year for the first time since 1993, so it needs to attract more foreign capital inflows to finance its current account deficit. It will be interesting to see how and if this works well in practice. I would expect a lot of brokerages and investment banks to get involved given the potential of the China market and the maturing of business elsewhere.

UK construction industry suffers worst month in a decade (The Guardian, Phillip Inman) cites the latest IHS Markit/Cips construction purchasing managers’ index (PMI) which shows that purchasing activity and new orders fell off a cliff in June. Samuel Tombs, chief UK economist at Pantheon Economics, observed that “all three main sub-sectors – housebuilding, commercial and civil engineering – reported sharp falls in activity. The threat of a no-deal Brexit reportedly has dampened demand for commercial projects, while the risk of a Corbyn government following a general election has hindered activity in the civil engineering sector”. Everyone is adopting a wait-and-see approach, so until we get more clarity on Brexit, I don’t think the situation is going to improve. Obvious, I know – but this is just more evidence that politicians need to get their collective @rses in gear so that everyone has something to work with, whatever that may be.

ABInBev eyes a chunky Asian IPO and the Saudi Aramco float comes back on the radar…

Budweiser readies year’s biggest IPO, tapping Asia’s growing thirst (Wall Street Journal, Joanne Chiu, Saabira Chaudhuri and PR Venkat) highlights what could be the biggest Initial Public Offering so far this year and the biggest-ever listing of a food or drink company as the Asia-Pacific unit of Anheuser-Busch InBev SA, called Budweiser Brewing Co. APAC Ltd., tries to raise $9.8bn on the Hong Kong Stock Exchange. This would imply a valuation for the whole business at up to $63.7bn and investors started to get their orders in yesterday for a float slated for July 19th. * SO WHAT? * The IPO will help parent ABInBev reduce its debts and will give the Asian business, which covers China, Australia, South Korea, India and Vietnam, some money to splash on buying rivals. Given the market potential in Asia – Euromonitor forecasts that China will overtake the US as the world’s biggest beer market by sales in 2021 – you can

see the attraction of increasing efforts there, especially when other regions are maturing.

Aramco’s $2tn flotation is back on, says Saudi Arabia (The Guardian, Jillian Ambrose) highlights some potentially exciting news for advisers as the Saudi energy minister, Khalid al-Falih, said that officials are working on listing the company within the next two years. * SO WHAT? * Everyone has been wetting themselves about the prospect of a partial float of the $2tn state-owned mega-company and were bitterly disappointed when the float was pulled last summer. If it goes ahead, it will be the biggest IPO EVER. Proceeds from the float will be used to finance initiatives to wean the kingdom off oil revenues and advisers will be falling over themselves to be in on a deal that will undoubtedly earn fat fees. Just to give you an idea of the scale of the company, it reported earnings of $224bn for 2018 – that’s QUADRUPLE the profits of ExxonMobil, the world’s biggest listed oil company. The Devil, as always, will be in the detail of any deal – but if it goes ahead, a lot of companies will be earning a lot of money off the back of it. Any qualms about dealing with a regime that chops up journalists at its embassies will obviously go out of the window, but hey.

Yo! Sushi eyes America, Five Guys eyes UK expansion and Trainline sells a load of tickets…

Seafood giants unveil separate mergers as investors tuck in (Daily Telegraph, Vinjeru Mkandawire) highlights Yo! Sushi’s move in buying a majority stake in SnowFox, the #3 sushi kiosk chain in the US, for around $400m. The enlarged food group will have two-thirds of its sales generated in the US. This will be Yo!’s second aquisition in two years following its 2017 takeover of Canada’s #1 sushi business, Bento Sushi for a “mere” £59m. Fun fact: Yo! Sushi also owns Taiko Foods, UK supplier of Asian food products and bentos to supermarkets. Elsewhere, Young’s Seafood is being combined with pork processor Karro Food by private equity firm CapVest to provide “considerable scale” and “strong market positions” in its respective areas. The enlarged group will generate £1.2bn in sales – pretty chunky. * SO WHAT? * Yo! Sushi is cr@p. There. I said it. I am half Japanese, went to uni in Japan for a couple of years and worked over there for a few years more and I cannot tell you how far away from “real” sushi that the stuff they serve you in Yo! really is. That said, people seem to like what they sell, and I guess I cannot argue with that! Sushi appears to be attractive because it is seen to be healthy and feeds into the whole wellness thing that’s going on right now – so I think that there is a lot of growth potential both in the UK and the US. Good luck to

’em – but I really wish someone would do something similarly appealing with PROPER stuff! The Youngs Seafood/Karro Food surf ‘n turf combo sounds like a winner and brings a close to the air of uncertainty surrounding Youngs since it was put up for sale last year in the midst of rising cost pressures brought about by higher fish prices. More consolidation to come in the sector perhaps?

Elsewhere on the high street, It’s still a numbers game as Five Guys plans UK expansion (The Times, Dominic Walsh) shows that it is possible for eateries to do well as it unveiled UK revenues up by a healthy 23% last year following the opening of ten new outlets. It isn’t holding back on expansion either as it also said that it will be opening another 10-15 restaurants this year. Sir Charles Dunstone, co-founder of the Carphone Warehouse, owns the UK business which now has a total of 88 outlets. * SO WHAT? * Isn’t it good to hear some good news on the high street for a change?? 

Then in Fortress surprise suitor for Majestic Wine (Daily Telegraph, Laura Onita) we see that private equity firm Fortress Investment Group has emerged as a surprise bidder for Majestic’s 200 outlets – seemingly overtaking previous front-runner Elliott Advisors in the process – and has been rumoured to be lining up former Berry Bros & Rudd and ex-Tesco exec Dan Jago to run it if its bid is successful. We may get more detail on this when Majestic announces its annual results on July 13th.

US auto sales drop, Tesla delivers and Trainline remains on track…

US auto sales slipped in first half of 2019 as prices climbed (Wall Street Journal, Nora Naughton) shows the disappointing news for new vehicle sales and many expect this losing run to continue after six consecutive months of weakness. GM and Fiat Chrysler suffered in the first half and even the Japanese were having a hard time with Toyota, Nissan and Honda all reporting sales weakness. * SO WHAT? * This just confirms the global trend of slower car sales, but at least the US economy is doing OK with a tight labour market and rising wages implying that things could still turnaround.

Amid the gloom, Tesla sets a delivery record of 95,200 cars (Daily Telegraph, Olivia Rudguard) sounds a positive development for the often-embattled company as it

managed to deliver a record number of cars in the second quarter of this year. This is particularly impressive given that it had only delivered 63,000 cars in the previous quarter. * SO WHAT? * Yes, this is a step in the right direction, but while Tesla’s been having problems all of the other major manufacturers who have no such issues have been catching up and then some. Good luck to the first-mover, but competition is only going to get worse.

Full steam ahead as Trainline ticket sales climb by 20pc (Daily Telegraph, Oliver Gill) highlights good news for the newly-floated Trainline as it announced a big hike in ticket sales in its first trading update since the float. * SO WHAT? * I like this company as it has a decent market position in the UK and overseas and it is a difficult model to repliate. OK – it is lossmaking at the moment, but it has a proper product that’s hard for others to copy and generates cash. As chief exec Clare Gilmartin put it, “With the majority of rail and coach tickets currently still sold offline in the UK and globally, there is a huge opportunity ahead of us to continue to grow and innovate”.

And finally, in other news…

I thought I’d leave you with some food for thought in Personal trainer admits weird client requests – including nude workout sessions (The Mirror, Courtney Pochin https://tinyurl.com/y4pn2ufm). Whaaaat?? I personally think that the most alarming one was “oiled up, bare chested wrestling”…

1. In MARKETS, MACRO & COMMODITIES NEWS, markets trend higher on trade war resolution hopes, UK factory output hits new lows, OPEC keeps its production limits unchanged and iron ore price soar
2. In FINANCIALS NEWS, Thailand’s SCB sells its insurance division to Hong Kong’s FWD and Aussie banks face a foreign onslaught
3. In CAR NEWS, Aston Martin gets a push while Nio sees management departures
4. In INDIVIDUAL COMPANY NEWS, Coty restructures and Office looks to close stores
5. In OTHER NEWS, I bring you the bottle cap challenge…

So markets get a Trump-Xi bump, UK factory output falls, oil production remains unchanged and iron ore prices continue to climb…

Global markets rally as hopes of US-China trade deal rise (The Guardian, Richard Partington) highlights investor hopes of a resolution to the US-China trade wars after Trump and Xi agreed to resume trade negotiations. The two leaders are set for more talks as Trump’s meeting with Xi at the G20 gathering appeared to go well, with Trump saying that the relationship with China was “right back on track”. Trump held back from imposing further tariffs on Chinese imports while China agreed to reciprocate and purchase more US agricultural goods. So far so lovely, however, Stocks are marching higher but corporate profits are not (Financial Times, Philip Geordiadis) shows that although the S&P has had its best first half since 1997, this hasn’t been on the back of forecasts of strong corporate profits and FactSet data shows that analysts actually expect corporate earnings to fall from here. The conclusion? Either the analysts are too gloomy, or we’re getting close to seeing a market correction. Mind you, if Trump and Xi actually get to some kind of trade accord markets will ignore all that and get a big boost – but then analysts may be more minded to up their targets if that happens anyway.

Opec retains oil output limit to ward off global price crash (The Guardian, Jillian Ambrose) shows that the cartel has

decided to keep current production limits unchanged, arguing that the rapid growth of the US shale oil industry and global economic slowdown could cause an increase in supply and a decrease in demand respectively. Russia and Saudi Arabia (the biggest non-Opec and Opec oil producing countries) have already agreed to extend the cuts despite Donald Trump asking them to increase output to make up for the oil that Iran produced. * SO WHAT? * Oil prices ticked up a bit, but I would have thought that the bits I mentioned yesterday about the Strait of Hormuz and the Bab-el-Mandeb strait will also affect oil prices in the short term at least.

In Iron ore prices soar as supply fails to meet ‘insatiable’ demand (Daily Telegraph, Jon Yeomans) we see that the iron ore prices rose as mine closures in Brazil following the Vale-owned dam collapse led the Australian government to forecast that global seaborne supply would fall by 4% this year. Global supply will also be hit by lower iron ore exports from Australia as cyclones dented output. This is the first annual drop in Australian iron ore exports for almost twenty years. * SO WHAT? * The price for iron ore, used to make steel, has broken the $100 a ton barrier in the last few months as supply disruption and rising demand from steel mills in China have combined in a perfect storm for price rises. Liberum analyst Ben Davis observed that “We’ve had incredibly strong demand for steel, most of it going into housing. The demand side has been the bigger factor than supply disruption. And there is a little bit of upside still to go”. Interestingly, demand for BHP and Rio Tinto’s “high grade” iron ore has risen in recent years from China because it pollutes less when it goes into the smelter. Miners make a lot of money from iron ore given that it can be extracted for as little as $13 a ton!

SCB sells its insurance business to FWD while Aussie banks are likely to face more foreign competition…

Thailand’s SCB sells insurance arm to Hong Kong’s FWD for $3bn (Financial Times, John Reed and Don Weinland) highlights the sale of the insurance business of Thailand’s Siam Commercial Bank to Hong Kong’s fast-growing FWD insurance group, as part of the latter’s expansion in Asia. * SO WHAT? * This is south-east Asia’s biggest ever insurance takeover and will mean that SCB will be able to distribute FWD’s life insurance products to its customers in Thailand for 15 years. This follows FWD’s acquisition on Friday of MetLife’s Hong Kong life insurance

business and is its ninth M&A deal in seven years. It still has a way to go before reaching the size of the likes of AIA or Prudential in terms of assets and agents but it is clearly going in the right direction. The SCB/FWD deal will be subject to regulatory and shareholder approval.

Foreign banks take aim at Australia’s big four oligopoly (Financial Times, Jamie Smyth) sounds a warning for the likes of Commonwealth Bank of Australia, National Australia Bank, ANZ Bank and Westpac. They face more potential competition from the likes of HSBC, ING and Citi following an inquiry that exposed large scale misconduct among the incumbent big four. Australia is one of the world’s most profitable banking markets and consumers could be tempted to leave following the Royal Commission inquiry and subsequent tightening of regulation. Things could get interesting…

Aston Martin’s about to get a shove but Nio is suffering…

Italians prepare to give Aston Martin a push (The Times, Ben Martin) highlights the fact that Aston’s biggest shareholder is talking about increasing its current 31% in the business. The Italian private equity firm Investindustrial is thinking of sinking £64.8m, equivalent to about 3% of the company, into it – which is ironic considering that it sold off shares in Aston Martin when the company floated for £19 a share, reducing its stake from 40% to 31%. The current share price is around £10. * SO WHAT? * This is quite an unusual move because when private equity firms sell down a holding, they rarely buy it back again as they tend to buy low and sell high. In this case, they are selling high and buying low – so many will infer that they believe that there is long term value in Aston Martin at the current

price. There is a lot riding on the success of Aston’s upcoming 4×4!

Electric car start-up Nio hit by management departures (Financial Times, Louise Lucas, Tom Hancock and Archie Zhang) shows that all is not well at the Chinese electric vehicle maker that raised $1bn in a New York listing last year as two senior executives, the heads of software and British operations, left their posts. The departures come shortly after the recall of 4,800 of their SUVs following reports of spontaneous combustion, which precipitated a 75% fall in the company’s share price. * SO WHAT? * This is a particularly bad sign because software is key to the vehicles and it has been a major area of weakness for the company. Costs are still high and many staff have been let go in the US in the last few months – including the chief exec – so if the company needs to raise more cash (which it inevitably will) it is going to have to continue to wield the axe. It just goes to show how difficult it is for electric vehicle manufacturers these days – especially when vehicle subsidies are reduced or cut altogether.

Coty struggles and Office eyes store closures…

Struggling beauty giant Coty to restructure operations (Wall Street Journal, Sharon Terlep) portrays the travails of troubled cosmetics maker Coty in the face of executive turnover and falling sales. The makeup and fragrance seller, controlled by investment firm JAB, is taking a $3bn write-down on CoverGirl, Max Factor – among other brands – and shed jobs as it seeks to restructure itself. Sales of brands like Revlon and Maybelline are suffering from the trend of consumers shifting to higher-end and niche brands like Glossier and Kylie Cosmetics. The company said that it will focus on stemming the losses and cutting costs before it re-embarks on new product launches and growth.

Shoes chain takes step towards closures (The Times, Louisa Clarence-Smith) gives us more evidence of the poor health of the UK high street as Office, which has about 100 stores in Britain, has appointed advisors to look at a potential CVA. The retailer, owned by South African clothing retailer Truworths International, blames “continued concerns over Brexit and depressed consumer demand” for its current woes. * SO WHAT? * Shoe shops are having a horrendous time of it, aren’t they? Clarks and Jones are among those having problems. I guess that shoes can be fairly expensive and, if you’re not feeling flush, you can just go and get them repaired. I would also say that footwear is particularly susceptible to online competition given that your size won’t vary with manufacturers and shops as much as clothes do, hence less of a need to go and try them on. OK, you might go once or twice to feel the fit, but you can then go and order online. Tough times and surely time for more consolidation in the sector…

And finally, in other news…

You probably know by now that I like to keep you informed of the latest trends (and sometimes dance moves). Well how about What is the bottle cap challenge? Jason Statham, Conor McGregor, John Mayer and more try Instagram trend (nj.com, Amy Kuperinsky https://tinyurl.com/yxwd4kqq). Doing this down the pub on a Friday night should cause quite a stir…

1. In MARKETS, OIL & CURRENCY NEWS, China plans its own “NASDAQ”, oil prices look set to rise and we see the nature of cryptocurrencies changing
2. In RETAIL NEWS, supermarkets drag other retailers down and Superdrug slashes its dividend
3. In INDIVIDUAL COMPANY NEWS, AstraZeneca’s dividend looks shaky and Jaguar Land Rover invests in electric cars
4. In OTHER NEWS, I bring you a python from Cambridge…

So China eyes a major tech boost, oil supply disruptions could cause hikes and cryptocurrencies evolve…

In China eyes $16bn boost for tech sector with Nasdaq-style board (Financial Times, Tom Hancock, Wang Xuequiao and Henny Sender) we see that Beijing is about to put a hefty amount of domestic savings into boosting the tech sector and will it to create a new stock exchange modeled on the NASDAQ, called the Star board. Unlike the Shanghai and Shenzhen exchanges, it will allow short selling. * SO WHAT? * This is a Big Deal – especially given the ongoing trade dispute between the US and China – because it will give Chinese tech companies a real alternative to listing on the NASDAQ (depending on how it’s structured and all the details). Given what’s been happening with Huawei, many Chinese companies are getting increasingly concerned about playing the role of political/trade negotiation football and a domestic alternative will certainly be more compelling in theory. Having said all that, a new Chinese exchange won’t have the pedigree that the NASDAQ has (or the same exposure to international investors), but I’m sure that it could be made very attractive to tempt companies over. I would have thought that the domestic demand would be red-hot, especially from retail investors.

Oil supply shock could send prices soaring across the world (Daily Telegraph, Anna Isaac) highlights mounting concerns that threats to one of the world’s main oil supply routes, the Strait of Hormuz, are increasing and could destabilise the Middle Eastern region. Another important supply route, the Bab-el-Mandeb strait, was attacked last year and oil analysts are now assessing the risks and potential impact on the oil price. * SO WHAT? * The Strait of Hormuz carries about 30% of the world’s seaborne crude oil supplies and the Bab-el-Mandeb route is important for Yemeni aid and Israeli trade. Swiss bank UBS thinks that if troubles escalate in the region, oil prices could shoot up from $66 per barrel to over $90 per barrel.

Following on from all the recent hype over cryptocurrencies, Has bitcoin joined the ranks of classic haven assets? (Financial Times, Eva Szalay) highlights the recent rise of bitcoin and discusses whether it is being increasingly seen as a “safe haven asset” (i.e. something to buy into when times get tough for its perceived stability). * SO WHAT? * Although this does sounds a tad counter-intuitive given that it has a somewhat shady track record and no intrinsic value, its rise coincided with rises in more widely accepted safe haven assets such as the Japanese yen, the Swiss franc and gold. Libra’s appearance would certainly have helped Bitcoin’s credibility in making everyone think it was moving closer to mainstream acceptance whenever it was announced – so the fact that Bitcoin’s rise happened against a tricky economic backdrop (including China-US-Iran problems and Brexit nightmares, among other things) may have been a happy coincidence rather than heralding the advent of a new safe haven asset.

Supermarkets drag other retailers down and Superdrug slashes its dividend…

Supermarkets behind fastest fall in retail sales in a decade (The Times, Elizabeth Burden) cites results from research from the CBI, which found that retail sales volumes fell at their steepest pace for ten years – backing up findings from reports from others such as Kantar and the British Retail Consortium. Retailers have been suffering from a combination of higher business rates, Brexit uncertainty, increasing online competition and rising wages. Patrick O’Brien, UK retail research director at Global Data, predicts a tough time going into the end of the year and warned that “it’s not even clear whether the discounters – Aldi, Lidl, Home Bargains, The Works, Card Factory – will be able to sustain like-for-like growth”. * SO WHAT? * I continue to believe that retailers that can blend a good online offering with a physical offering that customers want to go to, will survive and thrive. I think that Aldi and Lidl have an interesting physical offering because of the changing nature of their middle aisles – which gives

customers reason to visit their shops. Our incumbent supermarkets, on the other hand, are really pretty much of a muchness in terms of the goods they offer and I would argue that this makes them much more vulnerable to the online onslaught. This has to change for them to survive long term. Incidentally, I think that if Aldi and Lidl start to post disappointing numbers, the incumbent supermarkets will tank badly – because if the discounters are having a hard time you can bet your bottom dollar that Sainsbury’s et al. are having it worse.

Investor pain as Superdrug cuts its dividend by more than half (Daily Telegraph, Oliver Gill) heralds a massive dividend cut by the high street pharmacy that’s owned by AS Watson (no relation to me, sadly 😜) as the company’s profits were wiped out by higher staff costs. Superdrug is the UK’s second biggest health and beauty retailer after Boots and has actually been doing quite well recently as it has seen its market share rise from 9.2% to 9.8%. * SO WHAT? * The cut in shareholder payouts has been quite dramatic – from £50m down to £20m – so investors will find this quite painful. It’ll be interesting to see, though, whether better market share and profits will be able to offset a higher wage bill in future.

AstraZeneca’s ability to pay its dividend is questioned and JLR invests in electric vehicle capability…

Carrying on with the dividend chat, AstraZeneca’s dividend on shaky ground, says analyst (Daily Telegraph, Julia Bradshaw) highlights an assertion by Martin Hall, of Hardman & Co, that the company won’t be able to pay its dividends because its operational cash flow – the money it gets from its daily business operations – will fall dramatically due to the expiration of patents on some of its best-selling drugs, including Nexium, Losec and Seroquel. * SO WHAT? * The company hasn’t commented on this assertion yet, but if it turns out to be true, investors won’t

be happy. It will have been well aware of its blockbuster drugs coming off-patent and may well have been borrowing money to invest in its pipeline AND to cover its dividend. We’ll just have to wait to see what the company’s reaction is – and that will probably depend a lot on how much credence is given to Mr Hall’s assertions by investors.

Jaguar Land Rover upgrades UK plant for electric cars (Daily Telegraph, Oliver Gill) highlights some positive news for the embattled car manufacturer as it is about to invest hundreds of millions of pounds in its Castle Bromwich factory to develop electric cars during an upcoming six-week shutdown. * SO WHAT? * Great news in theory, but will it be too little too late?? Car manufacturers around the world are having a hard time currently and JLR itself is cutting 4,500 jobs as part of a £2.5bn turnaround plan. Let’s hope it works.

And finally, in other news…

I thought I’d leave you today with something of a warning in Giant 9ft python on the loose in Cambridge (Metro, Kate Buck https://tinyurl.com/y3jrvbq4). Yikes!

1. In INDIVIDUAL COMPANY & BITCOIN NEWS, Apple loses Jony Ive, Nike announces strong sales and Bitcoin drops
2. In RETAIL NEWS, we see H&M cutting back on new stores, our changing high streets and weakening online fashion
3. In CAR NEWS, Ford announces big cuts and Vauxhall clarifies action on no-Brexit
4. In OTHER NEWS, I bring you camouflaged animals…

So Apple loses Jony, Nike’s sales climb and but Bitcoin falls…

Apple fans around the world will be wetting their pants, or at least wearing black armbands because Jony Ive, iPhone designer, announces Apple departure (Financial Times, Tim Bradshaw) is the news that’s all over the press today. After 30 years at the company, he’s decided to leave and form his own company called LoveFrom (which he describes in typically enigmatic Jony Ive fashion as “a culmination of what I’ve learned and intend to continue learning from the last 30 years. It will be a collection of creatives…from around the world that come from quite diverse areas of expertise”. ?!? It just sounds like a design agency to me…). Apple will continue to be one of his clients, but I think more people are interested in What will Apple do without Jony Ive? (Financial Times, Tim Bradshaw) given his massive influence as Apple’s chief design officer in a golden age that made Apple what it is today. This is a great article with an excellent chart of how Apple has grown over the years into one of the world’s biggest companies – you should take a look if you can. * SO WHAT? * In answer to the question posed by the title of this article, though, Apple will just have to carry on with the team the Ive left behind him. Interestingly enough, his Industrial Design department has been pretty rock solid for the last three decades, but some of the “old guard” have been leaving in recent years and Ive’s surprise departure perhaps bookends Apple’s most successful era. Given the maturing of the iPhone in particular, the slower progress of other devices and big

shift towards services, it seems that this might be a time where new ideas from a new team can provide the creative boost needed to switch Apple up a gear. Time will be the judge, but in the meantime many will mourn the departure of an icon.

Nike posts strong sales, plays down trade risks (Wall Street Journal, Khadeeja Safdar and Patrick Thomas) highlights strong performance by the sportswear giant in the latest quarter with US-China trade shenanigans apparently not affecting sales either side of the divide. Nike manufactures around 25% of its global apparel and footwear in China but execs say they’ve got the flexibility to switch production to factories in other countries to roll with the trade war punches as appropriate. Total sales for the fourth quarter rose by 4%, North American sales were up by 7% and China sales were up by 16%! Its profits would have been higher but for increased spend on new tech and a higher tax rate than last year. Digital sales showed an impressive 35% hike as its apps continued to help reduce dependence on traditional store sales. The company also painted a positive outlook for the coming year. * SO WHAT? * A decent performance and it just goes to show how some companies can survive even the direst of trade wars if they get their structure and offering right.

Bitcoin rally ends with sharp decline (The Times, Callum Jones) heralds a disappointing end to the week for Bitcoin as it fell by 10% yesterday to $11,621.30. Some have suggested that a lot of Bitcoin’s recent strength has been down to investors trying to shift money out of China, with the cherry on top being provided by Facebook’s unveiling of Libra last week. As always, no-one really knows, but I suspect there has been more than a little element of profit taking going on.

H&M cuts down new store growth, empty UK shops may never come back and online fashion sales lose their shine…

H&M cuts back on new stores (Daily Telegraph, Laura Onita) shows that the mighty H&M, one of the world’s largest retailers, has decided it will slow the pace of new store openings after its quarterly profits dropped in the latest quarter – the eighth consecutive quarter of weakness. H&M has been wrestling of late with cutting down its unsold product but investors saw signs that the company could be turning this around. Summer clothing sales have been very strong due to the current heatwave across Europe and inventories have been coming down. The company’s share price shot up by a fifth in Stockholm yesterday as chief exec Karl-Johan Persson observed that “The H&M group continues to increase full-price sales, reduce markdowns and increase market share, showing that customers appreciate our collections and the improvements we are making to the product assortment and the customer experience”. * SO WHAT? * H&M is certainly going in the right direction but it still has work to do on cutting its inventory. It also needs to continue to respond to customers quickly in a very cut-throat space – but for now, at least it appears to be making the right moves.

One third of shuttered shops on the high street ‘have gone forever’ (Daily Telegraph, Laura Onita) highlights the rather depressing findings of a report published by Colliers International which points to a massive change in the make-up of our high streets. The report says that around 11% of our high streets and local shops are empty, of which a third has been vacant for more than two years. It details a number of high profiles of high street casualties and recent relaxation to planning rules is helping business owners respond to changes on the high street. * SO WHAT? * This is yet more evidence of the evolution of the high street. I don’t think it will disappear – it will just evolve. In my opinion – and it’s easy to say but hard to do – high street outlets need to concentrate more on experience and offering because they won’t be able to compete on price with online. Also, retailers in particular need to concentrate on getting the right balance between offline and online presence to maximise the benefits of both.

Mind you, Online fashion loses the feelgood factor (The Times, Elizabeth Burden) cites figures from Kantar, the market analytics company, which show that online fashion sales have slowed to their slowest ever rate. Year-on-year growth fell to just 0.6% in the latest quarter versus 8% last year and 6.8% the year before that, although in absolute terms, offline sales continue to be greater at £5.5bn versus £2.1bn. * SO WHAT? * After years of growth, optimists will say that online fashion sales are just pausing for breath while naysayers will say that they are reaching a point of maturity. Either way, it just goes to show that fashion sales – online or offline – aren’t easy at the moment. 

Ford announces big cuts and Vauxhall threatens them…

Ford to cut 12,000 jobs in Europe as it seeks to reverse $400m loss (Daily Telegraph, Alan Tovey) is a headline that pretty much says it all but this equates to the elimination of about 20% of its European workforce. This is all part of a restructuring aimed at bringing the loss-making business of the Blue Oval back to profitability. The car company also said that it will slim down to three division – commercial vehicles, passenger cars and imports – and add three new models over the next five years.

Vauxhall plant ‘safe’ – but only if Brexit deal agreed (The Guardian, Jasper Jolly) cites the French carmaker PSA Group as saying that it will build its new Vauxhall Astra in the UK – but only if the UK avoids a no-deal Brexit. * SO WHAT? * These bits of bad news are just the latest to hit the automotive industry – and I suspect that there will be more to come. Ford’s European business has been a drag on its overall profits for quite some time now, but I guess that with the current climate of doom they can just blame overall difficult market conditions for ALL automotive makers. Although it’s probably a bit cynical, I think that the Vauxhall chat is just a case of the company managing expectations. If there is a no-deal Brexit, they can shut down factories and say “I told you so” and if the Brexit deal is only so-so, they can still shut down facilities and say “well it wasn’t as good as we had expected”. If, on the other hand, Brexit turns out to be joyful (it won’t be) they can stay and take advantage.

And finally, in other news…

I thought I’d leave you today with something animal-related in Can you spot the camouflaged animals in these photos? (Insider, Talia Lakritz http://tinyurl.com/y3tvxfte). Amazing!

1. In MACRO AND BITCOIN NEWS, China manages to skirt US tariffs, foreign investment in the UK hits a new low and Bitcoin breaks $13,000
2. In UK RETAIL NEWS, Bathstore goes down the plughole, Bonmarche eats humble pie, Pizza Express gets stuffed and Boots unveils a new flagship
3. In CAR-RELATED NEWS, Apple buys an autonomous start-up, TDR buys BCA and UK car production continues to weaken
4. In OTHER NEWS, I bring you a new way of cross-training…

So China swerves US tariffs, foreign investment in the UK weakens and Bitcoin smashes through $13,000…

American tariffs on China are being blunted by trade cheats (Wall Street Journal, Chuin-Wei Yap) highlights how goods worth billions of dollars are avoiding US tariffs by entering the US via other countries, such as Vietnam, in a practice called transshipment. Funnily enough, exports to Vietnam from China of electronics, computers, machinery and other hardware have shot up in the first five months of this year versus the same period last year according to the latest trade data. The Vietnamese Ministry of Industry and Trade said that “The phenomenon of trade fraud through labeling of the origin of goods as being produced in Vietnam is increasing. Such fraudulent labeling not only directly affects products and consumers, but also significantly reduces the reputation and competitiveness of goods manufactured in Vietnam”. Mind you, it’s not only Vietnam that is used in transshipment – Taiwan, Cambodia, Serbia and Mexico also play a part in the charade. * SO WHAT? * This is interesting because it weakens Trump’s tariff threats in real terms. Yes, the headline tariffs will still create headaches, but if the Chinese manage to get around them I would have thought that the main countries to suffer will be those who allow transshipments to carry on within their borders. China will just re-route elsewhere. TBH, I would have thought this sort of thing goes on all the time with many countries – and it’s just the high profile nature of the US-China trade conflict that has brought this to the fore.

Foreign investment into UK falls to lowest level in six years (Financial Times, Valentina Romei) cites official data from the Department for International Trade which shows that foreign investment into the UK’s most productive

industries has continued to fall and is now at a new low. Uncertainty of future trading arrangements has obviously been the main reason for this and findings from fDi Markets, a research firm, show that this drop in foreign investment has come at a time when the rest of the EU has seen an uptick. The financial services and automotive sector has seen jobs drop by around a third, but things were even worse in advanced engineering, environment and infrastructure investment where job creation fell contracted by about 40%. * SO WHAT? * I don’t think anyone would be surprised by this. I would say, however, that Brexit will not have been the only factor at play here – financial services have been hit by other things such as MiFID II as well as costs associated with GDPR. The automotive sector has been a universal nightmare for all concerned as fewer new cars are being sold on a global basis while manufacturers are wrestling with higher production costs associated with changing technology and tighter emissions standards. Still, it has obviously had a negative effect – my point is that it isn’t the ONLY negative factor!

Then in Bitcoin surges past $13,000, boosted by ‘Facebank’ (Financial Times, Daniel Shane and Siddarth Shrikanth) we see that Bitcoin is now at its highest level since the beginning of last year and the euphoria related to this rise is helping to power other cryptocurrencies such as Ethereum, to new highs. * SO WHAT? * I would have thought that the recent rise has a lot to do with Facebook wading into the market with Libra last week bringing a new aura of legitimacy to cryptocurrencies generally. However, Libra is different because it will be pegged to a BASKET of currencies and will be backed by some ACTUAL assets, whereas others such as Bitcoin and Ethereum have no backing. No one ever seems to come up with a proper explanation of why Bitcoin goes up or down so I just think that investing in it is just down to luck with timing. Yes, there are clearly short term trading opportunities (volatility creates that) but I think Libra will be better long term.

Bathstore drowns, Bonmarche gets humble, Pizza Express gets sliced and Boots opens a swanky new flagship…

Bathstore goes into administration, putting 500 jobs at risk (The Guardian, Julia Kollewe) shows that Britain’s biggest bathroom specialist has fallen into administration having failed to unearth a buyer. Unfortunately, the company’s billionaire owner, Warren Stephens, decided not to pour any more money into it. Administrator BDO said that Bathstore will continue to trade for the moment, but 500 jobs are now hanging in the balance. Ryan Grant, joint administrator, said that the company should be able to fulfil most of the outstanding customer orders but installation services have stopped. * SO WHAT? * One of Bathstore’s rivals, Better Bathrooms, fell into administration in March – so it’s not alone in its nightmares. It has been particularly hard hit by a slower housing market and weakening consumer confidence due to Brexit uncertainties. The thing is – who would want to buy such a retailer now? Natural choices like B&Q’s parent Kingfisher or builders merchants are having their own problems, so I wonder whether it’s time for Sports Direct’s Mike Ashley to put in a cheeky bid for the company of 50p or something ???? Bathstore at House of Fraser, perhaps?? I bet you he’s thinking about it…

Then Bonmarche U-turn over ‘inadequate’ takeover bid (The Times, Elizabeth Burden) shows that the directors of the ailing over-50s fashion retailer have been forced to eat humble pie shortly after dismissing a takeover offer from

its biggest shareholder, Philip Day, as being too low. Day has made a lot of money by buying up problem retailers in the past like Jane Norman and Peacocks and is known for being the owner of Edinburgh Woollen Mill and a rival bidder to Mike Ashley for House of Fraser. Bonmarche’s share price halved following a profit warning and yesterday’s poorly-received quarterly update resulted in a 26.2% fall to just 11.5p. * SO WHAT? * Clearly, the company’s management are living in a fantasy world and had to admit that Day’s offer – that they described as “inadequate” when it was made two months ago – suddenly looks “fair and reasonable”. I wonder whether Day will punish this arrogance by coming in with a lower offer – or even take a leaf out of Mike Ashley’s playbook and wait for it to go into administration before buying it for peanuts.

Slump in casual dining takes a slice out of Pizza Express (Daily Telegraph, Oliver Gill) highlights the gloomy mood at one of the UK’s biggest restaurant chains captured in its annual report. In it, the company blamed “labour and property cost pressures”, last summer’s “extreme weather” and “intensifying competition” in China as being behind its poor performance. * SO WHAT? * Just another example of difficulties in casual dining.

Boots unveils London flagship as regional stores face the axe (Daily Telegraph, Laura Onita) shows mixed news from the pharmacy/retailer as it unveiled a swanky new flagship store in Covent Garden yesterday on the one hand and then talked about cutting staff at other stores on the other. Everyone will be watching the new store’s performance closely to see whether it will be a sign of a brighter future for the tired retailer.

Apple buys into driverless, TDC buys BCA and UK carmaking continues to fall…

Apple buys autonomous vehicle start-up Drive.ai (Financial Times, Shannon Bond) shows that Apple has just beefed-up its existing self-driving project (codenamed “Project Titan”) by buying Drive.ai, which had been looking for a buyer for some time. Its latest round of funding valued it at $200m but Apple has not revealed the price it paid. * SO WHAT? * I suspect that this snapping up of start-ups will continue as the likes of Uber, General Motors’ Cruise and Aurora continue their race to be leader of autonomous driving.

I mentioned the possibility of this the other day but TDR Capital agrees to buy car auctioneer BCA in £2bn deal (Financial Times, Anna Gross and Philip Geordiadis) highlights private equity firm TDR Capital’s acquisition of WeBuyAnyCar.com owner and car auction house BCA Marketplace. The deal is worth £1.9bn and comes in at a roughly 25% premium to what BCA shares were trading at before the announcement. * SO WHAT? * TDR said that it will be doing a review of BCA’s operations after completion

of the deal, but this news will come as welcome relief to embattled fund manager Neil Woodford, whose funds held BCA. The car industry is going through a tricky period at the moment and so it’ll be interesting to see whether TDR opts to grow domestically or whether it will try to boost the company’s fortunes by going for international expansion. 

In Carmaking suffers year of falls in production (The Times, Philip Aldrick) we see continued gloom in the UK carmaking industry as the latest figures from the Society of Motor Manufacturers and Traders (SMMT) show that the number of cars made in the UK has fallen for 12 consecutive months and is now on course to hit its lowest levels since 2011. As usual, the SMMT’s chief exec Mike Hawes complains that “The sector is facing multiple seismic challenges simultaneously: technological, environmental and economic. Political instability and uncertainty over our future overseas trade relationships, most notably with Europe, is not helping”. * SO WHAT? * It shouldn’t be a surprise that our car production is going down the pan, but I still say that the industry is now paying for the arrogance it showed with diesel. Hindsight is a wonderful thing, but surely our UK car makers should have seen this coming given the increasing number of cities around the world that were banning diesels on the grounds of pollution. Getting clarity on Brexit will go a long way to helping the industry because at least everyone will know what they are dealing with.

And finally, in other news…

I thought I’d leave you today with a great way to cross-train that will get you noticed in Woman only runs backwards because it’s ‘more fun than forwards’ (Metro, Jen Mills http://tinyurl.com/y5aw7vbp). Good luck with this at the local park ????

1. In MACRO AND BITCOIN NEWS, Trump slaps Iran, German business confidence falls and Bitcoin breaks $11,000
2. In M&A NEWS, Eldorado buys Caesars and Capgemini merges with Altran
3. In INDIVIDUAL COMPANY NEWS, Daimler goes into reverse, Monsoon eyes store closures and Monzo doubles its valuation
4. In OTHER NEWS, I bring you Yorkshire fish & chip exports. For more details, read on…

So Trump puts the squeeze on Iran, Germans lose business confidence and Bitcoin breaks another barrier…

Trump imposes sanctions on Iran’s supreme leader, others (Wall Street Journal, Ian Talley and Rebecca Ballhaus) highlights Trump’s latest actions towards Iran – he’s freezing the assets of Supreme Leader Ali Khamenei’s office and a number of Iranian military commanders as part of his ongoing campaign to put pressure on Iran/force a regime change (depending on what you believe). * SO WHAT? * Given that existing sanctions on Iran are pretty comprehensive, some say that this latest salvo is largely symbolic. However, because the sanctions also ban anyone from doing business with them, this could put a spanner in the works for the business operations of Khamenei’s office which controls a whole load of private companies that are thought to be worth $100-200bn (a pretty wide estimate, to be sure!). This’ll give world leaders even more to talk about at this week’s G20 meeting!

German business confidence sinks to lowest level since 2014 (Daily Telegraph, Alan Tovey) highlights a crisis of confidence among German business leaders, according to the closely-followed Ifo survey. * SO WHAT? * Confidence has been falling for over a year and manufacturing gloom had been particularly dented by weakening order backlogs

as well as the ongoing US-China trade war which has affected exports. I don’t see it getting better any time soon – especially with Trump tariffs being slapped on German car imports.

Bitcoin passes $11,000 on news of Facebook’s cryptocurrency plan (The Guardian, Richard Partington) draws attention to the fact that Bitcoin has broken the $11,000 barrier – its highest level in three months as hype over Facebook’s new Libra cryptocurrency has had a halo effect. Bitcoin has risen by $2,000 in the week since Libra was announced – especially impressive as it had been bumbling along at under $6,000 for most of this year. * SO WHAT? * As usual, no-one really knows why Bitcoin has shot up, but it is most likely that investors are starting to think that Libra will bring cryptocurrencies into the mainstream and that it seems to be increasingly seen as a safe-haven asset like gold against a backdrop of Iran-US-China tensions. I’m more convinced by Libra than I am about Bitcoin given its backers and the fact that it will be anchored to a BASKET of flat currencies, but I can imagine Bitcoin living alongside Libra on a longer term basis. One thing I would say is that most central banks and governments continue to distrust cryptocurrencies, so I think that there is a danger that if Bitcoin really DOES look like going more mainstream, there will be a big movement by governments across the board to regulate this whole area – which could cast a cloud for some time as details are hammered out. Still, until then, let the good times roll!

Eldorado buys Caesars and Capgemini mergers with Altran…

Caesars Palace sale to create biggest casino chain in US (Daily Telegraph, Michael O’Dwyer) heralds a major move by Eldorado Resorts to buy Caesars Entertainment (the company that owns Caesars Palace) in a $17.3bn cash-plus-shares deal. Eldorado has grown quickly over the last few years by making acquisitions and this latest one was at a 28% premium to Caesars’ closing price last week. The new enlarged group will keep the Caesars name (WHERE’S THE APOSTROPHE, EH???), will have 60 US casinos and will continue to trade on the Nasdaq Global Select Market. * SO WHAT? * This is good news for Caesars (which has had debt problems for quite some time) but a bit of a leap of hope for Eldorado, which is probably why the latter’s

shares fell by almost 11% in trading yesterday and Caesars’ rose by 14.5%. Still, I guess scale should help with any cost cutting that’s bound to happen with a deal like this. This may give rival operators a push towards consolidation themselves.

Capgemini in €3.6bn merger with smaller rival Altran Technologies (Financial Times, Harriet Agnew) highlights a merger between French consulting and IT services provider Capgemini and engineering and R&D specialist Altran Technologies with the former buying the latter for €3.6bn in cash. The deal will be subject to regulatory approval but has been recommended and approved by the boards on both sides. Capgemini says that this deal will boost its software engineering capability in India and eastern Europe. * SO WHAT? * I guess that scale is useful in a business like this and continued globalisation means that you have to try as much as you can to be wherever your clients are both in terms of geography and business area.

Daimler has a ‘mare, Monsoon eyes store closures and Monzo doubles its valuation…

In Diesel emissions inquiry sends Daimler into reverse (The Times, Tabby Kinder) we see that Daimler, the company behind Mercedes-Benz, announced its third profit warning in the space of a year and allocated a big chunk of cash to cover an expected crackdown on its diesel vehicles. Its share price fell by 3.75% in trading yesterday which sent other car manufacturers in France and Germany lower.

Monsoon’s restructuring puts 36 stores at risk of closure (Financial Times, Jonathan Eley) highlights the fact that 36 Monsoon and Accessorize stores could close under its

current restructuring proposals with rent cuts of up to 65% at 135 of its 258 stores. Monsoon is seeking a Company Voluntary Arrangement (CVA) as part of its bid for survival and needs to cover a £20m cash shortfall. * SO WHAT? * As we have already seen in the past, even if Monsoon gets this CVA past the creditors, it is no guarantee that it won’t go under anyway at some point down the line. The tough times continue.

Monzo value doubles in fundraising (The Times, Katherine Griffiths) highlights a significant milestone for challenger bank Monzo as its valuation hit £2bn after attracting £113m in investment in the latest fundraising round. * SO WHAT? * This reinforces its position as one of the most highly rated British fintech companies along with Oaknorth, Revolut and Transferwise. It will use the money to help its rollout in the US and develop its “marketplace” idea which will offer a number of different services to its customers.

And finally, in other news…

There’s lots of news out there these days about exports to China being affected by the fallout of the US-China trade war, but here’s one UK export that might just cut the mustard: North Yorkshire chippy to open restaurant in China (BBC, https://tinyurl.com/yxwnr57r). Eeebahhgoom!

1. In MARKETS AND COMMODITIES NEWS, global markets brace for turmoil and the falling cobalt price damages DRC
2. In RETAIL/MAIN STREET-RELATED NEWS, Carrefour looks to reverse out of China and restaurants put pressure on delivery prices
3. In CIGARETTE-RELATED NEWS, San Francisco aims to ban e-cigarettes and Philip Morris looks to expand its heat-not-burn offering in the UK
4. In NEWS ON PLUCKY BRITS, Brompton thinks the future is in e-bikes and Meatless Farm looks to America
5. In OTHER NEWS, I bring you a cute tortoise…

So global markets brace themselves for more US/Iran fallout and falling cobalt prices hit DRC…

Global markets braced for turmoil as US prepares Iran sanctions (The Guardian, Richard Partington) shows that everyone is bracing themselves as a Trump tweet (what else??) gets everyone panicked about rising tensions with Iran. He said that “We are putting major additional sanctions on Iran on Monday”, which will put more upward pressure on the oil price. This comes in the week that Trump is due to meet China’s Xi Jinping to talk about trade. * SO WHAT? * Stock markets have been rallying recently as hopes of breaking through the current trade impasse between China and the US have been increasing. However, if Trump leaves the meeting empty-handed and Iran

tensions increase, markets could be in for a bit of a correction.

Plummeting cobalt price takes toll on Democratic Republic of Congo (Financial Times, Henry Sanderson) highlights the fact that its price has fallen by a whopping 65% over the last year and that this is having a detrimental effect on the world’s biggest producer, the Democratic Repulic of Congo (DRC). The DRC is one of the world’s poorest countries but produces over 60% of the world’s supply of cobalt, a metal that is used in the lithium-ion batteries. The price hit its ten-year peak of over $40 a pound in early 2018, but is now around the $14 mark, according to Fastmarkets. The price has cratered due to an oversupply of the metal, which was mined to take advantage of the higher prices, but Chinese demand has dried up. * SO WHAT? * There appears to be virtually no control over cobalt mining and related activities in the DRC, so until someone gets more of a grip, extreme volatility is likely to continue.

Carrefour aims to exit China while restaurants start questioning delivery prices…

Carrefour moves to quit China with deal to offload most of business (Financial Times, David Keohane) shows that Europe’s biggest retailer has had enough of China and has agreed to sell 80% of Carrefour China to Suning.com, a major Chinese retailer, for €620m in cash. The deal is expected to close by the end of the year. Carrefour set up shop in China back in 1995 and now has 210 hypermarkets and 24 convenience stores – but the business has proved to be a drag of late, not great when it is fighting a price war on the domestic front with E.Leclerc, Casino and Auchan. * SO WHAT? * This sounds like a smart move and at least they will have some interest in any upside by keeping a small slice of the Chinese business. Carrefour has been focusing on moving away from its hypermarket format towards convenience store and e-commerce formats of late. I’m not sure whether this is a good thing or not TBH – by doing this, it is just copying the German discounter competition and probably trying to surf the trend of more frequent shopping trips that make smaller stores more viable. On the one hand, it is commendable that Carrefour is prepared to rip up its traditional business model, but on the other it might lose its identity in the process – and if it does that, what’s the point of shopping there??

Restaurants are arm-twisting delivery companies to lower fees (Wall Street Journal, Heather Haddon) shows that some big restaurant chains are starting to revisit fees charged by delivery companies, making things particularly difficult for smaller start-ups in this highly crowded space. US food delivery companies such as Grubhub and Postmates have benefited from restaurants signing up with them but now increasing competition is giving restaurants more confidence to negotiate lower delivery rates. McDonald’s, Applebee’s and Cousins Submarines are among those doing just that at the moment as they claim that higher delivery charges hit their profitability. Delivery services tend to charge around 25% in fees per order. * SO WHAT? * This is bound to happen as competition in this area intensifies. Restaurants that signed initial terms to stay in the game and not go the way of apparel retailers now have the shoe on the other foot and have the power to push back. The delivery segment has done extremely well in the last few years in attracting capital – venture capital firms have poured $4.8bn into 60 deals in food delivery companies last year alone – but competition is increasing. Grubhub’s market share since 2017 has halved, whilst that of DoorDash and Uber Eats have gained ground. Given that success in food delivery depends largely on scale and solid infrastructure, surely we are due to see more consolidation. It’s just my opinion, but I think that the “low hanging fruit” for food delivery – certainly in the larger economies – is maturing all the time, so I would be more inclined to turn my attention to “dark kitchens” (you know, the stand-alone kitchens that just do food for deliveries) as an exciting growth area – and maybe real estate companies that have exposure to this space. 

San Fran goes against the herd and Philip Morris aims for IQOS glory…

San Francisco set to ban E-cigarettes (Wall Street Journal, Talal Ansari) tells us that San Francisco could be the first US city to ban e-cigarettes this week, which is particularly ironic given that it is home to one of vaping’s biggest players – Juul Labs. The San Francisco Board of Supervisors will be holding a final vote on a ban tomorrow. The ban will only be temporary initially, pending a Food and Drug Administration (FDA) assessment of the health risks of e-cigarettes. The FDA has given e-cigarette companies until 2022 to submit their products for review. Importantly, the sale of cigarettes won’t be illegal but users will have to pay a $1,000 fine or face other penalties. * SO WHAT? * E-cigarettes are still a very new product and the fact that they have become so popular among kids and teenagers so quickly has taken regulators by surprise. It’ll be interesting

to see whether other cities follow San Francisco’s example. I’m betting that they won’t given the tobacco industry’s very deep pockets and lobbying powers, but vaping’s seemingly unstoppable growth has at least been slightly dented by this new crackdown.

Philip Morris to put heat on cigarettes (The Times, Alex Ralph) heralds the potential opening of hundreds of stores across the UK that will push cigarette alternatives – with an initial roll out of Philip Morris International’s IQOS stores selling heated tobacco and vape products in Bristol and Manchester. There are already four stores in London, but this signals the launch of a major expansion. * SO WHAT? * Philip Morris has faced challenges from landlords in the past who have been reluctant to do business with a tobacco company. However, I would have thought that rising vacancy rates and continued strife on the high street will mean that they will throw their morals out of the window and be glad to see rents from new tenants. This sounds like a great move by Philip Morris, with impeccable timing!

Brompton eyes an e-bike future and Meatless Farm puts the US in its sights…

Straight outta Brompton: company predicts ebikes future (The Guardian, Sarah Butler) is an interesting article where the folding bicycle maker predicts that electric bikes will make up at least half of its business within the next 10 years. It has sold over 2,500 of its new e-bikes since their launch in August and believes that their popularity will increase. The company is expected to take its new product to Germany and the US in the coming months after already being available in the UK, Belgium, Netherlands, Spain and France. * SO WHAT? * Interesting, but as an ex-bike rider myself, I am highly sceptical of e-bikes as they are way more expensive than normal ones and have more that can go wrong with them. E-bikes have been a growth area for the likes of Halford’s and Evans, but let’s face it – not everyone can afford them. What’s wrong with relying on leg-power?? Still, good luck to Brompton, though. 

I believe I have mentioned this company before but Meatless Farm looks to stir up US vegetarian market (Financial Times, Emiko Terazono) highlights a British company wanting to take on plant-based protein groups Beyond Meat and Impossible Foods in their own backyard and have signed up with Amazon-owned retailer Whole Foods Market. The new agreement will mean that its plant-based mince and burger patties will be sold in the US retailer from this summer, signalling an expansion from its current UK distributors Sainsbury’s and Morrisons. Whole Foods will have exclusive distribution for six months, after which time Meatless Farm will be looking to broaden. * SO WHAT? * It’s great to see a UK start-up braving it in a major market. The hype surrounding the likes of Beyond Meat and Impossible Foods means that the timing is as good as any. It would be interesting to see what its offering is like in comparison to the others, but if it can sign distribution deals like its American cousins, its future should be bright! It’ll either do well itself or another company will buy it IMHO as it is in a fragmented market. Bigger companies wanting to get a piece of the action will be increasingly willing to pay to fast forward their progress in this area by acquiring tiddlers like this.

And finally, in other news…

I thought I’d leave you today with the heart-warming Turtle missing back legs gets Lego wheelchair (Metro, Jimmy Nsubuga https://tinyurl.com/y3grouky). Ahhhhhh!

1. In MACRO & INVESTMENT NEWS, the Bank of England leaves interest rates unchanged and Neil Woodford gets ready for more redemptions
2. In UK RETAIL NEWS, sales are hit by cold weather but Dunelm surprises on the upside while Dixons, Monsoon and N Brown continue to have issues
3. In “OUT OF CHINA” NEWS, we see why America’s Apple and South Korea’s Lotte are moving out of China
4. In INDIVIDUAL COMPANY NEWS, Slack opens with a bang, Waymo signs a deal with Renault and Nissan and McDonald’s experiments with new tech
5. In OTHER NEWS, I bring you freaky picture…

So UK interest rates remain unchanged and Woodford prepares for more flak…

Bank freezes rates and cuts growth outlook (The Times, Gurpreet Narwan) highlights the Bank of England’s decision yesterday to keep interest rates unchanged as it cut its forecasts for second quarter growth due to Brexit uncertainty and the tricky global trading backdrop. All nine members of the Bank’s monetary policy committee (MPC) voted to keep rates at 0.75%. * SO WHAT? * Pretty much everyone expected this but there have been rumblings about an interest rate RISE given that unemployment keeps falling and wages keep rising. The Bank did say, however, that rates could rise once Brexit is out of the way to stop the economy from overheating. Let’s face it – no-one knows! Like everyone else, the Bank is adopting a wait-and-see approach.

Woodford fire sale raises £170m for payouts when fund reopens (Daily Telegraph, Harriet Russell) shows that the embattled fund manager Neil Woodford has managed to raise at least £169m in a fire sale of publicly listed shares. This will give him money to dole out when the inevitable redemptions come on the reopening of his currently suspended Equity Income Fund. He’s sold an estimated £10m of shares per day since he stopped investors from withdrawing money on June 3rd. It is thought that he cut his stake in Amigo Loans from 10% to 5.6%, sold off a third of his holding in Purplebricks and reduced his shareholdings of Redde, New River REIT, Countryside Properties and Crest Nicholson. On the upside, Car auctioneer in £2bn takeover talks (The Times, Patrick Hosking) says that Woodford may be in for a £136m windfall as one of his holdings, BCA Marketplace (the company behind webuyanycar.com), is deep in talks to sell itself to private equity buyer TDR Capital in a £1.9bn all cash deal. It is possible that rival bidders may emerge, giving Woodford an even bigger boost at such a difficult time. * SO WHAT? * Woodford will be facing a ton of redemptions when he reopens his fund so any “victory” like this could prove to be a timely boon in his time of need.

Retail sales were under the weather, but Dunelm surprised on the upside while DixonsCarphone, Monsoon Accessorize and N Brown face down tough times…

Cold weather hits UK retail sales in May (Financial Times, Valentina Romei) cites the latest figures from the Office for National Statistics which shows that unseasonably cold weather in May hit retail sales by 0.5% versus the previous month. Department stores suffered their eighth month in a row of weaker sales – the segment’s longest losing streak for ten years. Although the first quarter showed strong consumer spending, weaker data in April and May “reinforces belief that the economy is headed for a sharply weakened performance in the second quarter”, according to Howard Archer, chief economic adviser at EY ITEM Club. * SO WHAT? * The UK high street continues to suffer, but given falling unemployment and wages rising above inflation, you would have thought that consumers are going to start spending at some point in the not-too-distant future, no?

It’s nice to see a story like Rainy day trade gives Dunelm another boost (The Times, Ben Martin) because good news is pretty thin on the ground in UK retailing! Britain’s largest homeware and soft furnishings retailer actually benefited from the poor weather as consumers sought sanctuary from the cold and rain in its shops and actually spent some money whilst they were there. Dunelm came out with an unscheduled trading update yesterday which surprised the market on the upside because it lifted its annual profit expectations – and the shares got an 8.5% boost on the news. This is the company’s third profit upgrade since the start of this year and follows a management shake-up at the top of the company. * SO WHAT? * I think that this is an amazing performance for a company that should be suffering! Given that most retailers exposed to this area are feeling the pinch from a drop-off in real estate sales due to current economic uncertainty, it is almost unbelievable that it is doing so well. Still, hats-off to them!

Unfortunately, it’s back to retailer gloom in Weak phone sales hit profits at Dixons Carphone (The Guardian, Julia Kollewe) as the company’s share price tanked by 20% after

it announced a big fall in profits and “significant” losses in its mobile phone business. This is the company’s second profit warning in a year and it rubbed salt in the wound by almost halving its dividend. The group, which owns Currys, PC World and Carphone Warehouse, continues to suffer from consumers delaying phone upgrades – in some cases punters are hanging on to their phones for three to four years. * SO WHAT? * I would have thought that the changeover to 5G (and maybe new tech like bendy phones – as long as they work properly ????) will be a major boon as people scramble to upgrade for new functionality but, let’s face it, that’s not going to happen for a while yet. In the meantime, I think it’s time for them to hunker down. OK, it’s faffing around with “gaming battleground” formats at 18 stores – to be rolled out to 80 locations by the end of the financial year – where customers can play video games, but that’s all jam tomorrow stuff. As far as I’m concerned, it’s all about handset sales – and they will continue to be rubbish until 5G starts to get more popular.

Monsoon offers landlords rent cut deal (The Times, Simon Duke) highlights Monsoon Accessorize as the latest retailer to try its hand at getting rent cuts from its landlords via company voluntary arrangements (CVAs) in order to survive. It has hired Deloitte to oversee its CVA which would be part of a massive overhaul of the company and is seeking rent reductions for 135 of its 258 high street stores. Monsoon Accessorize has shut down almost 40 stores in the last two years and had a bit of relocation and downsizing thrown in as well. It says that current trading conditions are the worst it has experienced in its 46 years of existence. * SO WHAT? * Here we go again! Retailers keep pushing and pushing – but at some point, landlords are not going to cave. It seems to me that we are nearing that breaking point…

Difficulties in apparel retailing continue in N Brown aims to simply be online as its sales slide (The Times, Tabby Kinder) which shows that the company suffered from poor performance in its catalogue and mail order business, although its digital revenues were up by 3%. The company behind Jacamo, Simply Be and JD Williams kept its guidance on annual sales and profits and continues its efforts to be a destination online retailer. * SO WHAT? * I think that this company has a decent chance of carving out a proper niche given that it has an identifiable target customer (plus-size and mature customers) with less options than in other areas of apparel retailing. If it can get its offering sorted, I think it could be good.

America’s Apple and South Korea’s Lotte look at leaving China…

Apple explores moving some production out of China (Wall Street Journal, Yoko Kubota and Tripp Mickle) has a whiff of inevitability about it as Apple has asked suppliers to look at moving final assembly of up to a third of products out of China and into other parts of southeast Asia. Most of Apple’s products are currently assembled in China by Foxconn (formally known as Hon Hai Precision Industry Co.), Pegatron and Wistron. * SO WHAT? * Given the current US-China trade war and the likelihood of Apple getting used as a negotiation football in any trade relations between the two superpowers, it would be foolish of Apple NOT to look into diversifying its manufacturing/assembly base. It won’t be easy to do overnight due to the need for skilled labour, but given that overheads relating to dealing with China (especially in terms of wages and tariffs) are on an uptrend, now would seem to be as good a time as any to move at least some of its operations.

Lotte’s China woes a harbinger of South Korean exodus (Financial Times, Edward White, Song Jung-a and Kang Buseong) takes a look at the growing trend of South Korean businesses deciding to leave China behind for other countries in the region. Attracted initially by the promise of a massive market, companies such as Lotte are losing patience and leaving as rising labour costs, price competition, tightening Chinese regulation and the improving capabilities of local rivals make it a much less appetising place to do business. Samsung Electronics announced production cuts at its last remaining smartphone factory in China, Kia announced last week that it would rent out one of its three Chinese facilities and Hyundai is thinking about cutbacks. Major manufacturing groups are trying to keep some China presence but are looking to countries like Vietnam and Indonesia for better growth prospects. * SO WHAT? * It’s not just South Korean companies who are leaving China – lots of others are looking at whether the effort they have to put in to do business there is really worth it. It certainly doesn’t seem to be the promised land it was once cracked up to be for foreign firms.

Slack has a strong debut, Waymo signs a deal with Renault and Nissan and McDonald’s looks at some McTech…

In a quick scoot around other news, Slack soars on debut as US markets hit a record intraday high (Daily Telegraph, James Titcomb) shows a share price jump of 60% on the office messaging app’s market debut, riding high on markets that were buoyed by the Fed signalling potential

future interest rate cuts. Slack has never made a profit. * SO WHAT? * A great debut – but its future will depend on whether it really lives up to its billing as an “e-mail killer”. Start-ups seem to love it, but the majority of business is still stuck on e-mail. The market is definitely there, but the company’s future will depend on execution.

Elsewhere, Waymo deal adds salve to fractured Renault-Nissan alliance (Financial Times, Peter Campbell) highlights an exclusive deal between the three to develop self-driving transport services in Paris and Japan while McDonald’s tests robot fryers and voice-activated drive throughs (Wall Street Journal, Heather Haddon) looks to a future with new McTech potentially playing a role in cutting costs for the company.

And finally, in other news…

I thought I’d leave you today with the freaky picture in This picture tells you how stressed you are. What do you see? (India Today, https://tinyurl.com/y2kgq2jk). According to this picture, I am stressed (but not too badly!).

1. In MACRO & INVESTMENT NEWS, the US keeps rates on hold, UK manufacturing orders fall, the Hargreaves/Woodford thing takes another turn and Vanguard cuts prices
2. In TECH NEWS, Oracle unveils strong revenues, YouTube considers changes on kids’ content and Slack targets a $26 per share flotation price
3. In INDIVIDUAL COMPANY NEWS, Bathstore heads for the plughole and Airbus announces strong orders
4. In OTHER NEWS, I bring you an inspirational 103-year old sprinter and a very cool Uber. For more details, read on…

So the Fed keeps rates steady, UK manufacturing orders fall, the Hargreaves Lansdown/Woodford thing drags on and Vanguard gets even more aggressive on pricing…

Fed feels the pressure but holds rates steady (Daily Telegraph, Tom Rees) shows that the US Federal Reserve (aka “the Fed”) managed to resist increasing pressure from Donnie T to cut interest rates for the first time in ten years but said that it would be willing to cut in order to prevent an economic slowdown. The federal funds rate is currently 2.5% but now the market believes that a rate cut at the next meeting in July is a dead cert. * SO WHAT? * The US economy has continued to power ahead in relation to many other countries but the outlook has been looking increasingly tricky as the US-China trade war has rumbled on. Wall Street had hoped for a cut yesterday, but I guess it got the next best thing – a big hint that there will be a rate cut at the next meeting.

Meanwhile, back in the UK, Manufacturing orders drop to lowest level in 3 years (Financial Times, Valentina Romei) cites the result of a survey conducted by the CBI which shows that UK manufacturing orders dropped to their lowest level in almost three years. After manufacturing saw rising activity in the first quarter leading into the original Brexit deadline due to businesses stockpiling products, domestic orders showed up as being particularly weak. * SO WHAT? * This is a bit of a no-sh!t-Sherlock conclusion, but it is evidence of what we already know nevertheless. Basically, everyone needs clarity as far as Brexit is concerned, but then again we already know that.

How Hargreaves kept faith in faltering fund (The Times, Ben Martin) is the latest story in British newspapers’ apparent bid to bore us to death about how a fund manager went from hero to zero by putting too many eggs in too few baskets whilst being egged on (#dadjokewordplay) by his besties at Hargreaves Lansdown. Hargreaves is, understandably, trying to cover its own backside as a company by saying that it raised concerns about Woodford’s investment strategy back in

November 2017 although it still kept his funds on its “best-buy” list. * SO WHAT? * Everyone and their dog tried to take their money out of the Equity Income Fund when all of this kicked off, forcing Woodford to ban withdrawals (because he was having to sell assets to meet redemptions – and the speed of withdrawals was faster than the speed at which he could sell assets). This then led to more bad PR and everyone taking pot-shots at the formerly high-flying fund manager. These pot-shots are deserved, given his poor performance, but EVERY fund manager makes bad decisions at some time or other. There are many important issues that have been raised in this whole debacle in my opinion: firstly, that financial services companies such as Hargreaves Lansdown seem to be making an absolute killing from stuffing hapless clients into funds that may or may not be suitable; secondly, that internal controls need looking at (the fact that Hargreaves Lansdown’s research director Mark Dampier AND HIS WIFE sold out of the funds about three weeks before the suspension, looks very dodgy although every report I read is at pains to point out that “there is no suggestion of wrongdoing”) and thirdly, that there needs to be more oversight of the weighting of funds – or at least more transparency to clients so they know what’s going on. I think it’s OK to concentrate investments – just as long as investors are in the loop.

Vanguard trades blows in fund fee war with M&G (Financial Times, Chris Flood) heralds a bit of a kerfuffle going on in Europe’s asset management market as Vanguard announced that it is cutting fees across its $215m UK domiciled active funds to mark the three-year anniversary of its launch in 2016. M&G Investments, the asset manager owned by Prudential, has tried to retaliate by introducing a simplified fee structure for its UK-based funds. * SO WHAT? * UK investment managers are generally finding it tough to raise funds at the moment and so Vanguard’s price cut makes things even worse. It’s like Vanguard came along three years ago, punched UK investment managers in the face, kicked them in the unmentionables and is now starting to put the boot in while they are on the floor. Vanguard’s tactics of low pricing has proved to be a big hit with investors over the years, making it the world’s second biggest fund manager with $5.6tn in assets. The continued pressure on UK active fund managers continues…

Oracle unveils solid revenues, YouTube mulls changes and Slack eyes $26 per share…

Oracle’s revenue beats targets in latest quarter (Wall Street Journal, Asa Fitch) highlights the company’s better-than-expected sales and profits for the quarter as its fast-growing software licensing and cloud business outpaced hardware revenues. * SO WHAT? * It’s good to see that Oracle is trying to move with the times and the success of its cloud business echoes that of Microsoft, Amazon and Salesforce’s. Some say that it has a way to go yet to become a major cloud computing player, but I guess it’s going in the right direction. Whether that is fast enough is the key!

YouTube weighs major changes to kids’ content amid FTC probe (Wall Street Journal, Rob Copeland) says that execs at the Google unit are thinking about making some major changes in its existing offering for kids. They are discussing the transfer of all children’s content into the existing YouTube Kids app to protect children from unsuitable videos following increasing pressure from the likes of the Federal Trade Commission and other consumer groups. There is also talk about switching off “auto-play” that plays a new video after you’ve watched an existing one.* SO WHAT? * This would be a huge change as children’s videos are some of the most popular on the platform and generate millions of dollars in advertising. The unit has come under increasing criticism for being too

slow on addressing hate-based content and false news as well as being too lax when it comes to content for children. I personally believe that this needs addressing asap, so it’ll be interesting to see how this plays out. Hopefully, other companies that publish content for kids will take note and everyone can improve – which will ultimately be better for advertising as advertisers will feel more comfortable that they are not inadvertently harming anyone.

Slack’s reference price set at $26 for Thursday trading debut in direct listing (Wall Street Journal, Corrie Driebusch and Maureen Farrell) heralds the latest puffed-up IPO to hit the New York Stock Exchange as the likely $26 price it will float at tomorrow implies a company valuation of $15.7bn. This is going to be a direct listing (like Spotify’s listing last year) and although $26 is the “reference price”, some expect it to open significantly higher. * SO WHAT? * A direct listing differs from a more conventional listing in that a company floats existing stock on a public exchange without raising any money or using any underwriters (which can theoretically lead to more volatility in share price as employees can dump their stock with no restrictions, for example). In a direct listing, it also doesn’t choose the price or who gets to buy in the night before – so it’s altogether more nervy. Many that are involved in “traditional” listings will probably be praying for Slack to drop like a stone or have ridiculous volatility because if it’s a success, more companies will take this route and bypass investment banking fees (although actually, direct listings still need investment banking support). Instead of investment banks having their cake AND eating it, more direct listings mean that they will just have cake. With maybe a bit of a nibble.

Bathstore heads for the plughole and Airbus announces strong orders…

In another bit of bad news for the UK high street, Bathstore face collapse putting 700 jobs, 168 stores at risk (The Guardian, Zoe Wood and Sarah Butler) shows that the UK’s biggest bathroom specialist will potentially be the latest retailer to go down the plughole as advisory firm BDO has been called in to handle a potential administration as the company failed to find a buyer. * SO WHAT? * The tough times continue on the high street, but this retailer has also been hit by consumers not wanting to spend on big ticket items like new bathrooms given the uncertain economic backdrop. Stagnation in most of the residential property market won’t be helping either.

Following on from yesterday’s news that Boeing got orders for its 737 MAX aircraft from IAG, Anything Boeing can do, we can do better (The Times, Callum Jones) highlights orders from American Airlines, Wizz Air, Frontier Airlines and Jetsmart for its A321 XLRs, which were only launched on Monday this week. Nice.

And finally, in other news…

I’m feeling in a kind of inspirational mood this morning, so I thought I’d leave you with 103-year-old Julia ‘Hurricane’ Hawkins just set a new world record for 50-metre dash (Mental Floss, Claudia Dimuro https://tinyurl.com/y2qb8y2n) and the incredibly cool You can hail an Uber to the Great Barrier Reef (National Geographic, Sarah Reid https://tinyurl.com/yyw9lmxk). Wow! Amazing on both counts!

1. In MARKETS & CURRENCIES NEWS, the prospect of Xi-Trump talks buoys markets, UK flotations look thin on the ground and Facebook launches Libra
2. In TECH NEWS, Niantic buys Sensible Object and Twitch buys Bebo
3. In INDIVIDUAL COMPANY NEWS, UBS’ pig nightmare continues and Boeing gets an order boost
4. In OTHER NEWS, I bring you cat sandals. For more details, read on…

So Xi-Trump talks look like happening next week, UK IPOs get rarer and Facebook launches Libra…

Trump-Xi talks fire up European rally (Daily Telegraph, Tom Rees) flags a tweet by Trump which said that he will be meeting Chinese president Xi Jinping about trade at next week’s G20 summit, although he added that he will decided whether or not to go ahead with imposing tariffs on the remaining $300bn of Chinese imports following the meeting. * SO WHAT? * European markets strengthened on the news (everyone’s hoping for a resolution and talks between the two leaders could break the deadlock) but they had already received a boost from ECB president Mario Draghi hinting about more stimulus for the Eurozone.

Domestic & General flotation is shelved (The Times, Alex Ralph) doesn’t look like a major story at first glance, but what it does do is highlight the fact that the postponing of a planned flotation or sale of home appliance insurer Domestic & General by its private equity owner, CVC Capital Partners, is part of a broader reluctance for British companies to list on the stock exchange at the moment. Flotations have slowed down to their lowest level until at least 2009, according to Dealogic. There have only been 14 IPOs (raising $3.1bn) on UK exchanges this year versus 65 (raising $18.3bn) in the same period in 2014. * SO WHAT? * Clearly, the uncertainty of Brexit has got to be a factor in

the scarcity of flotations and I suspect that there are many potential deals waiting in the background for some kind of clarity on the situation. For now, though, only the very brave, the desperate or the very competent dare to put their heads above the parapet.

Facebook could change the face of digital coins (Daily Telegraph, James Titcomb) does a really good job of trying to explain new cryptocurrency, Libra, and what its impact may be. Facebook’s blockchain project that started a year ago has attracted the backing of a number of high-profile companies and launched yesterday to great fanfare. WhatsApp and Facebook Messenger will support peer-to-peer payments using Libra and Facebook will launch a digital wallet, Calibra, where customers can store coins. Facebook is trying to help facilitate the exchange of cash for Libra in emerging markets and could potentially give discounts to advertisers who pay their bills in Libra in order to kick-start usage of the cryptocurrency. Libra is expected to be more stable than Bitcoin and, unlike other “stablecoins” won’t just be pegged to the dollar – it’ll be pegged to a basket of currencies, which should also help to reduce volatility. * SO WHAT? * On the one hand, you could say that Libra will be more successful than Bitcoin because one of Bitcoin’s weaknesses has been that it has not been accepted by major retailers. However, Facebook/Libra: pros and coins (Financial Times, Lex) points out that punters are increasingly reticent about giving their phone numbers to Facebook – let alone their money – and that regulators will be poring over every tiny detail before it is properly released, so it is not yet a done deal.

Pokemon Go’s developer buys Sensible Object and Twitch buys Bebo…

Niantic buys London games developer Sensible Object (Financial Times, Tim Bradshaw) highlights the purchase of London-based games studio Sensible Object by the Silicon Valley company that brought you Pokemon Go. This is part of the development of its “augmented reality” gaming platform and comes on the eve of the release of its next AR game Harry Potter: Wizards Unite. Niantic was valued at around $4bn at its latest funding round earlier this year and has made a number of acquisitions over the last 18 months to enhance its capabilities. * SO WHAT? * Let’s hope, for Niantic’s sake, that the game is a success as there are plenty of one-hit-wonder gaming companies that

have struggled with that “difficult second album”. At least they are trying to enhance their offering via acquisitions and AR gaming still appears to have a way to go yet in terms of development. I believe that Wizards Unite will launch this Friday, FYI.

Video site Twitch snaps up social media pioneer Bebo (Daily Telegraph, Olivia Rudgard) highlights Twitch’s acquisition of Bebo – remember them?? Bebo was founded in 2005 and at its peak had 45m users. Since then, it was sold to AOL in 2008 for $850m but struggled and the founders bought it back for $1m in 2013 as it suffered from market share being taken by MySpace and then, of course, the mighty Facebook. * SO WHAT? * Twitch specialises in video game live streams and Bebo is currently a video game streaming site, so I guess the acquisition just enhances Twitch’s existing capabilities. Twitch didn’t give any more details.

UBS has China problems and Boeing gets some orders for its troubled 737MAX…

I thought I’d mention UBS was riding high in China – until Swinegate (Financial Times, Don Weinland, Patrick Jenkins and David Crow) because it is a story that’s taking up a lot of column inches at the moment. Basically, UBS economist Paul Donovan released a report last Wednesday which touched on the current swine flu epidemic where he said “Does this matter? It matters if you are a Chinese pig. It matters if you like eating pork in China”. The words “Chinese pig” were seized upon and seen as being racist and UBS then faced a massive sh!tstorm from all sides. * SO WHAT? * This has resulted in Haitong Securities, one of China’s largest securities houses, cutting ties with the bank, and then on Monday, it was also removed as an underwriter from a bond transaction worth up to $1bn for the state-

owned China Railway Construction Corporation. “Swinegate” is continuing to have repercussions, even though Donovan is now on an “indefinite leave of absence”. FWIW, I think that this is one of those “trial by social media” things as I have never come across any analysts that would be racist in a report in my entire City career. I do think, however, that this is being used as an opportunity by some to put pressure on UBS, which was previously sitting pretty as a non-US bank trying to operate in China. That’s probably going to be a lot harder now – at least in the short term.

Boeing ends order drought triggered by 737 MAX crisis (Wall Street Journal, Robert Wall and Andrew Tangel) heralds some rare good news for the aircraft manufacturer as British Airways parent IAG signed a letter of intent for up to 200 Boeing 737 MAX planes. This is a real vote of confidence in Boeing, which has been suffering from the grounding of its plane following two tragic crashes. * SO WHAT? * This will be very important for Boeing and comes just as regulators are getting ready to test Boeing’s fix of the plane.

And finally, in other news…

I know I talk about dogs every now and then – so just to reassure you that I am not “cat-ist” I thought I’d leave you today with Adorable cat sandals from Japan welcome new arrivals to their feline footwear litter (SoraNews24, Casey Baseel https://tinyurl.com/yy3cwgw9). For the catlover in your life…

1. In CONSUMER/RETAIL-RELATED NEWS, Eurozone wages are up, UK consumer confidence remains steady, H&M falls behind Inditex and Black Sheep raises new funding
2. In SOCIAL MEDIA NEWS, Facebook launches its cryptocurrency and TikTok aims for advertisers
3. In PLANE-RELATED NEWS, Airbus trumps Boeing and Lufthansa has a profit warning
4. In INDIVIDUAL COMPANY NEWS, Huawei sales get hammered, Pfizer buys a cancer drug maker and Beyond Meat faces scepticism
5. In OTHER NEWS, I bring you a novel garlic-peeling method. For more details, read on…

So Eurozone wages rise, UK confidence steadies, H&M lags Inditex and Black Sheep raises funds…

Eurozone wages grow at fastest pace in a decade (Financial Times, Valentina Romei) highlights wage growth despite the export-led European manufacturing sector facing tough global trading conditions. Wage growth stood at 2.5% – its fastest growth rate since 2009 – and up from 2.3% at the end of last year, according to Eurostat data. * SO WHAT? * Good news for European workers and it looks like the European economy is actually coming around after a period of stagnation.

Consumers shake off pressure on living costs (The Times, Gurpreet Narwan) cites the latest IHS Markit survey which showed that household sentiment improved in June, but still remains negative overall on household finances. Despite wage growth outpacing inflation since the beginning of last year, households perceive their living costs as being higher and are concerned about jobs,

despite record lows for unemployment. Joe Hayes, an economist at IHS Markit, observed that “the unclear path towards Brexit still lingers in the background, while uncertainty has been brought about by the end of Theresa May’s tenure as prime minister”.

Meanwhile, on the high street, H&M spells out need for investment (The Times, Elizabeth Burden) looks at how H&M’s turnaround is going in the right direction but that it is lagging Spanish rival Inditex in terms of its online business and Coffee chain Black Sheep raises new funding as it plans international push (Financial Times, Philip Georgiadis) highlights an independent coffee shop chain that’s trying to keep things that way by raising £13m in a new round of funding from private investors. * SO WHAT? * Avoiding VC/private equity/institutional investor help to fund expansion is increasingly rare these days (especially from a coffee shop) and although I love Black Sheep’s coffee (I think it’s the best from a “chain” in London – better than Taylor St Coffee and Joe & The Juice, for example) I think that it is operating in a very crowded space where giants like Starbucks et al can just switch their product offering on a much larger scale according to what sells. Call me cynical, but surely it’s just a matter of time before this gets bought by a private equity firm or another operator in the same space.

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1. In MACRO NEWS, the US/Iran situation hots up while UK growth looks set to fall
2. In RETAIL NEWS, Walmart outpaces Amazon, we take stock of the impact of CVAs and Patisserie Valerie gets a revamp
3. In INDIVIDUAL COMPANY NEWS, Deutsche Bank outlines a major overhaul
4. In OTHER NEWS, I bring you an unexpected cake. For more details, read on…

So tensions increase between the US and Iraq while UK growth looks set for a slowdown…

Trump’s ‘maximum pressure’ Iran strategy stokes war fears (Financial Times, Demetri Sevastopulo) refers to Trump’s comments on Thursday that blamed Tehran for attacks on oil tankers in the Gulf of Oman last week. Some think that it could push the two countries closer to war as tensions have continued to heighten since the US withdrew from the Iran nuclear deal a year ago. Those opposed to poking the hornets’ nest say that Trump is seeking something that will be impossible to get – his own way over a number of major issues and/or the destruction/removal of the current regime – while supporters of Trump’s aggressive stance say that the Obama administration was too soft on Iran and that choking off its resources reduces their options, meaning that they will be more likely to engage at the negotiation table. Saudi Arabia ups ante in war of words with Iran (Financial Times, Ahmed Al Omran, Simeon Kerr and Monavar Khalaj) shows that Saudi Arabia is getting in on the Iran bashing (and probably notching up brownie points with the US after the whole Khashoggi thing last year) as

the kingdom’s de facto leader, Crown Prince Mohammed bin Salman (aka “MBS”) warned that “The kingdom doesn’t want a war in the region, but we will not hesitate to deal with any threat to our people, sovereignty and vital interests”. * SO WHAT? * The oil price will rise the more tensions increase in the region given the potential threat of supply. I think that Trump will want to avoid this, but he certainly knows how to push Iran’s buttons!

UK growth tipped to slow as firms run down Brexit stockpiles (The Guardian, Richard Partington) cites British Chambers of Commerce (BCC) forecasts which predict that economic growth in the UK will fall as companies rundown the stockpiles they’ve amassed going into Brexit. It has cut its GDP growth forecasts for next year from 1.3% to 1% – the weakest rate since the 2009 recession following the financial crisis. * SO WHAT? * The stockpiling of raw materials and components by manufacturers powered a 0.5% rise in GDP in the first three months of this year, but these inventories are now being run down which will mean that orders will be slow. This is interesting, but critics will say that this must be taken with a pinch of salt as the BCC is a big supporter of Remain and economic forecasts are always subject to tweaking! Their forecasts will obviously reflect their wider stance – but I think this is what everyone is expecting anyway. Remainers will use this as evidence to back their own Brexit fears.

Walmart outdoes Amazon, we see the impact of CVAs so far and Patisserie Valerie’s new owner has a plan…

In Walmart outpaces Amazon in drone patent race (Financial Times, Martin Coulter) we see that Walmart is actually on course to file more drone patents than Amazon for the second year running! Research from accountancy firm BDO shows that it filed 97 new drone patents with the World Intellectual Property Organisation since July 2018, with Amazon “only” filing 54. * SO WHAT? * Amazon boasted earlier this month that it would start delivering packages to customers via drones “within months”, but regular readers of Watson’s Daily will know that I am highly sceptical of this generally – certainly as far as drones in densely populated areas are concerned anyway. I’m sceptical because I think it’s hard to get permits to fly in a lot of places, but I it could probably work in more remote locations which would normally cost a lot to deliver to.

CVA tactic has led to the closure of 1,000 shops (Daily Telegraph, Ashley Armstrong and Tim Wallace) takes a look at what CVAs have done to our UK high streets. Originally, CVAs were only meant to be used when a business was in danger of bankruptcy but they have now become so prevalent that landlords are fighting back. Paul Suber, co-head of retail at Colliers said that “CVAs should

not be used as a tool for financial engineering and a way to walk away from freely entered-into legal contracts. Their use must only be as a last resort”. New research shows that CVAs have been used to shut 954 stores since the start of 2017 among retailers including Carpetright, Mothercare and Homebase and landlords are complaining that they are being used as a tool to force rents down. * SO WHAT? * I don’t think that retailers can be blamed for using this tactic even if CVAs weren’t originally intended for such situations. However, I am sure that retailers will say that this is just a case of the chickens coming home to roost after years of landlords just upping rents without taking into account difficult conditions. There is definite mileage in landlords getting some rent rather than no rent as it is difficult to think who will fill all of the empty spaces – but I suspect that the situation will continue to get worse as shopper behaviour continues to change.

There’s good news for posh cake fans in Rescuers butter up Patisserie Valerie’s clientele (The Times, Tabby Kinder) as the new owner of the cafe chain, Causeway Capital, has outlined a turnaround plan following a major review conducted after it paid £94m for the business that imploded in January. It said that it will slim Pat Val’s existing 37 menus with 800 items down to a much leaner two menus with 150 products. Great for fans of simplicity, but not so good for those who like tons of choice! Causeway Capital has entered into new terms with its suppliers and new policies for its 2,000 staff. Let’s hope it all works out!

Deutsche Bank readies itself for some big changes…

Deutsche Bank to set up €50bn ‘bad bank’ as part of overhaul (Financial Times, Stephen Morris and Olaf Storbeck) heralds the latest development for Germany’s biggest lender as it prepares for a major overhaul of its business. Basically, the bank aims to split out around €50bn of assets, mainly comprising of long-dated derivatives, and taking an axe to its equity and rates trading

business outside Europe. Details aren’t finalised yet, but this seems to be the direction the company is taking. Chief exec Christian Sewing is expected to announce details at the bank’s half-year results in late July. * SO WHAT? * Deutsche Bank has been criticised for ages for not doing enough to turn the business around, so I guess we will have to see whether this IS enough. I suspect that critics will be very cynical as Deutsche has promised overhauls in the past and not delivered satisfactorily, so goodwill is thin on the ground as far as they are concerned. This was inevitable really after merger talks between Deutsche Bank and Commerzbank collapsed a few months ago as investors have been pushing for major changes.