Category: Uncategorized

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.

And finally, in other news…

I thought I’d leave you today with a cautionary tale in Woman asks for Mariah Carey birthday cake – but what she gets is priceless (The Mirror, Courtney Pochin https://tinyurl.com/yxawndrw). Hmmm.

1. In TECH NEWS, both Broadcom and Huawei suffer from the US ban while Facebook’s cryptocurrency gets closer to launch and Alilbaba gets closer to its Hong Kong listing
2. In UK RETAIL NEWS, Morrisons rolls out fast delivery, Tesco’s sales growth slows, Majestic confirms multiple bidders and Arcadia wields the axe
3. In INDIVIDUAL COMPANY NEWS, Tyson Foods gets on the meatless bandwagon
4. In OTHER NEWS, I bring you the science behind why we yawn. For more details, read on…

So we look at both sides of the US ban on Huawei, Facebook closes in on its cryptocurrency launch and Alibaba closes in on its Hong Kong listing…

Broadcom to take $2billion hit from Huawei ban (Wall Street Journal, Asa Fitch) puts a figure on how much the US ban on exports to Chinese is costing as Broadcom said its sales would be $2bn lower annually. * SO WHAT? * Broadcom is one of the first chipmaking majors to quantify the financial impact of the ban and if it is indicative of what is to come elsewhere, smaller chip companies are bound to have it worse. Some, like Qorvo and Lumentum Holdings, have already lowered their quarterly revenue guidance as a result. Broadcom’s share price fell by 8% on the news while others like Qualcomm and Intel also fell. Chief exec Hock Tan warned that “The uncertainty of the [geopolitical] environment has put in place concerns about placing additional orders and active reduction of inventory out there”.

Huawei’s booming smartphone business is dealt a blow by US ban (Wall Street Journal, Dan Strumpf) shows the flip side of this as the world’s second biggest smartphone maker has had to postpone the launch of its new laptop as well as production in its PC business due to restrictions in buying US components like Intel chips and Microsoft Windows. * SO WHAT? * Huawei has been growing at breakneck speed over the years, powered by its offering of slick phones with quality camera tech at generally lower price points than Apple and Samsung. This growth was especially impressive given the general maturing of smartphone sales, but Huawei’s inclusion on the entity list is putting a stop to all that and the prospect of their phones not being able to update properly post the ban will certainly

hit sales hard. Consumer devices like handsets are the company’s biggest revenue generator, so this is a big deal. I have to say, even if this ban is lifted, Huawei’s reputation will be damaged for some time to come.

Meanwhile, Facebook’s new cryptocurrency, Libra, gets big backers (Wall Street Journal, AnnMaria Andriotis, Peter Rudegair and Liz Hoffman) highlights the heavy-hitters who are lining up to back its new cryptocurrency, Libra, that it will unveil next week and launch next year (I believe Libra is the official name of what had previously been referred to as “GlobalCoin”) that include the likes of Visa, Mastercard, PayPal and Uber. All of them are putting money together that will be used to fund the creation of a “coin” that will be pegged to a basked of proper currencies to avoid extremes in volatility experienced with other cryptocurrencies. * SO WHAT? * Bitcoin was born about ten years ago, but even now consumers hardly ever use it for “normal” transactions. When it’s up and running, Libra will be used across Facebook’s network and the internet more generally, bringing a newfound legitimacy to cryptocurrencies. It could go either way for the likes of Bitcoin or Ether, IMHO, because consumers could either abandon them for the more “legit” and stable Libra or there could be a halo effect of Libra that legitimises everything else. 

I have referred to this before but Alibaba’s $20bn Hong Kong listing to weather trade wars (Daily Telegraph, Hannah Boland) highlights the Chinese e-tailing giant’s latest step towards making a Hong Kong listing a reality as it filed the paperwork this week for a listing which many say will raise up to $20bn in new cash, although this amount isn’t official. * SO WHAT? * Although this hasn’t been said explicitly, Alibaba is no doubt making this move for a dual listing (it listed in New York in 2014) in order to give it distance from the US that will mitigate any collateral damage from the current US-China trade spat. It originally floated in New York because its listing rules were easier, but Hong Kong relaxed its listing rules last year in order to attract more tech companies.

Morrisons rolls out fast-delivery, Tesco sales disappoint, Majestic confirms bidder interest and Arcadia makes cut…

In a quick scoot around UK retailing today, Morrisons adds five cities to Amazon fast-delivery basket (The Times, Alex Ralph and Martin Strydom) heralds the expansion of a deal (called “Morrisons at Amazon”) between the two companies whereby customers get free delivery of groceries from Morrisons worth over £40 by Amazon within hours of placing the order. This service is currently available in Leeds, Manchester, Birmingham and some parts of London but will be extended to Glasgow, Newcastle, Liverpool, Sheffield and Portsmouth. Nice! * SO WHAT? * Is Amazon going to buy Morrisons and combine it with Whole Foods or what?!?

Tesco sales growth stalls as consumers tighten belts (Daily Telegraph, Michael O’Dwyer) highlights a slowdown in sales growth at the supermarket over the last quarter but it did say that it outperformed a “subdued” UK grocery market. Although growth had slowed, it still grew – for the

14th quarter in a row. Chief exec Dave Lewis remarked that “There’s some weakness in consumer sentiment in the UK. Clearly, part of that is down to the political situation. The other element is the weather”.

‘Multiple bidders’ for Majestic Wine stores (The Times, Dominic Walsh) gives us the latest on Majestic as it announced that it was suspending its final dividend but confirmed that it is in advanced talks with “multiple bidders” for its chain of retail stores. Majestic Wines owns Lay & Wheeler and Naked Wines in addition to its chain of stores and bidders for the latter are thought to include Opcapita, Fortress and Elliott Advisors. In essence, Majestic will change its name to Naked Wines, Lay & Wheeler will be sold separately while the shops will presumably still be called Majestic. Phew!

Then in Arcadia to cut head office jobs after staving off collapse with rescue plan (The Guardian, Sarah Butler) we see the beginnings of a major pruning operation at the owner of brands including Topshop, Topman, Evans, Miss Selfridge, Burton and Dorothy Perkins following the recent vote by creditors to go ahead with CVAs to keep Arcadia alive. So far, 50 stores are slated to close, 170 jobs will be cut at HQ and 1,000 shopfloor jobs are also likely to go. This is in addition to the 23 shops already targeted for closure. Will it all be enough??

Tyson gets on board with meatless…

In an interesting, but not-altogether unexpected development, Tyson Foods launches fightback against non-meat start-ups (Financial Times, Emiko Terazono) highlights a move by America’s biggest meat producer, Tyson Foods, to launch its own non-meat nuggets and burgers to take the fight to the likes of Beyond Meat and Impossible Foods. The company sold is stake (or “steak”??) in Beyond Meat just before the IPO (which was a bit silly in hindsight, given that Beyond’s share price has quintupled

since its flotation last month), but is now rejoining the fray with other “biggies” including Canada’s Maple Leaf Foods and Nestle in making efforts in alternative protein foods. Tyson’s Nuggets will be available in US retailers latest this summer and its burgers will follow on a bit later. It still has its hand in other alternative protein start-ups like MycoTechnology, Memphis Meats and Future Meat Technologies. * SO WHAT? * Yes, there is a lot of hype surrounding this area at the moment, but it IS real, the benefits are real and developments mean that these alternative protein sources are a REAL alternative. Will Tyson be able to “beat” the likes of Beyond with its superior production capabilities or will consumers trust Beyond more? Time will tell…

And finally, in other news…

I thought I’d leave you today with Why do we yawn? Contagious yawns help cool down the brain, scientists say (Newsweek, Kashmira Gander https://tinyurl.com/y2v3p4bt). Well I never!

1. In TRANSPORT-RELATED NEWS, I bring you stories on sales, batteries and experiments
2. In RETAIL NEWS, Inditex, Lululemon and Boohoo smash it, Lidl makes moves in London and Majestic gets another bidder
3. In INDIVIDUAL COMPANY NEWS, BAT is let down by vaping and Adidas’s winning run has a breather
4. In OTHER NEWS, I bring you a happy but poorer shot bar. For more details, read on…

So we look at car sales trends, battery developments and some experiments…

Car sales plunge in China ahead of emissions rules (Financial Times, Tom Hancock) highlights some tough home truths in the Chinese car market as sales fell by almost 20% last month in the world’s biggest market. Consumers kept their hands in their pockets, not wanting to buy ahead of the implementation in July of tighter new emissions rules and because of increasing concerns about the economy. These figures from the China Association of Automobile Manufacturers also showed vehicle sales falling by 16.4% in May, the fastest year-on-year decline ever, as sales of commercial vehicles like buses and trucks were particularly hard-hit. * SO WHAT? * This is bad news for car manufacturers, but I suspect that the government will step in before things get too bad with some kind of tax incentives etc. Still, the steepness of this drop-off in sales is a shocker.

Back in the UK, Pendragon warns of annual loss as it slashes prices of used cars (The Guardian, Julia Kollewe) shows that Britain’s biggest car dealer warned it would remain in loss-making territory this year because tough market conditions have forced it to slash prices of secondhand cars. Pendragon has 32 secondhand-only car outlets and 177 franchised dealerships and trades under the names of Evans Halshaw, Stratstone and Car Store, selling all the main marques. Interestingly, Pendragon wants to pull out of its US business to focus on the UK used-car market despite current conditions. Its new chief exec Mark Herbert, is doing a full business review that may lead to a breakup of the company and is expected to announced the conclusions in September. * SO WHAT? * I must say that I am surprised to hear a company like this seeing an “exciting opportunity” in the UK used-car market. It seems to me that the trend in cars is going to be away from diesels and petrols and towards electric – and this would surely mean that secondhand prices for “traditional” vehicles will only get weaker as charging capability improves, rendering them obsolete. The fact that (currently) lithium ion batteries deteriorate over time would perhaps lead to people being less likely to buy the vehicles outright (because battery depletion will cause massive depreciation), meaning that there will be loads of vehicles just hanging around with no-one wanting to “own” them in the traditional sense. There may be some mileage (#seewhatididthere) in secondhand for the next few years, but I would have thought the longer term trend is terminal for used.

Talking of electric cars, Bankruptcies and slowdown hang over China’s electric car market (Financial Times, Tom Hancock) highlights problems looming for China’s EV start-ups, such as Nio and Xpeng, as competition intensifies and subsidies that have powered an EV sales boom (sales are now 10x what they were in 2014) start to fade out. Thus far, subsidies have averaged at around Rmb70,000 ($10,100) per vehicle, but this month the subsidy will be cut to about Rmb25,000 for most vehicles. BYD, Beijing Auto and Shanghai Auto accounted for about 50% of China’s EV sales last year. * SO WHAT? * Sales are bound to drop off a cliff. It is common knowledge that once these subsidies are cut, they kill sales. This will no doubt force consolidation among the EV makers in a bid to drive down production costs and preserve margins. Who knows – maybe this will be with other domestic makers, or maybe some of the foreigners will be willing to shell out for some local bargains. The timing of this subsidy cut isn’t great either, given that consumers are getting more concerned about spending on big ticket items.

Despite all this, developments continue apace with Huawei and partners to release self-driving cars ‘as early as 2021’ (Daily Telegraph, Matthew Field) in partnership with a number of European, Chinese and Japanese car manufacturers including Audi, GAC Toyota Motors, Beijing New Energy Automobile and Changan Automobile. Then in batteries, VW and Goldman lead $1bn investment in Swedish battery project (Financial Times, Richard Milne) highlights a push to create a European battery making champion called Northvolt to rival Tesla and Asian makers with $1bn of funding from VW, Goldman Sachs, Ikea (!), and BMW. On a rather smaller scale, Battery revs up scooter in five minutes (The Times, Gurpreet Narwan) highlights the efforts by an Israeli-based-and-BP-backed start-up called Storedot which has developed a battery that can charge an electric scooter in only five minutes. It chief exec Doron Myersdorf gushed that “This is showing the world that we can break the barrier of fast charging and what was considered impossible is actually possible”. Impressive, no?

Then there was news on some experiments that had failed – like Shell reverses car-hailing plans in London (Financial Times, Anjli Raval and Aliya Ram) as the oil major decided to dramatically pull back the ambitions for its Uber-rivalling FarePilot app due to it not being profitable enough – and ones that are about to be embarked upon like Uber to test food delivery by drones (Financial Times, Shannon Bond). In this story, Uber wants to have food flown from the restaurants to an Uber Eats courier at a designated drop-off location, where the courier will then take it to the customer. Sounds great, but I am super-sceptical about the practicalities.

Inditex, Lululemon and Boohoo put in strong performances while Lidl outlines London plans and Majestic gets another bidder…

Inditex is in the pink after Brazil launch (The Times, Gurpreet Narwan) shows that the world’s biggest fashion retailer has benefited from taking Zara online in Brazil and in eight other countries. Another nine countries, including South Africa will also be able to order online and Inditex’s physical retail business is also ploughing ahead with store openings in 23 countries. * SO WHAT? * Its shares were weaker in trading yesterday due to bad weather in March depressing sales, but it seems that the underlying story is positive. Inditex is the parent of brands including Zara, Massimo Dutti, Pull & Bear and Bershka. The company has spent a lot on getting the balance right between its online and offline offerings and services and I think that the benefits will start to come through.

Lululemon reports higher sales, raises full-year outlook (Wall Street Journal, Aisha Al-Muslim) shows that the premium sportswear retailer raised its full-year outlook due to solid growth in its online business and sales of its core leggings and joggers. Net revenues were up by an impressive 20% from a year ago, beating market consensus estimates. The shares were up by 4.5% on this good news and are up 37% over the last 12 months. * SO WHAT? * I think that Lululemon is one of those brands that will do REALLY well when economies are going strong, but the fact is that you can get way cheaper gear to sweat in elsewhere. Also, how much workout gear do you really need and does it really have to be “this season”?? FWIW I think this is great in an up market but will be very vulnerable when economies wobble.

In Boohoo enjoys a boom as high street fashion chains falter (Daily Telegraph, Michael O’Dwyer) we see that the online retailer enjoyed a very strong start to the financial year with sales in the UK (which account for over 50% of revenues) up by 27% and international sales up by over

50% as its cheap fast fashion hits a cord with shoppers. Mind you, online retailers need to be careful in Banks warn EU rules will scupper a quarter of online payments (Financial Times, Nicholas Megaw) as the Second Payments Services Directive continues to loom large in the background. * SO WHAT? * Basically, this legislation will require most online payments of over €30 to go through an extra level of authentification like entering a code via text message. Adding an extra layer of faff is supposed to reduce fraud rates but retailers are worried that consumers will find this tiresome and lose sales as a result. I suspect that there are loads of companies that transact online that will be adversely affected by this and that aren’t ready for it when it comes in in September. Expect last minute panic a la GDPR.

Meanwhile, Lidl moves into central London with £500m expansion plan (Daily Telegraph, Jack Torrance) heralds the German discounter’s plans to move in on London with 40 new shops – including one not far from Oxford Street! Lidl says that the new shops will create 1,500 jobs and it plans to open a new UK head office for 800 employees in Tolworth, south-west London. * SO WHAT? * This is quite an interesting development because, thus far, the company has concentrated on cheaper properties in less densely populated areas. I would imagine that it will go down a storm, but it will be interesting to see how profitable they are with much higher overheads.

Things are hotting up in Majestic Wine shares rise as US hedge fund joins bidders for stores (The Guardian, Jasper Jolly) as US hedge fund Elliott Advisors has thrown its hat in the ring to buy Majestic’s 200 outlets. Elliott is having a bit of a go at retail currently, having last week bought US bookshop chain Barnes & Noble that it will run with Waterstones (and did you know that Waterstones bought Foyles last September?), which it bought in April 2018. * SO WHAT? * It’s still not clear what Majestic is going to do with its chain of shops – whether it will keep and rebrand some and sell the rest, or whether it will just sell ALL of them. Majestic’s share price strengthened by 9.7% in trading yesterday on the news.

BAT suffers and Adidas pauses for breath…

BAT vaping projections let-down as cigarette market shrinks (Daily Telegraph, Oliver Gill) highlights yesterday’s first trading statement for British American Tobacco’s new chief Jack Bowles, which disappointed investors due to poor sales and an outlook for e-cigarettes and other “reduced risk products” that fell below analyst expectations. BAT aims to increase sales of its vaping products, including the Vype and Vuse brands, by between 30 and 50% this year, but things aren’t looking great at the moment.

Adidas ends its run as shareholder cashes in (The Times, Dominic Walsh) explains a 2% fall in the company’s share price after a stellar 48% rise so far this year as Group Bruxelles Lambert, which owns 7.5% of the sports company, sold a big block of shares at a 1.7% discount yesterday. * SO WHAT? * It doesn’t sound like there was anything to worry about here – and you can’t blame an investor for wanting to crystallise profits after such a strong performance.

And finally, in other news…

I thought I’d leave you today with a patriotic bar that got hit big-time in the pocket in Unlucky 13 for Miami bar that offered free shots for US goals (Reuters, https://tinyurl.com/y6d5atgq). As Ron Burgundy might have remarked about the 13-nil scoreline, “Well that escalated quickly”…

1. In MACRO NEWS, UK pay rises and unemployment falls
2. In RETAIL NEWS, it’s crunch time for Arcadia and Ted Baker has another profit warning
3. In INDIVIDUAL COMPANY NEWS, VW breaks off its relationship with Aurora, Marcus links up with Saga and Amazon withdraws from restaurant deliveries
4. In OTHER NEWS, I bring you a scary Airbnb. For more details, read on…

So, despite everything, wages rise and unemployment keeps falling…

Pay goes up as unemployment falls (The Times, Gurpreet Narwan) cites the latest figures from the Office for National Statistics which show that wage growth rose by 3.8% in April – the biggest rise for a single month since May 2008 – while the unemployment rate fell to 3.8% (easy to remember, eh??), a rate not seen since 1974. * SO WHAT? * This is significant given that wage growth was

actually expected to FALL from the 3.5% recorded in January. Interestingly, Tej Parikh, chief economist at the Institute of Directors, said employers were finding it hard to find staff with the right skill set,  which presumably means that they are having to pay more. This all sounds rather counter-intuitive, doesn’t it – what with all the Brexit uncertainty etc. I guess the world keeps on turning despite Brexit and employers still have to continue their day-to-day business activities. Still, I think things are very finely balanced and could change very quickly if we have a bad Brexit OR if Brexit is abandoned altogether.

Arcadia faces a crucial vote and Ted Baker has another profit warning…

Arcadia on the brink after Intu rejects revised CVA plan (The Guardian, Sarah Butler) highlights the fact that today is a key day for the survival of the company behind brands including Topshop, Topman, Dorothy Perkins, Burton, Miss Selfridge, Evans, Wallis and Outfit as creditors are due to vote on seven separate CVAs which all need a 75% approval from voters. This vote was meant to happen last week but was postponed to this week because Arcadia chief Philip Green didn’t think he could hit the 75% mark. His situation has been made more difficult now because Intu, a major landlord which owns 17 big shopping centres in the UK, said that it was not willing to accept rent cuts of around 40% for the Arcadia shops in its properties. Investor M&G is also looking increasingly unlikely to back the CVAs. Crown Estate, Land Securities and Aberdeen Standard and Land Securities are rumoured to be wavering although Aviva, Hammerson and British Land are thought to be prepared to back the deal. * SO WHAT? * If Arcadia loses the vote, there is a very real risk that it could go into administration, putting 18,000 jobs at risk and leaving massive holes in the high street and in shopping malls. Fall of Green’s empire could spell the end for CVAs too (Daily

Telegraph, Ashley Armstrong) points out that failure in today’s vote could also result in CVAs being taken off the table as an option for struggling retailers to pursue – which could hasten the ongoing downfall in the retail sector.

There’s more bad news in Takeover talk at out-of-fashion Ted Baker (The Times, Alex Ralph) which highlights Ted Baker’s second profit warning in less than six months as the disappointing figures in yesterday’s trading update sent its share price plummeting by over 25%. The company blamed severe discounting in global markets, consumer uncertainty, unusually cold weather in North America and the disappointing performance of its spring and summer womenswear collections and added to the gloom by downgrading its future forecasts. * SO WHAT? * The weakness of this formerly stellar performer has triggered rumours that it could now be vulnerable to takeover – but then again you’d need a very brave purchaser to wade into a troubled UK high street in current circumstances. Founder Ray Kelvin resigned in March amid allegations of harassment (and an investigation is ongoing) and so I would have thought that if any buyers do decide to emerge they will want to get that sorted before getting serious about any offers. Who knows – maybe a company like Asos might like to get a high street presence?? The nightmares continue…

VW breaks up with Aurora, Marcus snuggles with Saga and Amazon abandons restaurant deliveries…

Volkswagen breaks with Silicon Valley self-driving start-up Aurora (Financial Times, Patrick McGee) heralds the end of a relationship with Aurora, the self-driving start-up backed by Amazon, after a trial run of a few months. This will make it easier for the carmaker to partner up with Ford’s driverless unit Argo AI as part of the global VW/Ford alliance announced in January to jointly develop future vehicles. Aurora announced a deal earlier this week with Fiat Chrysler to integrate its software into their vehicles. * SO WHAT * This is probably more of a downer for Aurora rather than VW as, strategically, a partnership with Ford makes more sense given that Ford is a leader in the US and VW is a leader in Europe and China. Also, VW is thought to have been not overly-impressed with Aurora’s tech. This is just one of many deals between driverless tech companies and auto manufacturers, so no real biggie. There will be other opportunities!

Goldman’s Marcus teams up with Saga to target over-50s (Financial Times, Oliver Ralph and Sarah Provan) highlights Goldman Sachs’ fast-growing retail bank Marcus’ collaboration with over-50s product specialist Saga on long-term savings products that are due to launch in the autumn. Marcus has grown rapidly in the UK since its launch last September due to having one of the best interest rates in the market and its easy-access savings account. * SO WHAT? * I think this is a canny move by a smooth-operator given that the over-50s account for two-thirds of the £850bn in UK cash savings accounts, according to Saga’s own estimates. It will no doubt have secured favourable terms as well given Saga’s current difficulties.

In Amazon ends restaurant delivery in face of fierce competition (Wall Street Journal, Sebastian Herrera) we see that Amazon has decided to close down its restaurant delivery service Amazon Restaurants, in the US, after four years of competing with the likes of Grubhub and Uber Eats. * SO WHAT? * This just goes to show that even giants fail! Grubhub and Waitr Holdings shares got a 7% and 6% boost on the news, but it just goes to show how difficult this sector is.

And finally, in other news…

I thought I’d leave you today with an example of why you shouldn’t be too nosy about your Airbnb in What was hidden in this Airnbn is the stuff of nightmares (The Poke, https://tinyurl.com/yxltt3f8). Yikes!

1. In TECH-RELATED NEWS, Salesforce buys Tableau in a $15.7bn deal and Tencent’s PUBG Mobile becomes the world’s top-earning game
2. In CAR-RELATED NEWS, we see that UK output is hit by car factory shutdowns, that our EV charging network has a long way to go and that Aston Martin is unveiling a new plant for its 4×4
3. In RETAIL/HIGH STREET NEWS, Tesco ups its wages, Ocado eyes vertical farms and Thomas Cook confirms a takeover
4. In OTHER NEWS, I bring you a cautionary tale. For more details, read on…

So Salesforce agrees to buy Tableau and Tencent’s PUBG Mobile goes top…

Salesforce to buy analytics platform Tableau (Wall Street Journal, Asa Fitch and Kimberly Chin) heralds the latest (and biggest) acquisition for Salesforce as it has agreed to pay a chunky $15bn in stock for data analytics platform Tableau to enhance its existing offering. The customer relationship management software-supremo is paying an eye-watering 42% premium over Tableau’s closing price on Friday in order to stay ahead of the likes of Adobe and Microsoft. Salesforce’s shares fell by 5.2% on the news as investors balked at the price and share dilution given that the deal was all-stock. Tableau software enables companies to build databases, spreadsheets, graphs and maps from their data. The deal is expected to complete by the end of October. * SO WHAT? * This sounds like a natural development given other tech companies’ efforts to enhance their business-intelligence and data analytics capabilities. Only last week, Alphabet bought Looker for $2.6bn to help it do more with its data and Microsoft has been on the acquisition trail to enhance its cloud business offering, called Azure. The only thing is the price and the fact that it’s all paper. However, it is expected to enhance

Salesforce’s revenue by $350-400m in the current fiscal year.

In Tencent’s ‘PUBG Mobile’ becomes top-earning global game (Financial Times, Tom Hancock) we see that Tencent’s PUBG Mobile game where players battle to the death with virtual weapons earned $146m last month to overtake the earnings of its previous smash hit Honour of Kings, which earned $125m in the same time period but was launched back in 2015. This points to a recovery of sorts for the gaming giant which has suffered over the last year from being on the Chinese government’s naughty step, meaning that new game title approvals have slowed right down. Interestingly, Tencent had to change the Chinese version of the PUBG Mobile game (called Game For Peace, lol) to have less violence and more than one winner. Many thought this would lose it users although that doesn’t appear to be the case at the moment. * SO WHAT? * After a period of being stuck in the wilderness, it seems that Tencent could be back on track with its gaming business. It has had a host of other game titles approved by Beijing since late last year (the authorities had been cracking down on gaming companies saying that their games were too addictive and damaging for young people) which means that its gaming revenues should climb. Tencent pushes its games through the big social networking chat app WeChat as well as a number of app stores that it controls. Given its near-monopoly status, you would have thought that 2019 is looking a lot better already.

Auto maker shutdowns hit UK output, our EV charging network is shown to be lacking and Aston Martin unveils its new factory in Wales…

Shutdowns in car industry shock GDP (The Times, Philip Aldrick and Benedict George) cites the latest figures from the Office for National Statistics which showed disappointing UK GDP growth figures for April. This was the second consecutive month of GDP contraction and the headline figure was hit badly by a 24% fall in vehicle production (the biggest fall since 1995) as car factories brought forward their summer shutdowns to coincide with the original Brexit deadline. Growth in the first quarter had been high due to domestic and foreign manufacturers stockpiling, but this is now unwinding.

Switch to electric cars hit by ‘poor’ charging infrastructure (Financial Times, Nathalie Thomas and Peter Campbell) is something that shouldn’t really be a surprise to anyone as Parliament’s business, energy and industrial strategy select committee has officially concluded that Britain’s current charging infrastructure is “poor” and “lacking in size and geographical coverage”. Sales of electric-only vehicles in the UK were up by 63% in April versus the same time last year, but still represent a paltry 0.9% of new car sales. At the moment, vehicle charging on the UK’s motorway network is dominated by Ecotricity with 300 chargers and last week, Dutch company Fastned opened a new 350kW EV fast-charger in Sunderland (which no cars currently sold in the UK can use!) with plans for five more 50kW chargers in the area. BP and Shell have also invested in charging companies and are rolling out fast chargers on petrol station forecourts and Tesla continues to invest in its own supercharger network (although only Tesla drivers can use these). * SO WHAT? * It seems to me that we are reaching

a real sticking point. Would-be drivers are put off by fears of a poor network, electricity providers want to provide more charging but worry about whether the grid can take it etc.etc. As Graeme Cooper, project director for electric vehicles at National Grid, put it, a “really grown up discussion” needs to happen between the energy industry, the transport sector, the government and Ofgem about the size of investment that would be needed to cope with EVs – and I think it needs to happen SOON!

In a rare bit of positive news for the automotive industry (and particularly the automotive industry in Wales, unfortunately), Aston rallies City with £150,000 4×4 (The Times, Robert Lea) highlights a nice jolly for 20 analysts from the City to see Aston Martin’s new production facility in St Athan, south of Cardiff, which will be making its new 4×4 DBX model that is to be formally launched in December. Chief exec Andy Palmer expects full production of the DBX to be 5,000 a year from 2021, with initial production starting from Spring 2020. To give you an idea of scale, Gaydon currently produces 6,400 vehicles per year. * SO WHAT? * This is part of a charm offensive by Aston, whose shares have been hit badly since the share price has tanked badly post its stock market flotation last year. Basically, analysts have been worried about whether Aston can deliver on a new model AND get a new plant on track at the same time and part of the intention of this jolly was to convince them that this could be done. There’s also increased competition in the luxury 4×4 space with the £140,000 Bentley Bentayga, the £165,000 Lamborghini Urus and the £250,000 Rolls-Royce Cullinan as well as Ferrari’s upcoming effort and the usual high-end Range Rovers and Porsche Cayennes and so Aston has got a tough job on its hands. Let’s hope that Aston can turn it around and that they can take on at least some of the Ford Bridgend workers who will be losing their jobs. Everyone will be chomping at the bit to see what the DBX order book is looking like given that there’s so much riding on the success of this model. 

Tesco ups its wages, Ocado invests in vertical farms and Thomas Cook confirms a takeover bid…

Tesco raises wages for store and warehouse workers by 10.45% (The Guardian, Sarah Butler) sounds quite good as the company said it would raise wages from September by 10.45% over the next two years to £9.30 an hour, BUT it said that it would abandon the annual bonus. This will just bring the minimum hourly pay for its store and warehouse workers in line with current rates paid at Lidl and Asda and ahead of Morrisons – although Morrisons staff get an annual bonus equivalent to 3% of their annual salary. * SO WHAT? * This just sounds like a bit of reshuffling to me – but supermarkets are being forced to pay their staff more given the tightness of the labour market at the moment. It’s a shame that the bonus will be cut, but then again given that supermarket non-management bonuses are capped at roughly 3-3.5% anyway, I would have thought that an improved hourly wage would be better on a practical basis. Mind you, the danger here is that if a supermarket had a bad year, it can cut the bonus before cutting jobs – but if everyone’s getting paid a better salary, there is less wiggle room before they start having to cut people.

M&S may offer ‘pick your own’ salad under Ocado deal (Daily Telegraph, Natasha Bernal) is an eye-catching story doing the rounds today as Ocado announced that it had just invested £17m in “vertical farming” which could mean you could get “pick your own salad” aisles in M&S stores! * SO WHAT? * Vertical farms produce food indoors and crops are grown on stacked levels in a controlled environment. The £17m has gone into a joint venture called Infinite Acres, along with 80 Acres Farms and Priva Holding, with each of the three having a third. Ocado added that it had bought a 58% stake in Jones Food Company – Europe’s largest operating vertical farm – and foresees a day where “consumers’ vegetables are harvested hours before they are packed, metres from where they are shipped”. Wow! How amazing would that be??

Then in Thomas Cook confirms takeover bid talks with Fosun (Daily Telegraph, Michael O’Dwyer) we see that the 178 year-old travel company’s tour operator business is close to being bought by Chinese conglomerate Fosun, which already has an 18% stake. TC’s shares spiked initially but it’s not yet a done deal. Fosun is not allowed to buy Thomas Cook’s airline (which it had put up for sale earlier this year) because of EU rules which say that airlines should be majority owned a and majority controlled by Europeans. * SO WHAT? * This is good news, but TC is absolutely rife with problems. A Chinese sugar daddy like Fosun could help with its huge debt and it is also hoped that a takeover could boost its exposure to Chinese tourists.

And finally, in other news…

I thought I’d leave you today with a cautionary tale in 34-year-old woman has to be cut free from toddler’s plastic car with a bread knife (Metro, Jen Mills https://tinyurl.com/y2crg4dv). Don’t try this at home, folks!

1. In INDUSTRY NEWS, Big Tech could be about to get a tax surprise and UK high street visits hit new lows
2. In NEWS ON CARS, makers continue to target China and we see the knock-on effects of our shrinking car industry
3. In INDIVIDUAL COMPANY NEWS, United Technologies and Raytheon plan a mega tie-up and BT aims to join Britbox
4. In OTHER NEWS, I bring you the joys of office chair racing. For more details, read on…

So Big Tech could be in line for some Big Tax and UK high street visits drop…

Digital giants face tax setback after G20 agreement (Financial Times, Robin Harding) highlights an agreement by G20 finance ministers to speed-up plans to revamp cross-border corporate tax. They will aim to agree on new rules “by 2020” that will hit digital businesses that operate across borders and currently use that to book their sales in the lowest tax jurisdiction. UK chancellor Philip Hammond remarked that “Global tax rules should still aim to tax businesses based on where they create value, not just on where they make sales. We need to ensure the reformed international tax system continues to reward countries for creative attractive business environments”. * SO WHAT? * The US is obviously resistant to this because of the size of its digital giants and I presume countries like Ireland will also object because they benefit hugely from being a low-tax country for corporates. The Devil will be in the detail with such an agreement and I would expect the US and the

FAANGs will do as much as they can to resist given how hard this could hit them financially. My money would be on a token effort that will increase taxes a bit, but not by as much as they should because of the sheer power of these American companies.

The UK retail sector has been in the wars for a while now and High street visits hit six-year low as Brexit uncertainty deters shoppers (The Guardian, Zoe Wood) cites the British Retail Consortium’s (BRC) monthly footfall data for May which shows that store visits hit a six-year low due to cooler weather and Brexit uncertainty. The BRC’s chief exec, Helen Dickinson, observed that “The UK experienced the worst footfall figures in six years, with declines in every region, and across high streets, retail parks and shopping centres. This reflects our recent sales data, which showed the largest drop in retail sales on record”. * SO WHAT? * If you combine these findings with last week’s BRC data on consumer spending – which showed the steepest fall in almost 25 years – you have yourself a very bleak picture. Philip Green’s Arcadia Group is going to be having its postponed meeting with creditors this Wednesday. If THAT doesn’t go well, the high streets could look even bleaker than they are doing now… 

Auto makers continue their China efforts, but their withdrawal from the UK is going to have knock-on effects…

Auto makers raise bets in China despite market slowdown (Wall Street Journal, William Boston) shows that although car sales have been slowing down in the world’s biggest car market, foreign automakers still see it as a key market – especially for the development of electric vehicles (EVs). China’s government is putting its full weight behind the development of EVs by continuing to offer big tax incentives to consumers that make them very price competitive as well as forcing manufacturers to fill an EV quota. * SO WHAT? * China is keen to be at the forefront of electric vehicle manufacturing and technology and it would be madness for non-Chinese manufacturers to ignore this. I guess that the thinking goes that if they develop and thrive in a market that could well see quicker mass adoption of EVs versus other developed markets, their China sales

would be healthy – but they could also use the tech know-how they’ve developed in China to other markets, which could be even more lucrative.

Ford closure takes car job losses to 10,000 (Daily Telegraph, Alan Tovey) looks at the effects that recent developments for car manufacturers in the UK could have on their related supply chains. The Society for Motor Manufacturers and Traders (SMMT) has just released a report which estimates that for every job lost at a car manufacturer, five are lost in the related supply chain. Given that up to 10,000 jobs are under threat in the UK car industry at the moment (Ford closing its Bridgend factory, Honda axing its Swindon plant, JLR cutting roles worldwide and Nissan deciding to abandon plans to build the X-Trail in Sunderland and stop producing Infiniti vehicles), this implies that another 50,000 are at risk. UK car manufacturing hit its peak in 2016 and 80% of the vehicles manufactured here were for export. * SO WHAT? * I think it’s safe to say that those “glory days” are gone, Brexit or no-Brexit. I also believe that leaving the EU has hastened a demise that was going to happen anyway given trends in ownership, purchasing and technology. It’s sad, but it’s not just the UK that’s suffering.

United Technologies and Raytheon mull a mega-merger and BT wants to be part of Britbox…

United Technologies strikes deal to merge with Raytheon (Wall Street Journal, Cara Lombardo and Doug Cameron) heralds what could be a humungous deal to make a combined aerospace and defence company, to be called Raytheon Technologies, worth a whopping great $100bn. This deal would make it the world’s second biggest such company behind Boeing and its product suite would range from engines and seats for jetliners and F-35 jets to Patriot missile launchers and space suits. * SO WHAT? * This deal would be part of a wave of consolidation among aerospace and defence companies as the Pentagon is increasing pressure on contractors to cut costs and invest more in new technologies. Interestingly, the combo is unlikely to face too much

antitrust resistance because the companies don’t compete against each other in most of their markets.

There’s continued action in the world of streaming as BT wants to join the party with Netflix rival (The Times, Elizabeth Burden) shows that BT is in talks with ITV to invest millions in Britbox, the subscription service that is to be launched by ITV and the BBC. Britbox is likely to cost £5 per month and both ITV and the BBC are expected to start withdrawing their old shows from Netflix and Amazon going into launch. * SO WHAT? * This looks like it could be pretty good for all parties as the Beeb and ITV get a nice slug of investment and, on the other side, it could also be good for BT who could become a “super-aggregator” of entertainment via its set-top box. No doubt more details will surface when discussions are more advanced. This sounds fair enough for now, but my concerns remain that all this subscription malarkey will ultimately lead to subscription fatigue as subscribing to all these services won’t be that much different from your old cable/satellite costs in the end.

And finally, in other news…

I thought I’d leave you today with something we’ve all had a go at unofficially: Blood, sweat but no tears: Japan’s office chair racing (Reuters, https://tinyurl.com/y4eqjawx). This looks great, don’t you think??

1. In RETAIL NEWS, UK retail jobs fall, Monsoon delays its CVA but Joules and Loungers buck the gloom while Auto Trader cruises in the fast lane
2. In TECH NEWS, Amazon drones on and Google Stadia gets a sceptical reception
3. In INDIVIDUAL COMPANY NEWS, Beyond Meat targets break-even this year while Ford’s Bridgend closure could trigger more losses and Neil Woodford’s horror show continues
4. In OTHER NEWS, I bring you some unusual sushi and an incredible drawing. For more details, read on…

So the number of retail jobs falls, Monsoon delays its CVA but on the positive side, Joules and Loungers stay strong and Auto Trader motors ahead…

Retail jobs fall shows pressure on high street (The Times, Gurpreet Narwan) cites the latest figures from the Office for National Statistics and Ordnance Survey which show that the number of people employed in high street retail jobs has dropped in every region apart from London in the last five years. The sharpest falls were in Wales (-10%), Scotland (-8.6%) and Yorkshire and the Humber (-7%) with London standing out at +6%. Retailer collapses and the increased use of self-service tills have had an effect as has the ongoing migration of shoppers going online. On the other hand, accommodation and food are doing better. * SO WHAT? * I guess this just confirms what we already knew. Our high street continues to be in a state of flux as it is currently undergoing an identity change that will continue for years to come.

Following on from what I said yesterday about Arcadia, Monsoon delays CVA procedure after Philip Green’s for Arcadia fails (The Guardian, Sarah Butler) shows that the owner of Monsoon and Accessorize has decided to delay restructuring plans after Arcadia’s plans hit some speed bumps with creditors. The company has said in the past that it would wait to see what happened with Arcadia before making a final decision on a course of action although it has to be said that Monsoon is not as reliant on landlords as Arcadia is. * SO WHAT? * Peter Simon, the owner and founder of Monsoon, has offered a £34m cash injection to keep the business afloat, so it’ll be interesting to see what happens IF Arcadia fails to convince its creditors in the vote next week. Comparisons are being drawn between Green and Simon given that they’ve both paid fat dividends to themselves over the years only for their companies to hit the skids at a tough time for retail.

On a positive note, Joules bucks high street gloom with ‘total shopping’ mantra (Daily Telegraph, Ashley Armstrong) shows a continuation of the company’s positive performance as it announced a 17% rise in sales for the year to May 26th, with pre-tax profits coming in at the top end of market expectations. The company doesn’t follow fashion trends, instead relying on family-friendly casual clothing and a loyal customer base of women aged between 25 and 44. It also has fewer shops than many of its peers. * SO WHAT? * This sounds great – and is especially impressive given the economic backdrop. Domestic seems to be going well and it caters to a proper audience that has money to spend. However, I often get the feeling that the wheels can fall off clothing retailers when they venture abroad. Joules is doing well in its current international expansion, but I really hope that it continues to keep its eye on the ball and doesn’t overreach itself – which is what often happens, where retailers end up having to beat a retreat back to Blighty with their tail between their legs a few years down the line.

Loungers is not resting on its laurels (The Times, Dominic Walsh) highlights another “winner” on the high street as it reported like-for-like sales growth of 6.9% for the year to April 21st. It opened 25 new sites over the last 12 months – 22 Lounges and three Cosy Clubs – to take the grand total of outlets to 146. Isn’t it great to hear about a restaurant/bar chain that’s doing well for a change??

Auto Trader steps up a gear with dealers (The Times, Robert Lea) shows that the online marketplace for cars put in a decent performance as retailers were keen to pay up to get more prominent listings. * SO WHAT? * This is particularly impressive given that sales of both new and used cars are getting weaker, so the company warned that “Predictions suggest that both markets will continue to decline for the calendar year 2019, albeit at a slower rate than in 2018. Economic and political uncertainty plus factors unique to the new car market , for example the continued impact of [new emissions regulations], continue to impact both new and used car sales”.

Amazon drones and Google’s Stadia gets a lukewarm reception…

You may be aware that Amazon just claimed that it will have drones making package deliveries to homes “within months” after displaying its wares in Las Vegas this week. However, although Amazon: drone zone (Financial Times, Lex) recognises that drone deliveries could cut costs dramatically (such deliveries are estimated to cost between 25-50% of road deliveries) it mentions practical limitations such as not being able to fly in areas with obstacles as well as noise pollution, privacy issues and general nuisance. Drone Major Group chief exec Robert Garbett remarked in Drone deliveries within months? Sure, and pigs might fly (Daily Telegraph, Matthew Field) that “Parcel delivery is a fabulous idea in certain forms but the public have a picture of a four-rotor drone taking a parcel to

your window. It is just so far from achievable in the short term it is unbelievable”. I, for one, am inclined to agree with him! And if drones can’t fly, I’m pretty darn sure that flying taxis will face even more problems!

In Google’s Stadia streaming service faces scepticism (Wall Street Journal, Sarah E. Needleman) we see that Google’s new cloud-based game-streaming service, that is expected to cost about $10 a month for a subscription when it launches in November, faced a lukewarm reception from analysts as there were no obvious blockbusters and a limited (only 30 titles) lineup. With cloud streaming, gamers can play games on an internet-connected device, avoiding the need for a console. * SO WHAT? * I think that this is a great idea in theory and when 5G kicks in properly along with a better games line-up this will explode in popularity. In the meantime, it will be a bit of a novelty although others, such as Microsoft and Electronic Arts, are working on similar offerings. I really think that the next generation of consoles will be the last. A “Netflix for games” is getting closer!

Beyond Meat aims for break-even, Ford’s woes in Bridgend could yet spread and Woodford ends a disastrous weak badly…

Beyond Meat aims for break-even 2019 (Wall Street Journal, Jacob Bunge) highlights Beyond Meat’s announcement that it could break even this year due to rolling out its plant-based products to more restaurants. In its first financial report since listing last month, the company said that its quarterly sales more than tripled although it is currently still loss-making. Beyond Meat’s Beyond Burger (which is delish, BTW) is sold in around 30,000 restaurants, food-service operations and supermarkets where it is sold alongside meat to tempt adventurous meat-eaters. * SO WHAT? * As I keep saying, I think meat alternatives will be MASSIVE. Beyond Meat and rival Impossible Foods’ success shows just what’s possible to the extent that now, even established food giants such as Tyson Foods, Brazil’s JBS and Switzerland’s Nestle are working on their own meat substitutes (Tyson Foods sold its 6.5% stake – or should I say “steak” – in Beyond Meat just before the flotation. I bet they wish they hadn’t given that the share price has quadrupled!).

Following up on other major stories that broke earlier this week, No-deal may put 6,000 more Ford jobs at risk (The Times, Robert Lea) puts the boot in to Ford workers as it

highlights the fact that more Brexit nightmares may be used as an excuse to sack 6,000 employees in Essex, east London and Merseyside if Ford decides to pull out of the UK completely. I think that there are many more other reasons to pull out, but Brexit could be a convenient excuse for Ford because they can blame the UK government – and not themselves – for having to evolve against a backdrop of rising costs and weaker sales. Brexit clearly won’t help, but it is not the only reason.

Woodford loses last remaining large client as assets shrink to £5bn (Financial Times, Owen Walker, Peter Smith and Caroline Binham) heralds an imminent coup de grace for former fund management star Neil Woodford as he lost yet another big client. He’s like Anthony Joshua swaying on his knees on the canvas while “fat cat investor” Andy Ruiz just lands punch after punch. God knows how he’s going to turn this around. Mind you, it might get worse for him as an individual as well as Hargreaves Lansdown’s head of research Mark Dampier in Supporter sold stock weeks before suspension (The Times, Ben Martin) as eyebrows have been raised by Dampier, by all accounts a mate of Woodford, because he sold his shares worth about £600,000 on May 16th for £23.92 a share – along with his wife who sold shares worth about £5m on the same day – only weeks before they crashed to what they are now – £19! Either Dampier is an absolute genius or something very fishy has been going on…At the moment, there are no suggestions of impropriety, but tongues will definitely be wagging!

And finally, in other news…

I thought I’d leave you today with the very clever Japanese office worker gets fired, retaliates by making sushi out of business suit and iPhone (SoraNews24, Oona McGee https://tinyurl.com/y4nonwq5) and the incredibly impressive This isn’t a Harry Potter photo – it’s an incredible coloured pencil portrait from a Japanese fan (SoraNews24, Shannon McNaught https://tinyurl.com/y3cox8ec). Have a great weekend!

1. In CAR NEWS, Fiat Chrysler pulls the merger with Renault, JLR and BMW team up on EVs, Ford announces the closure of its Bridgend plant and UK new car sales continue to weaken
2. In RETAIL NEWS, Arcadia is forced to postpone its destiny, Ashley pops up to buy Game and Card Factory does well
3. In INDIVIDUAL COMPANY NEWS, Samsung downsizes in China, BT wields the axe and Woodford gets another kick in the teeth
4. In OTHER NEWS, I bring you the world’s tallest sandcastle. For more details, read on…

So the Fiat Chrysler/Renault deal is off, JLR and BMW team up, Ford closes Bridgend and new car sales continue to weaken…

In Fiat Chrysler withdraws merger offer for Renault (Wall Street Journal, Nick Kostov and Stacy Meichtry) we see that the whole deal is now off because the French government, Renault’s biggest shareholder, rejected the merger offer due to Nissan’s lack of support (Nissan owns 15% of Renault and Renault owns 43.4% of Nissan). Renault said that “it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully”. A merger would have made the group the third biggest car manufacturer in the world behind VW and Toyota. * SO WHAT? * So it’s back to the drawing board! The problems of scale and rising costs of EV production and development remain and so ALL parties will need to review their strategies going forward. I would have thought that Renault will now trade at more of a discount as this whole debacle has highlighted what a handicap it is to have the government as a shareholder with outsize voting rights. If Renault is unable to do deals and costs are rising, the next logical step is to cut parts of the business – which is ironic given its assurances that if the deal went through there wouldn’t have been any job losses or plant closures (although I must say I was highly sceptical of that).

BMW teams up with Jaguar to power ahead with electric cars (Daily Telegraph, Alan Tovey) highlights a new alliance between the two companies on the development of electric vehicles, specifically Electric Drive Units (EDUs) for the next generation of battery-powered vehicles. The two companies will share R&D planning and joint procurement. * SO WHAT? * Both makers are having a tough time at the moment – JLR announced its biggest ever annual loss and BMW fell into the red for the first time in ten years in the last month – and EV development is only going to get more expensive. Let’s hope it’s a fruitful relationship for all

concerned. I am sure that there will be more deals like this to come among manufacturers given the current environment of rising costs and weaker car sales.

Ford puts 1,700 jobs at risk with plant closure (The Times, Robert Lea) is the latest blow to the UK car manufacturing industry as company bosses and union leaders are due to meet today. Ford has been withdrawing from the UK for some time now as Dagenham production stopped in the early 2000s, Ford Transit van production left the UK in 2013 and Ford only recently identified 1,000 job losses as part of the company’s reshuffling of its European operations. The tough times for car manufacturing continue – and unfortunately, there will probably be more to come.

Meanwhile, Motorist confusion over rules and incentives knocks UK new car sales (Financial Times, Peter Campbell) captures the continued feeling of doom in the motor industry as the latest figures from the Society of Motor Manufacturers and Traders (SMMT) shows that new car sales are continuing to fall. They dropped by 4.6% in May versus the previous year and the SMMT blames this on government policy confusing motorists, where on the one hand they are condemning the use of diesels but then on the other cutting incentives behind the drops. Market share for diesels continues to fall (it’s now 28% versus over 50% only a few years ago!) while new petrol-powered car sales rose slightly to make up 66% of  the market. * SO WHAT? * I think that the main thing that is stopping people from buying is economic uncertainty. SMMT chief exec Mike Hawes’ assertion of policy “confusion” is hysterical BS – the fact is that when you cut incentives (the government cut electric car subsidies from £4,500 to £3,500 and now excludes many plug-in hybrids), sales pretty much always go down – sometimes to ZERO! You can’t have the government subsidising vehicles forever – although the SMMT will obviously argue that it’s cut them too early. The SMMT is just a cheerleader for the industry – not a thought-leader. If it had been a thought-leader, it would have heeded all the early warning signs for diesel when a number of European cities started to ban them in the most polluted areas. Instead, the industry just stuck its head in the sand and hoped to style it out – but now it’s feeling the consequences.

Arcadia needs more time, Mike Ashley goes after Game and Card Factory puts in a strong performance…

Vote on Green’s Arcadia plan postponed with 18,000 jobs on the line (The Guardian, Sarah Butler) shows that the company behind Topshop, Topman, Miss Selfridge, Evans, Wallis and Dorothy Perkins really is edging close to the precipice as a crucial vote on the future of the company has been delayed to June 12th (next Wednesday) because it didn’t look like it would get the approval it needed to push through its complex series of CVAs, which involved store closures and rent cuts. It is seeking to close about 50 of its 570 UK stores and cut rents on up to another 200. Each CVA approval requires 75% approval from creditors and Philip Green needs yeses to all seven proposed CVAs to ensure the survival of Arcadia. * SO WHAT? * Arcadia said in its CVA documentation that if its plans weren’t approved, the company would be “highly likely, either immediately or after a short time period, to enter into insolvent administration or liquidation” but obviously landlords called his bluff. If it DID collapse, however, it would leave a gaping hole on the UK high street and potentially have implications on the whole of the fashion industry. It never rains but it pours!

Elsewhere in the war zone that is the UK high street, Mike Ashley sets acquisition sights on Game Digital (Daily Telegraph, Ashley Armstrong) shows that the Sports Direct chief is back on the acquisition trail again, after dusting himself down following the Debenhams scrap that he lost.

Sports Direct has had a sizeable holding in Game Digital for the last two years but that got dialled up a couple of notches after it bought 14m shares from investor Malborough. This now takes his stake up to 38.5% and he is now making an offer for the whole company. * SO WHAT? * God knows what he wants to do with Game. If there was one retailer on the high street that I could name right now as being ripe for extinction due to “death from online”, it would be Game. When you think that gamers can download over the internet and that smaller numbers are buying hard copies, why would anyone actually bother with going into a Game these days? The only thing I can think of that might get people through the doors is to make them mini-arcades where you can play the latest games and perhaps score some related merch while you are there. Devoting a lot of space to game “cartridge” boxes seems like a real waste to me. If you add into that the advent of 5G and the possibilities for not only downloading – but live streaming – surely you’ve got a retail outlet whose best days are long gone.

On a more positive note, Card Factory enjoys the best of days (The Times, Elizabeth Burden) shows that there are some success stories out there if you look hard enough as sales at the purveyor of reasonably-priced greetings cards and other bits have hit new highs. Unlike high street neighbours including Miss Selfridge and LK Bennett who are making store closures, Card Factory remains on track to open another 50 outlets this year. * SO WHAT? * Given what’s going on elsewhere, you’d think that they won’t have much trouble securing space at reasonable prices! This is particularly good news for the company given that it had a very difficult year last year where annual profits and sales growth were pretty weak.

Samsung pulls back from China, BT wields the axe and Woodford’s headaches turn into a migraine…

Samsung scales back its last China smartphone plant (Financial Times, Song Jung-a) highlights Samsung Electronics’ decision to cut jobs at its last remaining plant in Huizhou City as it moves production to cheaper locations in Asia. The company continues to suffer from slow sales in China as local rivals muscle in with their cheaper and well-specc’d alternatives. Samsung now only has a 1% market share in China versus the c.20% it enjoyed in 2013. * SO WHAT? * How times change! Back in the day, Samsung needed production capability in China to make a splash in a market with huge potential and benefited from cheap labour costs. This is no longer the case and many think that the Huizhou plant’s days are numbered.

Talking about cut backs, BT unveils start of cost-cutting axe for all but 30 of 300 offices (Daily Telegraph, Christopher Williams) heralds some severe ones at BT that will take until 2023 to implement. Details have been scant as the company is currently consulting with staff. About 13,000 jobs will be cut from the current 100,000 as part of plans to save £1.5bn over three years.

Following on from what I said yesterday, Woodford woes deepen as big backer quits (The Times, Alex Ralph) shows it never rains but it pours for former star fund manager Neil Woodford, as one of his biggest investors (St James’ Place) has taken away his mandate to run £3.5bn. Once this sort of thing starts, it is very difficult to stop.

And finally, in other news…

After yesterday’s shocker, I thought I’d leave you today with the altogether more relaxing Check out the world’s tallest sandcastle (USA Today, https://tinyurl.com/yyqquptw). Inspiration for the next time you go to the beach, perhaps?

1. In MACRO NEWS, talk of US rate cuts cheers markets while Australia actually cuts them
2. In NEIL WOODFORD NEWS, the star fund manager gets a pasting for poor performance and banning redemptions
3. In INDIVIDUAL COMPANY NEWS, Salesforce announces a positive outlook, AO World blames Germany for its woes and meatless burgers boost burger chains
4. In OTHER NEWS, I bring you the freakiest thing I have ever seen. It will give you the heebie-jeebies. For more details, read on…

So the US hints at cutting interest rates while Australia actually cuts them…

Trade tensions prompt Fed to put interest rate cut  in play (Wall Street Journal, Nick Timiraos) shows the Federal Reserve’s openness to cutting interest rates in order to keep the economy on track for expansion. Or as Fed chairman Jerome “Jay” Powell put it, “We are closely monitoring the implications of these developments [in trade negotiations] for the US economic outlook and, as always, we will act as appropriate to sustain the expansion”. Although he stopped short of saying that he would cut it, Stocks close sharply higher as Fed hints at possible rate cut (Wall Street Journal, Amrith Ramkumar) shows that markets were relieved that the Fed was open to taking action, giving US markets their biggest one-day boost for five months. * SO WHAT? * This is a significant turnaround in stance by the Fed – hence the big market moves. It had, until now, been firmly of the opinion that

rates would stay as they are. The general rule of thumb is that interest rate cuts = good for markets – and if US markets go up, that often provides a boost to other markets as well.

Australia cuts interest rates to bolster ailing economy (Daily Telegraph, Chris Johnston) heralds Australia’s first interest rate cut for three years with its central bank chief, Philip Lowe, hinting that there could be more where that came from. It was a 25 basis point cut to a record low of 1.25% aimed at giving the economy a kick up the &rse as it has stagnated of late due to being caught in the US-China trade war crossfire. Fun fact: Australia has gone 28 years – yes, that’s 28 years – without a recession! Less fun fact: Australia’s GDP growth fell to a rather anaemic 0.2% in the last three months of 2018. * SO WHAT? * Australia is suffering because China buys massive amounts of its natural resources, such as iron ore and coal, and import tariffs that are being slapped on as a result of the US-China trade war are denting Australia’s economic growth prospects. Cutting interest rates is one way to stimulate the economy, but realistically it needs the trade war to come to an end.

A star fund manager falls from grace and annoys investors…

Normally, a fund manager having bad performance isn’t really that newsworthy – it happens all the time. The thing is, though, if you’ve never heard of Neil Woodford – you will be hearing plenty about him now! He was the star fund manager of Invesco Perpetual and earned a reputation over more than 25 years as one of Britain’s top fund managers. He left Invesco to start up Woodford Investment Management in 2014 and his assets under management have now cratered due to a combination of poor performance and fund redemptions (i.e. investors taking their money out of the fund). Woodford tremors rock City as investors revolt over fund freeze (Financial Times, Peter Smith, Owen Walker and Caroline Binham) shows disgruntled investors continuing to try to extract their funds a day after Woodford blocked withdrawals (he said that he wants to stop the withdrawals to give him a chance to sell illiquid and unquoted stocks from the fund – and he can’t do this if he gets redemptions all the time). Hargreaves in spotlight as wheels come off (The Times, Alex Ralph and Ben Martin) shows that investment platform Hargreaves Lansdown is now also getting it in the neck as a result of its very close relationship with Woodford and recommendation of his funds to investors and Neil Woodford’s most disastrous stock choices – a roundup (The Guardian, Julia Kollewe) gives a rundown of some of

his worst stock picks and their performance over the last 18 months: Kier (the construction company that many think could go the way of Carillion -80%), Prothena (Dublin-based biotech firm, -80%), Allied Minds (investor in start-up tech and biotech firms, -79%), Provident Financial (the doorstep lender, -78%), Purplebricks (online estate agency, -71%), AA (breakdown service, -68%) and Imperial Brands (tobacco giant, -44%) are among his worst picks. Concerned investors might want to have a look at The alternatives that are delivering returns (Daily Telegraph, Laura Miller) which identify funds that have similar aims to Woodford’s (providing a mix of income and growth investment) but that are actually performing quite well. * SO WHAT? * I really think that this is, fundamentally, a non-story – but I decided to include it here because there is just sooooo much comment on it in the press today. When I was a stockbroker advising fund managers on what stocks they should buy and sell, I always thought that fund managers had a very tough job. Most of them can perform well for some of the time, but hardly any can perform well ALL of the time. Contrary to what a lot of the press would have you believe, most fund managers I know take losses personally and really feel the pressure when their portfolios aren’t performing well. It just goes to show that even if you’ve been brilliant for 25-odd years, a few mis-steps here and there can bring the whole thing crashing down and the problem is that, in this business, reputation is everything. It will take a Herculean effort for Woodford to salvage his – and in the meantime fund trackers will probably see more inflows to the cost of active fund managers.

Salesforce announces strong earnings, AO World blames Germany and meatless burgers boost burger outlets…

In Salesforce raises earnings outlook (Wall Street Journal, Aisha Al-Muslim) we see that Salesforce.com, the American cloud-based business software company, raised its full year earnings forecasts after delivering record revenue in the latest quarter. * SO WHAT? * Salesforce has been benefiting from increased take-up of cloud-computing and developments in Artificial Intelligence. It looks like that is going to continue!

AO World blames Germany for losses (The Times, Elizabeth Burden and Martin Strydom) highlights AO World’s mixed performance as the household appliance specialist racked up pre-tax losses of £19m in the year to March 31st versus losses of £13.5m in the previous year. Having said that, UK earnings before tax jumped by 21% and revenues were also up by 13.%. Germany was blamed as being the main drag due to tighter legislation in the country over drivers’ hours, which meant that AO had to go from a four-day week to a five-day week. * SO WHAT? * Clearly, the legislation in Germany is a pain, but it sounds

like something that can be surmounted. The main difficulty, though, is over Brexit as consumers still seem to be spending – just not on big ticket items. AO World is generally all about big ticket items and so will suffer more than other retailers (although at least they don’t own any high street stores – so things could be worse!).

Fast food embraces meatless burgers, but there aren’t enough to go around (Wall Street Journal, Jacob Bunge and Heather Haddon) highlights the success of meat alternatives as Beyond Meat and Impossible Food’s products are now on sale at almost 20,000 restaurants across the US and they are struggling to keep up with burgeoning demand. According to research by Technomic, 15% of US restaurants offered meatless burgers in March, up from 3% a year earlier. White Castle, TGI Fridays, Del Taco, CKE and Red Robin Gourmet Burgers have all introduced burgers from these companies and rising demand (and consequent hype!) has helped to almost quadruple Beyond Meat’s share price since its flotation last month. * SO WHAT? * Production costs are still quite high, but I would have thought that increased demand will lead to production on a bigger scale that will help to reduce costs over time. Cynics will say that strong performance is a flash-in-the-pan/passing fad, but given that the products are healthier, better for the environment and – let’s face it – actually pretty tasty I think that meatless is going to be huge.

And finally, in other news…

When I saw this story today, I decided to look no further: Japanese artist turns man’s face into eerily realistic human flesh coin purse (SoraNews24, https://tinyurl.com/y3ubbq6z). OMG. Just OMG. This will freak you out!

1. In MACRO NEWS, we look at a UK/Trump trade deal, why the oil price is weakening & disappointing UK retail sales
2. In NEW DEVELOPMENTS, top banks make their own digital coins, new regulations are to cover flying taxis and ecommerce groups worry about new EU security rules
3. In TECH NEWS, big US tech companies face investigation while Apple pushes forth
4. In INDIVIDUAL COMPANY NEWS, a Chinese credit card giant targets Europe and Kier tanks
5. In OTHER NEWS, I bring you a giraffe puzzle. For more details, read on…

So Trump talks about a UK trade deal, oil prices weaken and UK retail sales crater…

Would a trade deal with Trump boost Brexit Britain? (Financial Times, Chris Giles) discusses the effects of a potential trade deal with the US. Trump said, in an interview with The Sunday Times that “We have tremendous potential to make up more than the difference. One of the advantages of Brexit is the fact that now you can deal with the number one country by far”. He then tweeted yesterday that “Big Trade Deal is possible once UK gets rid of the shackles [of the EU]. Already starting to talk”. However, trade experts have poured cold water on this idea because the US already trades a great deal with the UK anyway and it is way less important to us than the EU. The US accounted for 18% of UK exports and 11% of imports in 2017 while the EU accounted for 45% and 53% respectively. On this data, trade with the US would have to grow a great deal – so if our exports to Europe fell by 10%, trade with the US would have to increase by 37%. * SO WHAT? * In reality, a proper trade agreement will face huge obstacles. For instance, it’s doubtful that the public would support having to agree to US food and animal welfare standards (did you see Dispatches: the truth about chlorinated chicken on Channel 4 last night? Here‘s a review/synopsis. It’s pretty shocking) and the NHS taking away caps on medicine

prices – yet the US wants both of these things as part of any deal. I would also add that, given Trump’s track record of changing his mind, any agreement would be highly subject to passing whims and would be used as a weapon against us – in the same way that his current tariff-wielding is being used against China. The other thing is that, if he’s not re-elected as president for another term, the thing could be up in the air anyway.

Oil price falls amid fears that US policy will squash demand (Daily Telegraph, Julia Bradshaw) highlights the current weakness in oil prices. It contends that they are weakening (they’ve fallen 10% in the last three days) over fears that the US-China trade war will lead to less trading activity overall. If China retaliates in a meaningful way, there are concerns that this could tip everyone into a global recession.

Continuing on that gloomy note, Retail sales figures worst since 1995 (Daily Telegraph, Julia Bradshaw) cites the latest figures from the British Retail Consortium/KPMG monthly report which show that total retail sales – encompassing food, non-food and online shopping – dropped by 2.7% versus May last year. Interestingly – and somewhat alarmingly – online sales growth slowed down dramatically. Online sales of non-foods increased by only 1.5% in May versus 11.5% a year ago. * SO WHAT? * Bad news, but hardly surprising given what’s going on in the economy at the moment! The online slowdown is a bit of a concern if this becomes a trend because it has been one of the only areas of growth in the retail sector.

Digital coins, flying taxis and ecommerce concerns…

Following on from what I was saying yesterday about Facebook’s proposed new digital currency, Top banks push ahead with digital coins for 2020 (Financial Times, Laura Noonan) says that 13 of the world’s biggest banks are looking to launch their own digital currencies next year based on the blockchain technology. * SO WHAT? * The banks believe that it will make trading less risky and cheaper by drastically simplifying paperwork and processing. Banks such as Santander, BNY Mellon, MUFG, Credit Suisse, KBC, ING and Canada’s CIBC are among those who have worked with UBS on a Utility Settlement Coin (USC) and they believe that this will transform the clearing and settling of trades.

Air safety agencies rush to draw up rules for flying taxis (Financial Times, Josh Spero, Sylvia Pfeifer and Nicolle Liu) is a very exciting-sounding headline, isn’t it! Well it seems that air safety agencies around the world are putting together regulations for flying taxis as companies look to launch services in the next five to 10 years. European regulator EASA is preparing tests to ensure the safety of vehicles and their software, the UK’s Civil Aviation Authority has set up a virtual space where flying taxi companies can test their tech, China’s Civil Aviation Authority said it aims to develop regulatory standards and co-ordinate testing of Unmanned Aerial Vehicles (UAV) by 2020. In terms of companies getting involved, Uber wants to launch an aerial ride-sharing network “Uber Air” by 2023 where Uber will use vehicles made by Bell, Boeing and Embraer; Rolls-Royce has plans for an electric aircraft that could take off and land vertically that could be available by the early-to-mid 2020s and Germany-based start-up Lilium

unveiled last month what it claimed to be the world’s first all-electric, five-seater plane that it plans on using as a public air taxi service around 2025. * SO WHAT? * This all sounds very exciting, but REALLY?? It seems to me that there are enough problems with flying drones for deliveries – let alone driverless flying taxis! I would love all these predictions to be true (sounds cool, no?) but I just don’t see it happening for a looooooooooong time. Even if the tech came out, it seems that they will need operators/ “overseers” – but where are they going to come from?? It seems like now is a good time to get yourself qualified as a drone pilot…

Ecommerce groups sound alarm over EU security rules (Financial Times, Tim Bradshaw and Nicholas Megaw) highlights what looks like being this year’s GDPR, in the sense that it’s important European legislation that’s going to catch a lot of companies unaware. Big hitters such as Amazon, Worldpay and Stripe say that billions of dollars of online purchases could be lost due to lack of company awareness/preparation in the run-up to the implementation of the Second Payment Services Directive (PSD2), which will require Strong Customer Authentication (SCA) for most online payments over €30 from September. The rules are intended to weed out fraud, but require significant changes to process and technology to comply and if the customers don’t approve a transaction by acknowledging it, they may not be allowed to complete a purchase. * SO WHAT? * This is going to be major. Even Amazon is going to be affected by this – its 1-click checkout process will be affected by the current rules and you can bet your bottom dollar that LOADS of companies are going to feel the consequences. A survey commissioned by Stripe and analysts at 451 Research showed that fewer than half of businesses surveyed expect to be ready by the deadline. I predict carnage – and this could stop the rise of e-commerce in its tracks (although I think this would only be temporary).

US tech is about to be investigated and Apple breaks with the past…

Congress, enforcement agencies target tech (Wall Street Journal, Brent Kendall and John D.McKinnon) heralds a major movement by antitrust enforcers and lawmakers who are going to investigate America’s biggest tech companies for potential anticompetitive practices. Officials at the Justice Department and Federal Trading Commmission are mulling over which areas they will be cracking down on with the likes of Google, Apple, Facebook and Amazon. The House Judiciary Committee also announced that it will be looking into competition in digital markets and whether existing antitrust laws and resulting enforcement has kept up with the pace of change of the industry. * SO WHAT? * This is obviously a big thing and has rattled investors who have grown used to a relatively free-wheeling Silicon Valley (although you could argue that the writing was on the wall at the end of last year with all the Facebook privacy shenanigans). Still, I suspect such investigations will go on for quite some time while everyone tries to double-guess what the authorities will say

in the meantime. I would expect some share price volatility in these companies until we get more clarity on the outcome of these investigations.

In Apple joins streaming chorus as iTunes fades out (Daily Telegraph, Matthew Field) we see that the curtain is being drawn on iTunes which started the “digital music revolution” to be replaced by revamped Music, TV and Podcast apps while Apple’s supporting actors – iPad, Watch and Mac take centre stage at WWDC” (Wall Street Journal, David Pierce) looks at the hardware side of things as Apple continues in its efforts to de-emphasise the iPhone at yesterday’s WorldWide Developers Conference in San Jose. Apple Watch is getting a separate App Store this month, meaning that you won’t have to download via your iPhone and it also formally separated the iPad from the iPhone with new iPadOS software. * SO WHAT? * Apple is clearly trying to move with the times and its effort at pushing its other hardware products forward – and encouraging developers to think “outside” the iPhone – shows how keen it is to use growth in previously peripheral areas to make up for maturing handset growth. This will take some time to happen, but at least it’s going in the right direction IMHO.

A Chinese credit card giant eyes Europe and Kier has a nightmare…

In other news, Chinese credit card giant eyes up Europe (The Times, Katherine Griffiths) signals the imminent arrival of China’s biggest issuer of debit and credit cards, Unionpay, in Europe following a tie-up with British fintech start-up Tribe Payments. The venture will mean that banks can choose Unionpay as their credit card provider as an

alternative to Visa,  Mastercard or Amex. Unionpay’s expansion comes at a time when it is facing fierce competition in its domestic market from Alipay and Wechat Pay. It’ll be interesting to see the rollout!

Then Kier shares plunge more than 40% after profit warning (The Guardian, Julia Kollewe) highlights investor reaction to the company’s profit warning – prompting comparisons with Carillion that collapsed last year. The share price is now at its lowest level since February 1999. Nightmare. The company is due to announce the conclusions of a strategic review on July 30th.

And finally, in other news…

I thought I’d leave you today with this: One of the giraffes in this brainteaser doesn’t have a twin – can you spot which one? (Insider, Talia Lakritz https://tinyurl.com/y6dtogtk). Frustrating (if you don’t use a pen to cross out giraffes!).

1. In TRADE WARS & BREXIT NEWS, China and Mexico continue US negotiation efforts while global airlines, Huawei and FedEx get caught in the crossfire and Brexit dents manufacturers
2. In RETAIL NEWS, we see the case for US retailer weakness as being company-specific while Arcadia awaits its fate and Amazon backs UK pop-ups
3. In TECH NEWS, Facebook gets serious about crytpo and Hyundai offers out its hydrogen fuel cell tech
4. In OTHER NEWS, I bring you Lithuanian baby racing. For more details, read on…

So trade negotiations continue to impact airlines, Huawei – and now FedEx – while Brexit hits UK manufacturing…

China, Mexico signal willingness to step up trade talks with US (Wall Street Journal, Josh Zumbrun and Yoko Kubota) shows the latest developments in trade negotiations as China’s Vice Commerce Secretary Wang Shouwen said yesterday that “We’re willing to adopt a cooperative approach to find a solution”. Meanwhile, Mexico is sending a delegation to the US to talk about immigration issues following Trump’s threat to slap taxes on all Mexican imports if the Mexican government doesn’t do anything to stem the tide of immigrants to the US. In typical understated style, Trump tweeted yesterday that “Mexico is sending a big delegation to talk about the Border. Problem is, they’ve been “talking” for 25 years. We want action, not talk. They could solve the Border Crisis in one day if they so desired”. * SO WHAT? * Both China and Mexico make up the largest sources of US imports and face big tariff hikes in the next few weeks, so this is a big deal. There aren’t any more trade talks scheduled, but many think that a meeting between Trump and Xi COULD happen at the G20 meeting in Japan later this month.

Then in Global airline industry cuts profit forecast by more than a fifth (The Guardian, Jasper Jolly) we see that the International Air Transport Association (Iata), whose 290 members account for 82% of scheduled air traffic, has cut its projections for earnings across the industry by over 20%. This is largely due to the US-China trade dispute hitting cargo transport and higher costs, including oil prices. * SO WHAT? * Although airlines will still be profitable (albeit less so than last year), there is a danger that negative sentiment on cargo could spread to passenger volumes if economic confidence takes a proper hit. I would have thought that cargo demand would bounce back strongly, however, if an agreement was reached between the US and China.

Huawei pauses production of some phones (Daily Telegraph, James Cook) is an immediate consequence of US sanctions as the Chinese telco equipment giant has apparently paused production of some of its smartphone models as the South China Morning Post reported that orders to Foxconn (the assembler) were suspended. At the moment, it’s not clear whether this is a temporary or

permanent measure. * SO WHAT? * Surely this was bound to happen given all the Huawei-bashing that’s been going on this year (mainly from the Americans). Given the uncertainty is clouding future demand visibility, it is probably a wise move. 

From the Chinese side, FedEx caught in US-China tensions (Wall Street Journal, Trefor Moss) shows that Chinese authorities are conducting an investigation into allegations that it damaged the interests of customers, according to state media. FedEx was alleged not to have made deliveries “according to the name and address” of intended recipients in China, harming Chinese customers. FedEx, which has an Asia-Pacific hub in Guangzhou and employs 9,500 locals, had apologised last Tuesday for publicly mishandling packages for Huawei. * SO WHAT? * This just looks like the Chinese getting back at the Americans for its Huawei-bashing. It was pounced upon as an example by China’s Commerce Ministry which announced Friday that it was setting up an “unreliable entity list” of its own that would be a blacklist of foreign companies, organisations and individuals that breach contracts, damage Chinese companies for political reasons or harm national security interests. China has never (officially) targeted individual companies before, so this is a major negative development for non-Chinese companies if it is rigorously enforced.

Nearer home, Industry faces triple blow as Brexit leads to ‘paralysis’ (Daily Telegraph, Alan Tovey) cites research by trade body Make UK which shows that Brexit is leading to investment in manufacturing falling off a cliff and export customers avoiding the UK. The latest results of this quarterly survey showed that in the second quarter of this year, the number of companies planning to invest in their business halved while the number of manufacturers planning to employ more staff dropped from 16% to 6%. Stephen Phipson, chief exec of Make UK warned that “Earlier this year there was clear evidence that industry was on steroids as companies stockpiled. Underneath, however, there is now growing evidence of European companies abandoning UK supply chains, whilst Asian customers balk at the unknown of what may exist as the UK leaves trade agreements which operate under EU rules”. * SO WHAT? * Pretty much everyone and their dog has been saying that manufacturing orders were artificially high because companies were stockpiling ahead of the original Brexit date – well it seems now that some of that is coming home to roost. Further political uncertainty and a run-down of stored inventory are likely to make things increasingly difficult for UK manufacturers.

We see whether US apparel retailer weakness is company-specific while Arcadia awaits its fate and Amazon finances some UK pop-ups…

Blame us, not the economy, say US retail chiefs (Financial Times, Alistair Gray) looks at whether the recent weakness in US apparel retailers is an industry-wide thing or company-specific as 35 out of 74 listed retailers tracked by S&P Global Market Intelligence undershot market expectations for first quarter like-for-like sales. The Gap and J Jill (a woman’s clothing chain) saw their share prices plummet by 10% and 54% respectively as chief execs admitted that shoppers were shunning their boring offerings, Urban Outfitters said itself that it had been less effective than normal in surfing the right fashion trends and Abercrombie & Fitch said that it had “self-inflicted issues” in its Asia business. Nordstrom blamed “executional misses” on falling sales. * SO WHAT? * I suppose that this could be an explanation of what’s going on in apparel retailing at the moment but this really shouldn’t be happening given US economic strength and rising wages. If things continue like this it will be much more difficult to blame individual companies and much easier to put it all down to a general malaise.

Arcadia’s fate left hanging by a thread (The Times, Ben Martin) reminds us that the fate of Arcadia, which owns the Topshop, Burton, Dorothy Perkins, Miss Selfridge and Wallis brands, will have its future decided this week when creditors and landlords get to vote on seven CVAs that will allow parts of the business to continue. Arcadia has 566 stores in the UK and Ireland and is planning on closing 23 of them as part of the CVAs that will have big rent reductions as part of the survival plan. Arcadia said that it would also close all of its 11 US Topshops and identified another 25 stores that could also close. Tough times for Philip Green, the billionaire who is currently facing four assault charges in the US for inappropriate touching of a Pilates instructor.

In Amazon sponsors high street pop-up shops (The Times, Elizabeth Burden) we see that Amazon is sponsoring ten pop-up shops across the UK over the next year to give 100 small online-only brands a physical presence on the high street in a project called “Clicks and Mortar”. The first one opens today in Manchester and others will be rolled out in Wales, Scotland, the Midlands, Yorkshire and the South East. * SO WHAT? * Amazon, Direct Line and Square are funding the logistics and Amazon is said to want to back the campaign in order to give online sellers to test physical retail. This sounds like a nice idea but doesn’t take away the fact that Amazon is one of the main culprits behind the hollowing out of our high streets in the first place!

Facebook probes further into crypto and Hyundai wants everyone to have access to its hydrogen tech…

Facebook in talks with US regulator over digital currency (Financial Times, Laura Noonan and Hannah Murphy) highlights the fact that Facebook has begun talks with the Commodity Futures Trading Commission (CFTC), the top US derivatives regulator, as part of the social media giant’s plans for a digital coin as part of its push into payments. * SO WHAT? * The advent of “GlobalCoin” proposed by Facebook, termed a “stablecoin” due to it being a digital currency pegged to a flat (i.e. normal) currency, will let users send money and make purchases across its Facebook, Instagram and WhatsApp platforms. The CFTC will be looking at how GlobalCoin, which will be pegged to the US dollar, will safeguard against money laundering. 

Hyundai urges rivals to buy its fuel cell tech to boost sector (Financial Times, Edward White and Song Jung-a) looks at how the world’s fifth-biggest car maker is proposing to broaden the appeal of hydrogen fuel cell technology by offering to sell its hydrogen fuel cell system to rivals to encourage wider adoption. Electric-powered vehicles are expected by most to be the dominant force over the next 20 years, but some say that shorter journeys are better served by electric while commercial transport may benefit from hydrogen’s longer range and quicker refuelling. * SO WHAT? * Both technologies face charging infrastructure hurdles currently, but hydrogen’s is lacking more. As things stand, alternative-fuelled car sales are a miniscule percentage of the whole and I think that charging infrastructure is going to be absolutely the key to mass adoption. Having said that, at the moment, electric is clearly winning the PR battle…

And finally, in other news…

I thought I’d leave you today with this huge bundle of cuteness: Babies crawl to victory in annual race in Lithuania (Inside Edition, https://tinyurl.com/y2wv9x4r). Ahhhh!

1. In TECH NEWS, Dell’s revenue growth slows, Huawei cuts out US employees and EE launches 5G in the UK
2. In RETAIL NEWS, Costco’s sales rise, Gap suffers and Majestic looks more likely to sell all of its stores
3. In TRANSPORT-RELATED NEWS, Uber posts $1bn loss for the first quarter and First Group looks at selling its UK business to concentrate on the US
4. In INDIVIDUAL COMPANY NEWS, German media group Axel Springer looks at going private, we look at challenges facing the FCA/Renault merger and the advent of CBD ice cream
5. In OTHER NEWS, I bring you a four seasons umbrella. For more details, read on…

So Dell’s revenues disappoint, Huawei’s US employees get the cold shoulder and EE launches 5G…

Dell revenue growth slows (Wall Street Journal, Patrick Thomas) shows that although the PC maker was profitable for the first quarter, revenue growth fell short of market expectations – hence the 3.3% share price fall in after-hours trading on the news. The company believes that corporate IT spend will rise going forward, but that it will have to monitor progress re the US-China trade talks. * SO WHAT? * Dell is often seen as one of the bellwethers for PC and software spend – as well as business confidence (the latter because companies will only spend if they are feeling flush – otherwise they just soldier on). The fact that it returned to the public markets after five years of being a private company means that it will be a bit easier to follow these trends because its operations will be more transparent. Interestingly enough, competitor Hewlett-Packard Enterprises said last week that its quarterly sales fell by 4% as it failed to close some business deals – presumably because buyers were faffing about the impact of the ongoing US-China trade negotiations. As Dell’s CFO Tom Sweet put it, “Right now, we’re going to have to go execute through some – and navigate probably through some – choppy waters at times, but that’s the job we have to do”.

You will, by now, be used to hearing about Huawei-bashing from the American side but Huawei orders employees to cancel meetings with US contacts (Financial Times, Sue-Lin Wong, James Kynge and Louise Lucas) gives you an idea of what it’s like if you’re an American employee working at the company’s Shenzhen headquarters.

Basically, US citizens working in R&D at Huawei’s HQ were sent back to the US two weeks ago when Trump put the company and 68 of its affiliates on his “entity list” and now the company is making big changes as to how its Chinese and US offices communicate with one another. The company is also limiting interactions between employees and any US citizens – even to the extent of checking the passports of any non-Chinese to its campus to make sure they aren’t American! If they are, they have to make sure that none of their private conversations are about technology! Freaky or what?!? It’s interesting to see what’s going on on the ground…

Unless you spent yesterday in a cave, you will have seen that EE launches UK’s first 5G service (Financial Times, Nic Fildes) to great fanfare – one month ahead of Vodafone. Although we were one of the last major economies to launch 4G, we are actually one of the first to jump on 5G. It’s already been launched in the US and South Korea as well as Switzerland and a few smaller countries like Monaco, Jersey and San Marino – but we are ahead of most of Europe. At the moment, the UK launch is limited to our six largest cities but EE expects to roll out 100 new sites per month although it only expects customer take-up to be gradual. * SO WHAT? * It’s launched, we’re a bit ahead of others but so far so meh. It’ll take a while to catch on (new generations always do) but I would have thought that this will be good news for handset makers (unless you are called Huawei ????)in the next few years as news of 5G’s superior speed will spread and give everyone a reason to upgrade their phones. They might have to take a bit of a hit in the short term as users hang on to their phones waiting to see more 5G coverage before upgrading, but this could give handset sales a nice boost in the medium term. I would have thought that this will also be good news for gaming companies given the new possibilities faster networks will bring. 

Costco sees stronger sales, Gap weakens and Majestic’s outlets look more likely to get sold off…

On the positive side, Costo sales rise as tariff uncertainty looms (Wall Street Journal, Sarah Nassauer) highlights a decent performance for comparable sales (which means sales at stores and through websites that have been knocking around for at least the last 12 months), with e-commerce sales rising by a healthy 20% over the quarter. Costco’s CFO says that the US-China trade shenanigans are making it difficult to predict the exact impact of another 25% tax on $200bn-worth of Chinese imports, but it will increase prices for sure. * SO WHAT? * Decent enough performance, but it will be hit – like other retailers – with higher costs. Likely beneficiaries will probably include domestic suppliers who may have lost out in the past to the Chinese.

On the negative side – and following on from Abercrombie & Fitch’s poor performance – Gap brand, Old Navy post weakest sales in three years (Wall Street Journal, Khadeeja Safdar) shows disappointing figures from Old Navy – which saw comparable sales fall for the first time

in three years – and Gap itself, which had its biggest sales decline for three years. Chief exec Art Peck blamed poor weather (that old chestnut!), weaker footfall, lower tax refunds and a decision to delay marketing spend until later in the year. The outlook wasn’t that bright either. Gap’s share price fell by 12% in after hours trading on the news. * SO WHAT? * This is disappointing news as it comes ahead of it splitting into Gap and Old Navy into separately quoted companies sometime in 2020 – but at the same time it is symptomatic of the contrasting fortunes of both brands. It really is tough out there for many apparel retailers at the moment.

In Majestic Wine’s plan to sell its stores backed by activist (Daily Telegraph, Ashley Armstrong) we see that a sale of all of the company’s retail outlets is looking more likely as activist investor Gatemore Capital, which is known most recently for having agitated for change at French Connection and now has a 4% stake in Majestic, is backing the strategy previously mooted by the company. * SO WHAT? * Majestic is thought to be close to selling off its store estate for £100m to focus on its online Naked Wines business. The cash raised from the sale will be ploughed into the online business. Mind you, if there is no buyer, chief exec Rowan Gormley says that the Majestic business will be run down and unprofitable stores will be closed.

Uber continues to lose money and First Group wants to concentrate on the US…

Uber posts $1bn loss for first quarter (Daily Telegraph, Olivia Rudgard) is about as surprising as being told that bears sh!t in the woods but the taxi app company confirmed its continued losing streak last night despite seeing revenues climb by 20% over the quarter. Uber’s continuing to spend money to make money by expanding geographically and into different business areas like food delivery and driverless cars but just isn’t making any profits. Maybe one day, eh…

FirstGroup confirms sale of UK bus division to focus on US business (The Guardian, Gwyn Topham) is an interesting one as FirstGroup, one of our biggest transport companies, announced that it will sell off its bus division and potentially withdraw from UK rail operations following concerted pressure from big shareholders. Although it said it will sell off its Greyhound business in the US – which has strong revenues but is unprofitable – and concentrate instead on its school bus operations First Student and First Transit, which make 60% of the company’s operating profits. First operates South Western trains as well as Great Western Railway, TransPennine Express and the smaller Hull Trains. * SO WHAT? * Wow – this is going to be messy. Activist investor Coast Capital, which is the biggest shareholder with a 10% stake, is agitating to replace the board arguing that First will more than likely destroy value in the disposals but things must be pretty bad for the company to make this sort of dramatic move.

Axel Springer looks to go private, we look at the hurdles facing the FCA/Renault merger and the possibility of cannabis-infused ice cream…

KKR and Springer plan to open the door on deals both desire (Financial Times, Tobias Buck, Javier Espinoza and Arash Massoudi) shows that German media group Axel Springer is looking at taking the company private along with the blessing of KKR and Springer’s founding family. This would make the company private for the first time since 1985. * SO WHAT? * Quite dramatic, but understandable given that the management (and family) wants to continue to be in the driving seat. Being quoted on the public markets can bring prestige, publicity and money – but along with it comes the drag of constant accountability to shareholders and restrictions on making deals. It sounds like the company wants to go full steam ahead into digital and taking the company private could well give it more freedom to do so without the prying eyes of troublesome shareholders.

Fiat Chrysler and Renault: the roadblocks in way of merger deal (Financial Times, Peter Campbell, David Keohane, Kana Inagaki, Leo Lewis and Rachel Sanderson) is a great article which breaks down the issues that a merger between Fiat Chrysler Automobiles and Renault will have. You should definitely have a read if you are interested but the short version is as follows. The deal could face problems from political interference (France and Italy don’t want massive job losses), the make-up of the board (i.e. what will the role of the French state be and what about Nissan?), anti-trust issues given geographical overlaps plus Trump sticking his oar in, valuation (it’s been hit by former top dog Carlos Ghosn’s arrest, so some think that the price is too low), other bids (always a possibility) and Nissan potentially spoiling the party as a long-time alliance partner. Conclusion? It’s not a done deal.

It is high time for an ice cream infused with CBD (The Times, Tom Knowles) heralds the potential arrival of cannabis-infused ice cream (once it is legalised!) as Ben & Jerry’s is experimenting with infusing some of its flavours with cannabidiol oil (CBD). The company joins other American brands like Coca-Cola, Walgreens, CVS and Oreo-cookie maker Mondelez, experimenting with CBD-infused products. CBD oil contains no THC, which is the psychoactive component of cannabis, but is thought to have health benefits including better sleep, less anxiety and pain relief. This is going to be huge someday!

And finally, in other news…

I thought I’d leave you today with a rather unusual new product: How to stay cool in Japan this summer? With a mist-spraying Fanbrella (SoraNews24, Oona McGee https://tinyurl.com/yywr9p56). Ridiculous though this looks, if you know what a Japanese summer is like, this thing looks like a godsend! Any of you considering going over there for the Tokyo Olympics next year should consider buying one of these!

1. In TECH NEWS, Huawei warns its ban will hit US suppliers, China increases uptake of its own chips while Nokia and Ericsson fight over replacing Huawei as suppliers
2. In RETAIL/HIGH STREET NEWS, Abercrombie & Fitch sales disappoint, Aldi and Lidl make further market share gains and GBK’s earnings are in a pickle
3. In TRANSPORT-RELATED NEWS, UK car production falls off a cliff and Trainline closes in on a £1bn float
4. In OTHER NEWS, I bring you some more dad jokes. For more details, read on…

So the US-China thing has repercussions beyond Huawei but Ericsson and Nokia fight over who will gain…

Huawei warns ban set to hurt 1,200 US suppliers (Financial Times, Louise Lucas, James Kynge and Sue-Lin Wong) sounds a warning to US companies that will be hit down the supply chain as a consequence of Huawei – and 68 affiliates – being on Donnie T’s “entity list”, which basically bans US companies from selling to them. The ban is scheduled to come into force in the middle of August after Trump announced a three-month grace period following the initial announcement during which US companies were expected to re-jig their suppliers. Huawei will be immediately hit in cyber security and semiconductors – two vital areas – but its chief strategy architect, Dang Wenshuan, tried to style it out by saying “It is a huge impact but not a crisis because we have been preparing for this since a long time ago”. China pushes self-made chips in response to US threats (Financial Times, Yuan Yang, Nian Liu and Sue-Lin Wong) shows that the government is getting ready to support its domestic chipmakers as the ministry of finance announced tax breaks last week “to support the development of integrated circuit design and the software industry”. The prospect of other companies such as Hikvision, Dahua, Megvii, iFlytek and Meiya Pico getting on to Trump’s dreaded list will also be concentrating Chinese minds. Markets take fright over China’s rare metal threat (Daily Telegraph, Anna Isaac) shows investor jitters after China threatened to fight back in the trade war by restricting the export of rare earth metals (although they aren’t actually “rare” as such – they

are just tricky to extract and the extraction process is damaging to the environment). Given that value of China imports from the US are way lower than US imports from China (which is why the trade war started in the first place), this is one way for China to get leverage as rare earth metals are used in cancer treatment drugs, smartphones and renewable energy tech. Funnily enough, shares in companies that deal with rare earths shot up as markets fell – Rainbow Rare Earths spiked by almost 15% yesterday on London’s AIM and China Rare Earth Holdings shot up by 24% in Hong Kong. * SO WHAT? * Talk about the screws being tightened on US-China trade negotiations! This is tough and the pressure doesn’t look like slackening off any time soon. I do wonder, when everything has calmed down, whether this will actually turn out to be a good thing on both sides as the US will get to keep its intellectual property and China will learn to become more self-sufficient in semiconductors. It will, however, make US dealings with China much more circumspect for years to come as I reckon this has really surprised the Chinese.

On the other side of the fence, if Huawei is getting a right kicking, which suppliers are going to benefit? Well With Huawei on defensive, Ericsson and Nokia fight each other for edge (Wall Street Journal, Parmy Olson) we see that the Finns and Swedes are most likely to benefit as networks start their 5G rollout. Both companies have been winning “equipment swap” contracts where they have been brought in to replace Huawei gear and Japanese mobile carrier SoftBank Group has announced that the two long-time rivals will be primary providers for its 5G rollout. * SO WHAT? * This sort of thing is going to be painful for Huawei and gives companies like Ericsson and Nokia who have, let’s face it, been a shadow of their former selves a chance to get back in the game. The drama continues…

Abercrombie & Fitch suffers, Aldi and Lidl continue to take market share and GBK is in a pickle…

Abercrombie blames mall woes for slow sales (Wall Street Journal, Kimberly Chin and Khadeeja Safdar) highlights the shock investors got when the company announced slower sales gains and a downbeat outlook yesterday. They took flight collectively, sending the share price down by 26% on the news. The retailer blamed lower footfall at malls over the spring and said that it was going to have to do a lot of discounting going forward in order to shift unsold stock. Overseas markets were disappointing and Hollister’s usual fast growth has slowed to a crawl. It will be closing flagship stores in New York, Milan and Japan as a result, but the cost of shutting them down will hit second quarter results. * SO WHAT? * Investors had been getting excited about a turnaround in fortunes at the company, but it seemed that the excitement proved to be premature as reality hit. It’s not alone in its woes, though, as other apparel retailers such as Kohl’s, JC Penney and Nordstrom have all reported falls in comparable store sales.

Meanwhile, back in the UK, Aldi and Lidl grab record market share as sales of Big Four stall (Daily Telegraph, Michael O’Dwyer) cites the latest figures from Kantar which show that the two German discounters now have an aggregated market share of 13.8% as the Big Four – Tesco, Sainsbury’s, Asda and Morrisons – failed to grow at all, which is the first time this has happened since June 2016. Kantar’s Chris Hayward observed that “the discounters continue to attract customers with nearly 1m more households visiting Aldi compared with last year and an extra 630,000 shopping at Lidl”.

The gloom continues for casual dining restaurants in Gourmet Burger Kitchen sales dip takes bite out of earnings (Daily Telegraph, Oliver Gill) as its South African owner, Famous Brands, revealed that GBK sales were continuing to fall. You may recall that GBK entered into a CVA in December to close down underperforming sites and reduce rents – and 17 restaurants were closed with 250 job losses as a result. * SO WHAT? * Famous Brands’ chief Darren Hele believes that things are starting to turn around at GBK, but I guess trading will continue to be difficult as troubled competitors (such as Jamie’s Italian etc.) serve as a constant reminder of the issues facing the whole sector.

UK car production falls and Trainline edges closer to a flotation…

UK car production plunges amid ‘untold damage’ of Brexit chaos (The Guardian, Rob Davies) highlights the fact that UK car production almost halved in April as factories shut down to prepare for Brexit, according to the Society for Motor Manufacturers and Traders. Most of the decline was due to JLR, BMW and Peugeot bringing forward annual maintenance stoppages that usually occur in the summer. * SO WHAT? * Manufacturers that make complex products like cars need visibility more than most to be able to supply their product in the right numbers whilst maintaining the

machines and production processes to keep everything going. Prolonged Brexit uncertainty is killing them and they will no doubt continue to press the government on getting any kind of clarity either way.

In £1bn float just the ticket for Trainline (The Times, Elizabeth Burden) we see that the KKR-owned online rail and bus ticket company will float on the London Stock Exchange next month, raising £75m to fund its growth plans and pay down loans, giving the company an implied valuation of £1bn. * SO WHAT? * This is pretty impressive considering that the New York-based private equity firm bought it in 2015 for about £500m. Trainline sells tickets on behalf of 220 rail and coach companies in 45 countries. Given that only 39% of tickets were purchased online in Europe’s five largest markets last year, there is clearly more upside to be had. This will be one of the biggest IPOs in the UK so far this year.

And finally, in other news…

I just couldn’t find any unusual stories today that amused or informed, so here are some more dad jokes for you.

What’s Irish and sits in the garden? Paddy O’Furniture

How do you organise a party in space? You planet

My wife told me to stop impersonating flamingos. I had to put my foot down

Have a great day, y’all!

1. In CONSUMER/HIGH STREET-RELATED NEWS, UK mortgage approvals hit new highs, higher costs get passed on to shoppers, Gordon Ramsay bucks the gloomy restaurant trend and Boots announces closures
2. In FINANCE-RELATED NEWS, Global Payments buys TSYS for $21.5bn and Aviva announces a shake-up
3. In INDIVIDUAL COMPANY NEWS, Alibaba considers a Hong Kong listing and we see reactions to the Fiat/Renault merger
4. In OTHER NEWS, I bring you a superb trick shot. For more details, read on…

So mortgage approvals rise, consumers pay for rising costs, Gordon Ramsay turns a profit and Boots sharpens its axe…

Record month for mortgage approvals as buyers tire of Brexit (Daily Telegraph, Tim Wallace) cites the latest figures from industry group UK Finance which shows that almost £9bn of home purchase mortgages were approved last month as homebuyers decided to get on with buying a house. This was the largest value of lending for almost 12 years, with the average loan size of £203,400 – which is the second highest amount ever. Remortgaging also saw more activity, with approvals up by 5% – the highest growth rate since November 2017. In addition to this, credit card lending appears to be calming down with lending growth of 4.1% in the year to April versus 4.3% in March. * SO WHAT? * I don’t have the UK Finance report in front of me, but the average loan size would suggest to me that this activity is more concentrated on the “entry” end of the market that has been inflated over the last few years by the Help to Buy scheme and ongoing frenzy of those wanting to “get on the ladder”. I don’t get the feeling that the number of mortgage approvals is something to get TOO excited about at this time, especially given the highly uncertain economic backdrop. The increase in remortgaging activity could be due to people opting to stay put and withdraw money while the going’s good and/or older people getting a lump sum to pass on to their kids to get that first mortgage. The calming down of credit card lending IS a good sign, in my opinion, as this will mean less overall pain for household budgets if the economy goes into a Brexit-fueled tailspin.

Higher costs passed on to shoppers (The Times, Gurpreet Narwan) cites the latest data published by the British Retail Consortium (BRC) which shows that prices in shops have been rising as retailers reduce the amount of discounting going on and pass higher costs on to their customers. Shop prices inflation has risen to 0.8% year-on-year in May – double the increase of 0.4% for April – led by non-food items like furniture, health and beauty. Many retailers have been absorbing rising costs from higher minimum wages and apprenticeship levy, a weaker pound as well as increased stockpiling in preparation for Brexit but it seems

that more are reaching the point where they have to pass them on. Interestingly, food price inflation weakened to 1.8% growth in May versus 2.2% growth in April. * SO WHAT? * It was bound to happen – especially given that wage growth is still outpacing inflation. Consumers ARE able to take these price rises on at the moment, but things could get tricky very quickly if the economy takes a turn for the worse – so I think that retailers are right to make hay while the sun shines.

In contrast to Jamie Oliver’s recent misfortunes, Gordon Ramsay defies restaurant industry struggles with rise in sales (The Guardian, Sarah Butler) shows that it IS possible for celeb chefs to make money running restaurants as Ramsay’s restaurant group, which comprises of 15 London restaurants and 23 overseas outlets, managed to make a small profit of £500,000 in the year to August 2018 after making a £3.8m loss in the previous year. Gordon Ramsay Holdings has only managed to make a profit in one year since 2012 and the man himself is now getting very excited about his new (bottomless pizza) Street Pizza concept. * SO WHAT? * This is a bit of rare good news for restaurants, but it just goes to show how hard it is to make money in this area – given Ramsay’s impressive talents and his huge worldwide following, I bet you didn’t think that with all those restaurants that he’d “only” make £500k!

High street blow as 200 Boots face closure (The Times, Dominic Walsh and James Dean) heralds some tough news for Boots, which said that 200 stores could go as part of a review of its store portfolio. The high street pharmacy stalwart, that has been owned by Walgreens Boots Alliance since 2014, has been engaged in an ongoing revamp that has so far resulted in 350 job losses at its HQ and format changes under its “new” chief exec Seb James, who started in September last year. * SO WHAT? * Walgreens Boots Alliance has 18,500 shops in 11 countries but still makes most of its money in the US and given the continued lacklustre performance of its UK arm, you just know that something has to be done. The revamp has been aimed at making the distinctions between their three main businesses – medicines and first aid, vitamins supplements and holistic remedies and make-up and creams – clearer, but I still think it’s a real mish-mash and a generally messy and uninspiring place to shop. It has a long way to go IMHO. 

The payments world continues to consolidate and Aviva has a look at itself in the mirror…

Global Payments buys TSYS in $21.5bn all-stock deal (Financial Times, Robert Armstrong) shows that consolidation in the payments technology industry is continuing apace shortly only a few months after Fiserv’s $39bn deal to buy First Data and the Fidelity National Information Service (FIS) agreement to buy Worldpay for $43bn. Global Payments’ chief exec Jeff Sloan said “Look for us to do more technology deals” as the TSYS deal was announced, so it seems that further consolidation will occur. Both companies expect at least $300m of cost savings and $100m of new revenue from cross-selling. * SO WHAT? * Simply speaking, Global Payments helps

merchants process payments and TSYS helps card issuers accept and clear payments but the combination would be even better if it could improve its transaction process software capability – and the remaining independent core processing provider is a company called Jack Henry. Watch this space!

In Aviva eyes split of UK business as part of shake-up (Financial Times, Oliver Ralph) we see that Aviva will next week announce a major shake-up of its UK business as new chief exec Maurice Tulloch puts his stamp on the business. Observers speculate that he could split the core UK business into life and non-life insurance at a meeting on June 6th. If he did this, it would reverse Aviva’s 2017 strategy of bring both businesses together. Tulloch wants to simplify the group’s structure so that each division can focus more on its own business area. * SO WHAT? * What one CEO giveth, the new CEO taketh away I guess! The Devil will be in the detail (as always), but I just wanted to mention this given Aviva’s high profile in the UK. 

Alibaba eyes a Hong Kong listing and we get the latest reactions to the proposed Fiat/Renault combo…

Alibaba looks to raise billions in Hong Kong listing (Financial Times, Louise Lucas, Don Weinland and Hudson Lockett) shows that the Chinese e-tailing behemoth is planning on a secondary listing in Hong Kong later this year that could raise about $20bn (it raised $25bn in the world’s biggest IPO back in 2014). It is thought that this move is calculated to diversify funding sources but is no doubt a response to ongoing trade tensions between the US and China. * SO WHAT? * This would be a big deal for the Hong Kong Stock Exchange to land such a whale – and it could tempt other Chinese companies with US listings to follow suit, which would be even more lucrative. As far as Alibaba is concerned, a Hong Kong listing would be great as demand for tech stocks is still hot whereas New York has gone off the boil of late. The other benefit of a dual listing would be that it would give Alibaba another option if it ever decided to delist stateside for whatever reason.

Following on from yesterday’s announcement of a potential merger between Fiat Chrysler and Renault, it seems that the overall reaction has been cautiously positive with France says planned Renault-Fiat merger must protect jobs (The Guardian, Jasper Jolly and Rob Davies) as France’s finance minister Bruno Le Maire remarked that the merger could be “a great opportunity for Renault and the European automotive industry” whilst seeking a guarantee “on the preservation of jobs and industrial sites in France” and Fiat Chrysler and Renault given Italy’s blessing (The Times, Tom Kington) showing that the deputy Italian PM, Matteo Salvini, saying pretty much the same thing – but about Italy and Italian jobs. Meanwhile, As Fiat Chrysler pursues Renault tie-up, Nissan weighs stakes (Wall Street Journal, Sean McLain and Nick Kostov) shows that Nissan – with its two decade-long relationship with Renault – could end up playing gooseberry to the Fiat/Renault love-in. Having said that, its stake in Renault could give it exposure to a broader alliance that could result in cheaper parts, more tech and more R&D – but once again, this will all have to be hammered out as part of any deal given the current shareholder structure.

And finally, in other news…

I thought I’d leave you today with an excellent trick shot worthy of those YouTubers Dude Perfect in GB gymnast nets unbelievable basketball trick shot (BBC, https://tinyurl.com/yxgzz399). Nice ???? !

1. In MACRO, MARKETS AND CRYPTO NEWS, we see the impact of the European elections, market relief as populists falter and Bitcoin’s comeback
2. In CAR-RELATED NEWS, Fiat Chrysler proposes a merger with Renault, insurance costs rise as complex cars raise repair costs and a Chinese electric car start-up is poised to enter Europe
3. In RETAIL-RELATED NEWS, shopping centres suffer and Miss Selfridge’s London flagship is on the chopping block
4. In MEAT-FREE NEWS, Quorn and start-up Meatless Farm ride the meat-free wave
5. In OTHER NEWS, I bring you an interesting alarm clock and the “full-English” pizza. For more details, read on…

So voters vent in the European elections, markets are relieved and Bitcoin gains…

Brexit party’s storming victory ramps up no-deal pressure (Financial Times, George Parker, Jim Pickard and Sebastian Payne) looks at the effect that the Brexit Party’s unexpected success has had after Nigel Farage’s eurosceptic party took 31% of the vote, winning 29 seats. Incredibly, it is now the joint biggest force in the EU parliament – with the same number of seats as Germany’s CDU, Angela Merkel’s party! Some Conservative leader wannabes will be looking to harden their Brexit stance as a result and be willing to entertain the notion of a no-deal Brexit while Labour is veering towards a more pro-Remain stance as the party lost votes to the vehemently pro-Remain LibDems. Corbyn backs referendum on Brexit deal after voter exodus (The Guardian, Rowena Mason and Jessica Elgot) shows that Jezza finally got off the fence (his a*se must really hurt from doing that) after a long period of faffing about. The European elections prompted voters to get off their collective backsides, with Brits having their second highest turnout (37%) ever. * SO WHAT? * God knows what will happen next. FWIW, I think that the nation is venting its frustration with the “main” parties and is yearning for simplicity – i.e. Conservatives = Leave, Labour = Remain (although that’s only come about because they lost so many votes to the LibDems!). The problem is that it’s NOT that simple. It is also ironic that after over two years of wrangling, the options that are left on the table seem to be everything apart from the deal that May hammered out! No deal is now a possibility once more, as

is a second referendum. If a Leaver gets the PM’s job, a new deal with Europe looks even more unlikely – and I would argue that a Remainer is less likely to become PM given the message from the electorate at these elections. Either way, pressure will build for a general election – but I think that will be even more of a disaster. It would be like playing a football match and your team going 2-0 down with 10 minutes to go. Do you take off all your players and replace them with the reserves team and the deputy manager or do you change your tactics in a bid for victory?? Surely the latter, no? The saga rumbles on…

Markets climb as populists fall short (Daily Telegraph, Jillian Ambrose) shows that European markets were relieved that the march of Europe’s populist parties was not quite as bad as had been feared. Support for far-right and nationalist parties was not as strong as some had been expecting. Most European indexes rose on the back of this, but Italian stocks got a hammering after news emerged that the EU is thinking about punishing the country for failing to reduce public spending. That said, the populists did make gains, but not enough to spoil the pro-EU party.

Then in Bitcoin comeback continues as digital currencies expand (Daily Telegraph, James Titcomb) we see that Bitcoin reached its highest level in over a year as it shot up by 10% yesterday to hit $9,000. This means that the cryptocurrency has risen by almost 70% in May alone! * SO WHAT? * Crypto fans are getting excited by the possibility of there being more acceptance of the digital currency which will be helped by Facebook launching its own digital coin – GlobalCoin – early next year. These currencies will obviously be in competition with each other but the emergence of a digital currency on this very mainstream platform will give more people confidence that other currencies, such as Bitcoin, are legit.

Fiat Chrysler and Renault consider merging, car insurance rises and a Chinese electric car start-up debuts in Europe…

Fiat offers Renault €33bn merger deal (The Times, Robert Lea) is one of the biggest stories gracing today’s broadsheets as Fiat Chrysler Automobiles (FCA) announced plans for a 50-50 merger with Renault to create the world’s third largest automotive group. The enlarged group would have a strong presence in all markets apart from the Far East (which is a bit cr*p because it is probably the most important one!) with vehicles covering all segments from cheap-and-cheerful marques such as Dacia and Lada, through to Maserati and SUVs from Chrysler. By creating an enlarged group, FCA said that it would be better equipped to share the cost of developing electric and autonomous cars, with €5bn of potential costs savings in procurement, manufacturing and R&D. It said that all this would be achievable without closing any manufacturing facilities. Renault shares shot up by 12% and FCA’s by 8% on the news. * SO WHAT? * This sounds like a reasonable deal from a strategic standpoint – and it would even go some way to soothing the relationship with Renault’s Japanese partner Nissan (Renault owns 43% of Nissan, while Nissan holds 15% of Renault currently) if the enlarged group was based in the Netherlands as Nissan would then be allowed voting rights that it currently does not have. The French state owns 15% of Renault and will thus be particularly keen NOT to see mass French redundancies as a result of this deal – although it is possible that cuts could be made in Italy, Poland and Serbia which have low production capacity rates. This deal could take over a year to close, so there’s a lot that could happen in the intervening period. One to watch for sure…

Hi-tech cars drive up insurance cost (Daily Telegraph, Olivia Rudgard) cites the latest report from the AA which concludes that the cost of repairing complex modern cars is driving up insurance costs. The increased prevalence of driving assistance gadgetry as well as rising prices of “basic” parts like headlights and windscreens means that we are all having to pay more for our insurance. Premiums

rose by about 2.7% in the final quarter of last year – the first rise for 18 months. Gareth Davies, head of motor insurance at More Than, put it best when he said “In-car technology such as parking sensors, satnavs and more sophisticated dashboards are becoming much more commonplace. While this is making cars safer and easier to drive, it also means they’re more expensive to repair. Even technology that isn’t broken can sometimes need to be recalibrated after a collision”. * SO WHAT? * OK, so 2.7% isn’t going to break the bank, but it is another thing that is getting more expensive these days along with all sorts of other things (food and petrol, for instance) nibbling away at our disposable income meaning that there’s less to spend on other things.

Chinese electric car start-up to debut in Europe (Financial Times, Patrick McGee and Tom Hancock) heralds the intention of privately-owned Shanghai-based carmaker Aiways to offer its all-electric SUV in Europe early next year. It plans on leasing its electric SUV in April 2020 in the EU, Switzerland and Norway in an attempt to break the dominance of German, French, US, Japanese and Korean manufacturers. Aiways says that it will make its offering competitive by not having an expensive dealership network and instead offering its U5 SUV via online leasing only. Monthly prices aren’t being disclosed as yet, but buying the car outright would “definitely” cost less than €40,000. * SO WHAT? * Chinese car manufacturers have been keen to crack the more mature markets of Europe and the US and this might just be an attractive proposition. Not having a dealer network could save 15-20% of profit margins, but there will be some spend on pop-up shops to display the car and offer test drives. The argument goes that many millennials won’t be keen to fork out €30-40,000 for a car given that they’ve grown up with Uber and car sharing, but when they have kids they WILL need one and be willing to pay a monthly fee without all the resale hassle. Having said that, it is one thing to enter a market like Europe – but if there’s no servicing network, any expansion will be dead in the water. Also, will this distribution strategy work? Recently, Elon Musk announced that he would axe his dealerships and go online-only to cut car selling prices – but then made a hasty U-turn a few days later following the backlash from customers and dealerships.

Things continue to be tricky with shopping centres and Miss Selfridge’s biggest store in London faces the axe…

The mood of doom for retailers continues as Shopping centres breach loan terms after stores fail (Financial Times, Judith Evans) shows that UK shopping centres owned by private equity groups like Lone Star and Oaktree are breaching their loan terms because continued retailer failures have led to massive falls in property values. This is expected to lead to a rise in asset sales, which will make prices fall even more. Shopping centres owned by private equity funds are particularly vulnerable to plunging property prices because they tend to have financed the

purchases (especially in the spending spree of 2014-2015) with a lot of debt. The situation continues to get worse. * SO WHAT? * This just goes to show that it’s not just the retailers that are suffering out there – it’s the companies that own the spaces they operate in. Solutions must be found to get new tenants in because no-one likes shopping in a ghost town.

Philip Green to close Miss Selfridge’s flagship London store in July (The Guardian, Sarah Butler) is the rather dramatic headline in today’s Guardian and is a consequence of the current misfortunes of Arcadia Group, its parent. Miss Selfridge’s Oxford Street store is one of the chain’s very few profitable stores and its closure would be in addition to the 23 already earmarked for closure. The store will be leased to another retailer and Miss Selfridge will move into the basement of Topshop next door. Tough times…

Quorn benefits from the Greggs frenzy while Meatless Farm also hopes to surf the vegan wave…

Quorn eyes uplift from growing taste for meat-free options (Financial Times, Emiko Terazono) highlights the success of Quorn Foods as its sales and profits are being powered by the popularity of vegan sausage rolls – from its successful partnership with Greggs – and mycoprotein-based chicken nuggets. Sales of the vegan sausage roll have exceeded initial forecasts by 70% – so things have been going well on the domestic front! Meanwhile, the company is also expecting sales growth of 40-50% in the US where it has been concentrating on selling chicken substitutes – and its nuggets were the fastest-selling product in the meat-free category at Kroger, one of America’s biggest food retailers!

Vegans scent victory in retreat from meat (The Times, Simon Duke) looks at a smaller company, The Meatless Farm Company, that started three years ago and now sells its vegan-friendly mince meat, burgers and sausages in Sainsbury’s and Morrisons and in Greene King and Wetherspoon pubs. The company has grown rapidly and is looking at a valuation by the end of this year of about £100m. * SO WHAT? * This meat-free wave is incredible, no? Companies like Beyond Meat and Impossible Foods have been headline grabbers of late and many of the long-established food companies like Unilever, Nestle and Kerry have been buying up – or investing in – plant-based “meat” start-ups in order to get in on the action. A recent report by Barclays estimated that the market size for meat-free meat could reach $140bn within a decade – so you can understand the excitement surrounding it all! I get the feeling that we are in the early stages of a massive revolution here – and farmers are going to have to adapt to survive.

And finally, in other news…

I thought I’d leave you today with a rather extreme alarm clock in Clever alarm system invented by Japanese railway company will wake even the deepest of sleepers (SoraNews24, Koh Ruide https://tinyurl.com/yyufdl7z) as well as the monstrosity in Benidorm bar sells 2,600 calorie Full English pizza – but it’s dividing opinion (The Mirror, Zoe Forsey https://tinyurl.com/y2t26lfu). OMG ????????????!!!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tesla’s nightmares continue and British Steel nears collapse…

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

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

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

And finally, in other news…

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

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

So Huawei gets hit with Android restrictions…

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

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

Ford, Tesla and JLR all announce bad news…

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

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

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

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

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