Category: Uncategorized

1. In MACRO AND COMMODITIES NEWS, concerns increase about a global recession, the US aims tariffs at the EU, oil prices rise on Libyan unrest and pork prices also look set to increase
2. In UK CONSUMER/RETAIL NEWS, shoppers shy away from big purchases, Cafe Rouge’s owner gets downbeat and Debenhams rejects Ashley’s bid
3. In INDIVIDUAL COMPANY NEWS, Merck buys Versum for $6.4bn, Standard Chartered gets a massive $1bn fine and JLR begins a shutdown
4. In OTHER NEWS, I bring you a few of my worst dad jokes. For more details, read on…

So global recession fears increase, the US trains its sights on the EU, oil prices rise and pork prices look like they’re about to rise…

Global recession fears mount as major economies lose momentum (Daily Telegraph, Tim Wallace) sets a rather downbeat tone for today as a number of leading indicators compiled by the OECD show the US, Japan, the eurozone, UK, Canada and Russia all losing momentum. The composite leading indicator now points to the worst economic outlook since 2009 when we were in the midst of the global financial crisis. On the plus side, China, India and France showed signs of stabilising and Brazil even looks like it’s managing to pull itself out of its recent recession. Lovely.

As Trump appears to be nearing some kind of settlement with China, US moves to impose tariffs on $11bn of EU goods (Wall Street Journal, Joshua Zumbrun) shows that he’s now training his sights on Europe, supposedly in response to the bloc’s subsidies for aircraft maker Airbus. The US has been fighting the World Trade Organisation over Airbus subsidies since 2004 and it seems that the Americans have decided to force the issue back into the limelight. * SO WHAT? * This has been going on for ages, but I would have thought that the whole Boeing scenario going on at the moment will be on the mind of the

Americans given that Airbus will be the main beneficiaries of Boeing’s woes. The Americans are now putting together a list of items that will be subject to duties in due course and it won’t be limited to civil aviation products – things like cheese, bicycles, kitchen knives and artists’ brushes will also be on there. Trade Tariffs – ding, ding – round TWO! 

In commodities news, Unrest in Libya helps send oil price past $70 per barrel (Daily Telegraph, Jillian Ambrose) highlights the rising oil price as renewed fighting in Libya raised the prospect of civil war. * SO WHAT? * The prospect of Libya’s oil supply being disrupted comes at a time when Venezuela and Iran are also limited in what they are allowed to supply. If you factor that in with OPEC and Russia in agreement over cutting production to support the oil price, you have a recipe for higher prices.

Then there’s bad news for bacon sandwich-lovers in Pork price to rise as swine fever sweeps China (The Times, Deirdre Hipwell) as African swine fever is ravaging livestock in China, which produces half of the world’s pork. * SO WHAT? * The spread of the disease in China could increase global pig prices for quite some time to come as 19% of China’s breeding herd has now been slaughtered because of the outbreak, according to analysts at Peel Hunt. Pig prices in China are now up by 37% in March and US hog futures have gone up by almost 50%. FTSE 250 company Cranswick could stand to benefit from this crisis, however, as it produces sausages and bacon as well as pies and sirloin beef. Its share price has had a tough time after a recent profit warning, but rising prices could come to its rescue.

UK shoppers stay away from big purchases, Cafe Rouge’s owner faces tricky times and Debenhams rejects Ashley’s offer…

The gloom just continues in Consumers spend more on eating out but less on big-ticket buys (Daily Telegraph, Tim Wallace) as the latest Barclaycard data shows current consumer spending patterns. Pub spending in March was up by 15% versus March 2018 and restaurant spending increased by 12% over the same time period. British Retail Consortium (BRC) figures showed, however, that spending on big ticket items, such as electronics and furniture, were down 0.5% on the year. The BRC’s chief exec, Helen Dickinson, observed that “While jewellery, beauty products and clothing purchases were up to indulge on Mother’s Day, shoppers were generally cautious, particularly on larger items. Brexit continues to feed the uncertainty among consumers” and Barclaycard’s Esme Harwood echoed this when she said that “March was characterised by ongoing uncertainty around Brexit, with consumers concerned about an impact on food prices and supplies. In light of this, consumer confidence in the UK economy is the lowest it’s been since we began recording this data”.

Cafe Rouge owner reaches for red ink (The Times, Dominic Walsh) says that the owner of restaurant chains

such as Cafe Rouge and Bella Italia, Casual Dining Group, will report a £242m loss today following a financial restructuring. The group was sold, in August, to private equity powerhouse KKR for a “nominal consideration” as part of this restructuring process. It is one of the UK’s biggest midmarket restaurant operators and has about 280 restaurants. * SO WHAT? * Although chief exec Steve Richards said that “despite the market challenges, Casual Dining Group has outperformed the market over the past 11 months” you do wonder – especially given the figures I just talked about from Barclaycard. Difficulties continue for many UK restaurants (although Fulham Shore’s restaurants – like Franco Manca – continue to do well in the same sort of space).

In a saga that’s getting almost as exasperating as Brexit negotiations, Debenhams on the brink as it rejects £150m Mike Ashley rescue deal (The Guardian, Sarah Butler) shows that, surprise-surprise, Debenhams management have voted to keep their jobs to reject Sports Direct’s Mike Ashley’s offer in a pre-pack administration deal set to be announced today that will render shareholders’ stakes worthless (including the £150m Ashley spent in building up his 29.9% stake). * SO WHAT? * God knows what the lenders, who are now in control of the company, will do now. As I keep saying, I think Debenhams is a company in terminal decline. I think that Ashley might have been able to do something with it by merging it with House of Fraser in some form, but that is not to be right now. I would not be surprised if the whole company collapsed and Ashley buys it for a song in a year.

Merck buys Versum, Standard Chartered gets a big fine and JLR shuts down…

Merck wins takeover battle for Versum with $6.4bn offer (Financial Times, Eric Platt and James Fontanella-Khan) heralds a win for Germany’s Merck as it managed to fight off rival bidders to buy the maker of chemicals that go into circuit boards and wafers. Versum’s client list includes the likes of Intel, Samsung and SK Hynix. * SO WHAT? * This will boost Merck’s performance materials unit in the face of increasing competition from China. 

I thought I’d mention Standard Chartered in $1bn settlement (The Times, James Dean) because $1bn is a hefty fine that has been imposed by American and British

regulators to settle an investigation into alleged breaches of sanctions against Iran and financial crime controls. * SO WHAT? * Some thought that the fine could be as much as $1.5bn but in a filing to the Hong Kong stock exchange in February this year, Standard Chartered said it had put aside $900m to cover fines, so I would have thought this would be neutral for the stock. In fact, it may be a positive because the size of the fine is now known.

Jaguar Land Rover begins Brexit shutdown as sales fall (The Guardian, Julia Kollewe) heralds the start of the week-long factory shutdown as part of the company’s plans for Brexit as the company also posted weaker sales in Europe and China. Facilities at Castle Bromwich, Solihull, Wolverhampton and Halewood will all be closed from Monday to Friday this week. Weakness has been blamed on slower demand in China, plummeting sales of diesel-powered cars and the costs involved in complying with tighter testing procedures in WLTP.

And finally, in other news…

I didn’t see anything in the tabloids today that particularly grabbed my interest so I thought I’d leave you with some dad jokes because a) I’m a dad and b) I used to do stand-up comedy (a long time ago):

So I asked my mate what he liked about living in Switzerland. “Well, the flag’s a big plus…”

Someone just stole my thesaurus. I’m lost for words.

What do you call someone with no body and no nose? Nobody knows

I thank you.

1. In REGULATION-RELATED NEWS, tech firms are to come under more scrutiny and Fiat teams up with Tesla on emissions
2. In MONEY-RAISING NEWS, Pinterest sweetens the deal of a dual-structure and Monzo gets a boost
3. In INDIVIDUAL COMPANY NEWS, Sports Direct gets aggressive with Debenhams
4. In OTHER NEWS, I bring you Ed Sheeran sake. For more details, read on…

So tech firms will face more scrutiny and Fiat teams up with Tesla…

UK moves to end ‘self-regulation’ for tech firms (Wall Street Journal, Sam Schenchner and Parmy Olson) heralds an important (and, let’s be honest, overdue) development for internet companies as the UK government is proposing to create a new regulatory body to enforce the removal of harmful content from the internet. It will force companies such as Facebook and Google to take “reasonable and proportionate” action on a broad range of illegal or potentially harmful content – including things like terrorist propaganda and cyberbullying – on their respective platforms. The new body will be able to punish non-compliance and more details will be forthcoming on this. * SO WHAT? * This is just part of an overall movement to bring to account hitherto “self-regulated” internet companies that have consistently been distancing themselves from responsibility of what their users disseminate. Germany last year implemented a law that imposed €50m fines for companies that systematically failed to remove hate speech and the EU is currently debating a law that could threaten fines of up to 4% of annual worldwide revenue from companies that don’t remove all terrorist material within an hour of being posted. The success, or not, of this new initiative will depend on whether the regulator will have actual teeth and how willing it is to bite. Internet companies have deep pockets and powerful lobbyists and will no doubt do all they can to

deflect any accusations – so we’ll just have to see how this works in practice. FWIW, I think this is a step in the right direction – and compliance with these new guidelines will probably increase costs for the internet companies concerned in terms of increased resource having to be funneled into compliance and software development. Great news for AI software development companies, I would have thought…

Fiat Chrysler pools fleet with Tesla to avoid EU emissions fines (Financial Times, Patrick McGee and Peter Campbell) is a bit of a bizarre story at first glance in that Fiat Chrysler Automobiles (FCA) has agree to pay Tesla hundreds of millions of euros to be counted in with Tesla’s fleet in order to offset its CO2 emissions obligations that will effectively lower its overall average figure. Interestingly, EU allows manufacturers to offset their emissions obligations internally – so VW could offset VW, Seat and Skoda emissions against those of Porsche and Audi, for instance. FCA is planning on selling hybrid and electric vehicles in the future but is seen to be a bit behind the others at the moment, hence this stop-gap measure. * SO WHAT? * This is pretty interesting as it is the first time that non-related manufacturers have pooled their emissions together to comply with environmental regulations in Europe. However, Tesla has generated some significant revenues in the US by selling zero emission vehicle credits, although these earnings can be volatile. Last year it earned $103.4m by doing this versus $279.7m the year before. Easy money for Tesla, eh??

Pinterest tries to sweeten its flotation deal and Monzo attracts more money…

Following on from the IPO frenzy on Lyft, Pinterest is expected to set IPO price range below last valuation (Wall Street Journal, Maureen Farrell) shows that the online image-search company looks like setting its sights on a valuation below that of their most recent funding round in 2017. The company is starting the investor roadshow today (this is where the company does a whirlwind tour of the world visiting investors and telling them how great they are and how they should invest loads of money in them) and the rumours are that the price range will be lower than expected – but don’t hang your hat on that as these things can change quite quickly. Look at what happened with Lyft – they eventually hiked up their price range, so this could no doubt happen with Pinterest. The company has over 250million monthly active users and has been reporting chunky revenue growth and shrinking losses. Interestingly, Pinterest offers investors ‘sunset clause’ on terms of $12bn float (Daily Telegraph, Natasha Bernal) highlights an extra sweetener for investors who are probably getting increasingly disgruntled with getting shares from tech IPOs that get b*gger all voting rights. Basically, it says that after seven years as a public company, all shareholders would

be given a vote. That sounds to me fractionally better than nothing, but maybe it will sway some investors. * SO WHAT? * Pinterest may have been mindful of Lyft’s example where it floated at a very high valuation and subsequently fell (although it’s now back to trading above its IPO price – but, let’s be honest, I bet that’s got a lot to do with the underwriters etc. stabilising the price – the real test will come when they come out of the agreed period), so it perhaps pitching itself conservatively. We’ll see soon enough, anyway, and I have to say that the company looks like it’s on the right trajectory. 

Nearer home, Monzo nears £2bn valuation to fund mortgages and pensions bid (Daily Telegraph, James Cook) shows that London-based digital bank Monzo is in the early stages of raising £100m in funding that could effectively value the company at around £1.9bn. This is a sizeable increase from its most recent fundraising in October when the implied valuation of Monzo was £1bn. * SO WHAT? * Monzo is still loss-making, but the extra cash will help it to offer more products to its client base and develop a financial hub for customers to access their current account in addition to savings, pensions, mortgages and utility bills. Digital banking continues to be a hot area with the likes of Starling Bank and Revolut being key competitors who have also raised vast sums of cash recently!

Mike Ashley continues his pursuit of Debenhams…

Ashley accuses Debenhams of ‘falsehoods’ (The Times, Miles Costello) shows that Mike Ashley is continuing to fight against Debenhams’ current management as last night, he accused members of the board of lying. The Sports Direct chief exec owns 29.9% of Debenhams and he, along with two colleagues, took two lie detector tests to verify their events of a meeting that took place with the department store’s management about a potential £150m

rights issue. He then demanded that Debenhams’ chairman and one of its non-exec directors do the same thing because “it is Sports Direct’s contention that the board of Debenhams and its advisers have undertaken a sustained programme of falsehoods and denials. The fact that they can so openly lie in their recollection of joint meetings with Sports Direct is beyond the pale”. Ashley was so incensed that he said Debenhams’ shares should be suspended and that the regulators should be called in to investigate. * SO WHAT? * Ashley is not letting this one go and, although I think that the lie-detector thing is just a bit of a stunt, it has publicised something that I am sure the Debenhams board would prefer to have kept on the down low. Surely this is something that will come to a conclusion very soon, but it’s not good for sentiment in the meantime…

And finally, in other news…

I thought I’d leave you today with this rather unusual product: Limited run of commemorative Ed Sheeran sake on sale from 8 April (SoraNews24, Master Blaster https://tinyurl.com/y3lc7yjz). Class.

1. In MACRO NEWS, China’s stimulus appears to be gaining traction, Trump is upbeat but a Xi meeting date isn’t decided while German factory orders disappoint – as does Italy’s economy
2. In CONSUMER SPENDING TRENDS, UK car sales slow, car insurance premiums fall and UK high street spending remains sluggish
3. In FINANCE NEWS, UniCredit has a sniff at Commerzbank, Saga has its woes and Nomura has a shocker
4. In INDIVIDUAL COMPANY NEWS, Boeing is in big trouble and Amazon expands both healthcare and Mrs Bezos’ bank balance
5. In OTHER NEWS, I bring you a cushion “bake”. For more details, read on…

So the China stimulus takes effect, Trump stays upbeat, German factory orders hit new lows and Italy doesn’t like recovering any time soon…

China stimulus efforts show signs of stabilising economy (Financial Times, Don Weinland and Sherry Fei Ju) cites the most recent official purchasing managers’ index which showed a return to growth. Some say that this is evidence of the success of government initiatives to kick the economy out of a rut by increasing debt issuance and encouraging infrastructure projects. Others worry about whether the latest figures are just a blip because the findings of this survey are at odds with the most recent factory output and raw material demand figures which showed the fastest slowdown in almost ten years. The main driver of growth in March was manufacturing production, which would imply that government spending on infrastructure projects is starting to filer through. * SO WHAT? * The world is watching as China’s economic growth machine has powered many companies and commodity prices. Given that most of the recent economic data has pointed to a slowdown, I don’t think that this PMI result is going to be enough to allay continued concerns – but it won’t make them worse.

Following on from what I said yesterday, Trump says US-China trade deal close, but no summit plans yet (Wall Street Journal, Bob Davis, Alex Leary and Vivian Salama) shows that there is still work to do in the US-China trade negotiations. Both sides are continuing to aim for a trade deal within the next four weeks, but US Trade Representative Robert Lighthizer said that there are “major, major issues left” but that “We’re certainly making more progress than we would have thought when we started”. Denied! For now.

German industrial powerhouse falters (The Times, Gurpreet Narwan) cites the latest figures from the German economy ministry which show that factory orders fell at their steepest monthly rate last month since January 2017, increasing fears of an economic slowdown. * SO WHAT? * An economic slowdown in China, Trump’s trade tariffs, new rules on diesel emissions and Brexit worries are all taking their toll on Europe’s economic powerhouse and although it has so far managed to avoid a technical recession by the skin of its teeth, data isn’t exactly painting a rosy picture. Although the services sector is doing OK, manufacturing (which accounts for about a third of GDP) is having a rough time as it is heavily exposed to the vagaries of the global economy due to it being one of the world’s biggest exporters. A weakened Germany is NOT good for the eurozone.

Talking of weakness, Sluggish Italian economy set to remain at near zero growth (Daily Telegraph, Tim Wallace) says that Italy is highly likely to remain in recession as there is talk that the government is about to cut growth forecasts to almost zero (0.1% this year versus previous expectations of 1%, apparently!). UBS’s Giovanni Montalti observed that “The Italian political framework appears very fractuous and the outlook is likely to remain characterised by instability, against the backdrop of factors such as the European parliament elections coupled with the challenging fiscal policy decisions to be taken by mid-October”. * SO WHAT? * Italy continues to be an economic basket case and I can’t see its fractuous cobbled-together government helping matters. Germany has leadership issues (Merkel not being the power she once was), France has gilet jaunes issues (Macron’s popularity going down the pan because of his heavy-handedness – which has come back to bite him) and Italy (wildly opposing powers being cobbled together after an inconclusive election because it was arguably “better than nothing”) has are suffering at the moment – not good for europe.

UK car sales slump, insurance premiums fall and UK high street spending looks poor…

Car sales crash as 19-plate fails to woo drivers (The Times, Robert Lea) is perhaps rather unsurprising given the whole Brexit farce but the latest figures published by the Society of Motor Manufacturers and Traders show that new car registrations were down by 3.4% versus March 2018 and at the worst level since 2014. Fun fact: March, with its “new” numberplate, is the most important month of the year for car dealers and generally accounts for 20% of all sales. Private sales and fleet sales are all down and diesel continues its spectacular fall from grace with sales now 25% of the market versus the 50%+ share it once enjoyed. * SO WHAT? * This is bad, but it could actually be even worse than this because some car dealers indulge in a bit of pre-registration naughtiness as they register vehicles without actually selling them in order to inflate the sales figures they have agreed with manufacturers. This means that the numbers could drop quite sharply over the following months as reality bites.

There’s some good news for drivers in Car insurance premiums fall in advance of whiplash payout reforms (The Guardian, Miles Brignall) as new legislation, which will come into force in April 2020 and reduce the number of payouts, is already having an effect on insurance premiums according to research by Comparethemarket. Whiplash claims cost the motor insurance industry £2bn per year but

the Ministry of Justice says that the new rules in the Civil Liability Act will “ensure spurious or exaggerated whiplash claims are no longer an easy payday” because they will change the way that whiplash claims are calculated. * SO WHAT? * This is good news for drivers as insurance prices have generally been in an upward trend since 2012 but Dan Hutson, head of motor insurance at Comparethemarket, pointed out that “the reductions have been aided by the reduction in the number of car registrations in the past six months, which suggests that insurers are having to compete more to win a larger share of a smaller market. With the review of the Ogden personal injury discount rate [a rate used to calculate large payouts in serious personal injury claims] now under way, there is hope for motorists keen to see further reductions of their premiums”. It’s not going to be life-changing for drivers, but it should give them a bit of extra money. Which is nice.

High street struggles to put spring in its step (The Times, Deirdre Hipwell) is another rather unsurprising headline today, but the article focuses in on the latest findings of the BDO high street sales tracker which show that, although like-for-like in-store sales strengthened by 4.8% in March, they were nowhere near strong enough to make up for the performance lost when the “Beast from the East” hit in March 2018, making sales fall by 10.1%. Despite increased footfall in shops, rising wages and falling unemployment, sales remain stubbornly low. The figures showed weakness across the board, but the only bright spot was online sales, which rose by 18.7% last month. Sophie Michael, head of retail and wholesale at BDO, made a rather downbeat observation when she said that “Retailers continue to trade on paper-thin margins and the impact of further increases in business rates and staffing costs will only add to the fears of possible high street casualties”.

UniCredit expresses an interest in Commerzbank, Saga has a nightmare and Nomura faces some biiiig cuts…

UniCredit plots counterbid to take control of Commerzbank (Daily Telegraph, Vinjeru Mkandawire) heralds a funny turn in the Deutsche Bank/Commerzbank saga as Italian banking giant UniCredit appears to have thrown its hat in the ring as a potential suitor to Commerzbank. * SO WHAT? * UniCredit already owns German bank HypoVereinsbank and has been interested in Commerz for years. It will be waiting in the wings to swoop if the deal to form a “German champion” doesn’t go ahead, but could face competition from ING, BNP Paribas and Santander. There was no comment from Deutche, Commerz or UniCredit on the matter, but I have to say that I just don’t see it happening. The German government still has a 15% stake in Commerz and I don’t believe that it will allow another foreigner to take control of one of its own – much less an Italian (and I say that given how dire Italian banks are at the moment, plus the wider political/economic landscape).

Shares in travel firm Saga slump as it warns Brexit will hit profits (The Guardian, Julia Kollewe) highlights problems at the company which specialises in travel and insurance for the over-50s. The impact of Brexit uncertainties and

projections of lower insurance margins prompted it to announce a profit warning and dividend cut, sending its share price down by 37%. The company plans to do an overhaul on its insurance division that has been hit by increased competition and also plans to offer more experience-led holidays in its travel division. * SO WHAT? * It sounds to me like there were rumblings about deterioration in its business, but clearly most investors got caught by surprise, judging by the depth of the fall. Saga relies on brand loyalty, so it needs to nurture this if it isn’t to become just another faceless insurer.

In Japan’s Nomura to cut $1bn in costs and shut 20% of branches (Financial Times, Siddarth Shrikanth, Robin Harding and Leo Lewis) we see some very sobering news for Nomura employees as the brokerage announced some drastic plans following big losses in the nine months to December 2018. London will be particularly affect when job cuts are announced but the cutting of branches in its domestic network in Japan is particularly drastic IMHO. The company will streamline the management into a global structure and will cut “flow” trading business in Europe and America for bonds, emerging markets and forex. * SO WHAT? * This is bad news for mid-tier brokerages with global ambitions and just makes the top-tier even stronger, resulting in less choice for investors. The latter will benefit in the near-term from price cuts that only the top-tier can afford to finance, but when the competition has gone down to the bone, they could get a nasty shock in terms of price hikes.

Boeing’s nightmare gets worse and Amazon makes increases efforts in healthcare (and bolstering Mrs B’s bank balance)…

I think that Ethiopian 737 Max pilots not to blame for crash, probe finds (Financial Times, Aaron Maasho, Tom Wilson and Sylvia Pfeifer) is an absolute shocker for all concerned as Ethiopian investigators have found that the pilots who guided 157 people to their deaths followed emergency procedures correctly and were not to blame. * SO WHAT? * The Lion Air 737 Crash in Indonesia and the Ethiopian crash have severely shaken the world’s confidence in Boeing, given that they only happened within five months of each other. The 737 is Boeing’s best-selling plane and Boeing: holding pattern (Financial Times, Lex) contends that that investors think this won’t get much worse as the company’s share price has come off its lows in recent days, having lost 10% since the crash but I have to say that I think that this could morph into the mother of all nightmares for Boeing (it already is for the victims and their families) if further investigations confirm what the Ethiopian investigation has already found. If this really is the company’s fault, the compensation claims could be

absolutely enormous AND orders for new planes could just fall through the floor as buyer confidence evaporates. China recently diverted a massive order to rival Airbus – and you’ve got to think that the latest incidents made that decision easier to make. This is a terrible business. And Airbus is probably going to benefit.

There were a couple of interesting stories about Amazon today. Amazon expands healthcare services with Alexa deals (Financial Times, Hannah Kutchler) heralds a welcome development for the company as it announced that its Alexa devices now comply with US rules regarding healthcare data protection, which will enable it to provide more services. It also announced a number of partnerships that will let it check users’ blood sugar, communicate with hospitals and get repeat prescriptions on their devices. * SO WHAT? * This is a great step forward into what many believe is a huge growth area.

The other big story regarding Amazon today is Bezos’ wife ‘happy’ with divorce deal leaving her with $36bn (Daily Telegraph, Margi Murphy) which will probably serve to put a line under any investor unease regarding the Bezos’ high-profile divorce as Mr B will retain 75% of the couple’s Amazon shares and 100% voting control. Everyone’s a winner (well, relatively).

And finally, in other news…

I thought I’d leave you with a great bit of PR in Greggs brilliantly trolls Next over £18 cushion that looks like a steak bake (The Mirror, Courtney Pochin http://tinyurl.com/y2bxfzpa). Superb!

1. In MACRO NEWS, it looks like the US and China are nearing a deal, May and Corbyn start talks and the UK services sector takes a beating
2. In TOBACCO NEWS, China Tobacco looks outside its domestic market while US cigarette sales fall on increased vaping
3. In CAR NEWS, Ford announces a slew of new models in China and Tesla has a shocker
4. In INDIVIDUAL COMPANY NEWS, Dunkerton has his work cut out at Superdry and Verizon kicks off 5G
5. In OTHER NEWS, I bring you some noodle etiquette. For more details, read on…

So a US/China accord seems closer, May and Corbyn get together on Brexit and the UK services sector suffers because of Brexit…

There’s some potentially good news for fans of world trade in Trump likely to announce plans for summit with China’s Xi on Thursday (Wall Street Journal, Vivian Salama and Bob Davis) as a US administration official said that an announcement of a summit date between the two presidents is “likely” to come today when Trump meets Vice Premier Liu He. * SO WHAT? * Obviously this might not come to pass, but it IS looking more likely. If a date is set I would expect markets to rise in anticipation – although they shouldn’t go too mad given Trump’s track record of being unpredictable.

Then in May and Corbyn kick off ‘constructive’ Brexit talks (Financial Times, Jim Pickard, Laura Hughes and Henry Mance) we see that the two leaders have come together in an attempt to get past the current deadlock. Basically, it looks like we are heading for a soft Brexit with a customs union with the EU looking increasingly likely. It seems that this is the price that May was willing to pay to get Labour

on board because, until now, she has repeatedly ruled this option out. MPs also voted late last night to stop a no-deal (this motion only won by a single vote) and will require the PM to ask for a long delay to Brexit when she goes to Brussels next week. * SO WHAT? * This is all very well, but Brussels has still got to approve of all this and it has repeatedly said that very stringent conditions would have to be fulfilled to get a long delay. The May/Corbyn talks looks like they might be a step towards some kind of agreement but it’s too early to tell yet.

Meanwhile, Growth halts as services sector hits reverse (The Times, Philip Aldrick) shows that service sector growth has ground to a halt in the first quarter of this year, according to the latest IHS Markit/CIPS PMI survey, as it actually contracted for the first time in two and a half years. * SO WHAT? * These surveys are obviously taken seriously (the Bank of England follows them!) but they have been known to be wrong at times of political uncertainty – for instance, after the 2016 referendum result, they forecast a GDP contraction that never happened and they were also overly pessimistic in the final quarter of last year. The thing is that the services sector accounts for 80% of UK GDP, so data like this doesn’t look good. The reason for this contraction was, unsurprisingly, mainly laid at the door of Brexit.

China Tobacco looks outside of its own backyard and US cigarette sales are falling while vaping is rising…

China Tobacco looks to take on global cigarette makers (Financial Times, Tom Hancock) highlights the desire of China National Tobacco to spread its wings and see what’s outside the domestic market it has monopolised (it has a 97% market share!) for so long. A slowing economy and increasing pressure by health officials for people to quit smoking is proving to be a drag on growth and so the company wants to look further afield to expand. Over 25% of China’s adult population are regular smokers currently, but this number is expected to fall. Most of China’s exported cigarettes are sold in developing Asian countries, but now there are ambitions to stray even further from its cosy home market in order to compete with the likes of Philip Morris International and British American Tobacco. * SO WHAT? * I would have thought that Western cigarette giants would probably be secretly quite pleased if China National Tobacco decided to expand internationally because it would give them a deep-pocketed potential buyer for brands that are on the wane as fewer people smoke. Yes, there would be more competition in theory

with such a “new kid on the block” but at least they might be a recepticle that they could offload some of their brands into if they want to slim down the business. On the other hand, a cash rich new player could make things trickier if they decide to wade into vaping.

That being said, you do wonder about the company’s timing given things like US cigarette sales drop as smokers shift to vaping (Financial Times, Andrew Edgecliffe-Johnson and Alistair Gray) because it would seem that the Chinese are looking to expand into a market that looks to be contracting (well, certainly in developed markets anyway!). The latest data from Nielsen said that sales volumes of cigarettes fell by 8.8% versus a year ago and although price rises clawed back some of the impact on revenues, the rate of decline seems to be increasing. Vaping product sales have shot up in the meantime. * SO WHAT? * Although companies such as British American Tobacco and Altria are putting a lot of money into e-cigarettes and heated products, the cash cow is still very much “traditional” cigarettes. The thing is that tobacco companies are potentially going to be squeezed a great deal over the coming years as less people smoke and restrictions on vaping come in. I’m not convinced that this is a great time for China National Tobacco to expand overseas unless they want to buy western brands that they can sell in their domestic market.

Ford announces new models for China and Tesla has a shocker…

Ford to launch 30 new models in China to stem plummeting sales (Financial Times, Tom Hancock and Wang Xueqiao) sounds like too little too late but the troubled American manufacturer announced that it will be launching 30 new models in China over the next three years in order to arrest the downward momentum in its performance there. * SO WHAT? * Ford’s total sales in China fell by 37% last year and sales at its main joint venture partner Changan were even worse as they fell by 54%! This poor performance stands in stark contrast to the performance of some of its foreign competitors in China who enjoyed a surge in sales despite a fall in the overall market for the first time in almost thirty years. Toyota has been a big winner and although GM and VW saw weaker sales, they weren’t nearly as bad as Ford’s.

I’ve always said that if you want to read a negative story on Tesla, you can always rely on the Wall Street Journal, so I imagine they were probably rubbing their hands in glee with Tesla’s first-quarter deliveries plummet (Wall Street Journal, Tim Higgins) as Tesla announced that vehicle deliveries fell by a chunky 31% versus the previous quarter as the company struggled to get its Model 3 to customers in Europe and China. Tesla said this was due to challenges associated with taking the Model 3 overseas for the first time. * SO WHAT? * Tesla fans will say that sales will bounce back once they get past these teething troubles, but the fact is the company has a terrible record of living up to ambitious promises and the competition is hotting up in the meantime. If you are in the market for an electric car, the choice is improving all the time and because most people only make vehicle purchases infrequently, Tesla is having to rely on very dedicated Tesla fans who are patient enough to wait rather than buy from another manufacturer. I still say I think that Tesla should merge with an established maker (e.g. VW). That way you would combine Tesla’s technical expertise with the established maker’s production capacity and distribution. I suspect that Elon Musk would rather cut off his own limbs than do that, though…

Superdry falls and Verizon makes progress with 5G…

After Tuesday’s dramatic events at Superdry where the co-founder ousted the entire board, Boardroom victory costs Superdry founder £15m (Daily Telegraph, Ashley Armstrong) goes to show that Julian Dunkerton has got his work cut out for him to turnaround the company as the company’s share price fell by 8% in the immediate aftermath. The whole board resigned – as they said they would – and four non-exec directors have handed in their notice with the company’s two brokers, Investec and UBS, also resigning. * SO WHAT? * Hey, well there’s nothing like starting with a clean sheet! OK, so the news is now being digested, but the clock will start ticking soon as shareholders (and others!) will be wanting to see a 

concrete plan of action. Will Dunkerton’s return have the same effect as Steve Job’s return to an ailing Apple, or will it be a flop??

Verizon, South Korea launch smartphone 5G (Wall Street Journal, Timothy W. Martin, Sarah Krouse and Na-Young Kim) heralds the arrival of the 5G era as Verizon launched 5G wireless services in parts of Chicago and Minneapolis yesterday with South Korean carriers SK Telecom and KT Corp switching on 5G in Seoul on the same day. * SO WHAT? * This is the beginning of something pretty special, IMHO, as 5G will enable things like eight-way video calls, holograms, high-def live streaming and other virtual/augmented reality capabilities due to it being up to 100 times faster than current networks. The future is here! South Korea, famed for its superfast internet, is projected to have the world’s highest 5G penetration for 2019 and 2020, according to research by Strategy Analytics. 

And finally, in other news…

I thought I’d leave you with something educational today in Big mistake lots of us make when eating noodles – and how we should be doing it (The Mirror, Zoe Forsey https://tinyurl.com/yxjt85nt). So now you know!

1. In BREXIT AND CRYPTOCURRENCY NEWS, we have a look at the latest in the Brexit saga and why Bitcoin had a bit of a pop
2. In NEWS ON RETAIL AND CONSUMER TRENDS, US shopping centre vacancies are up, Burger King signs a deal with Impossible Foods, music revenues from streaming make up for shrinking CD sales and Superdry’s Dunkerton sticks it to the board
3. In GAMING NEWS, Tencent wades in to cloud gaming
4. In OTHER NEWS, I bring you a world-record-breaking bagpiper. For more details, read on…

So we see the latest on Brexit and why Bitcoin suddenly shot up…

Theresa May deals triple blow to Tory hardliners (Financial Times, George Parker and Sebastian Payne) heralds what could be a move towards a soft Brexit as Theresa May announced she would not accept a no-deal on April 12th and will seek out a “further extension” to Article 50 when she meets the European Council next Wednesday 10th April. She announced cross-party talks with Jeremy Corbyn to hammer out a mutually acceptable deal. As you’d expect, it’s not going to be easy as EU draws up strict conditions for long Brexit extension offer (Financial Times, Jim Brundsen, Alex Barker and Mehreen Khan) shows that things on the continent aren’t that clear-cut either, despite what the headline might imply, as member

states are discussing the merits and demerits of a long extension and whether or not the UK would be participating in the upcoming European Parliament elections. The whole sorry saga rumbles on!

The more eagle-eyed amongst you may have noticed that Bitcoin had a sudden uplift yesterday and Talk of bumper Asian order helps Bitcoin break $5,000 (The Times, James Dean) contends that it broke through the $5,000 threshold for the first time since November because of a chunky buy order from an Asian investor. The cryptocurrency has been trading in a range of $3,000 to $4,000 since late last year but shot up by 22.8% from its level on Monday. Oliver von Landsberg-Sadie, chief exec of BCB Group, said that an order for 20,000 bitcoins worth $100m washed through the market across three digital currency exchanges. * SO WHAT? * This sounds like a one-off, but if we see a few more of these kinds of orders in the near future, Bitcoin might be set for another frenzy.

US mall vacancies rise, Impossible Foods signs a distribution deal with Burger King, music revenues rise on streaming and Dunkerton returns to Superdry…

I think it would be fair to say that we are used to seeing downbeat/depressing news about retail in the UK but US shopping centre vacancies rise to eight-year high (Financial Times, Alistair Gray) shows that it’s not all sunshine and rainbows stateside either as the rise of e-commerce and collapse of private equity-backed chains have led to a rise in vacancy levels. Shopping malls have suffered particularly acutely so far this year – and with names like Gap and Victoria’s Secret among many household names slated to close outlets – the immediate future isn’t looking bright. * SO WHAT? * This is indeed a tricky state of affairs and when you have so many retailers either going bust or announcing big store closure programmes it gives other waverers an excuse to downsize as well – so momentum starts to build. I am of the belief that we are all in a shake-out phase that will last a few years as retailers adapt to changing consumer behaviour and that high streets and malls won’t die – they will just repurpose in order to provide goods and experiences that you just can’t get online. The intervening period will be painful, however, and even well-established brands won’t be able to rest on their past glories.

I mentioned this on my Youtube channel yesterday (because it came out after I published Watson’s Daily) but Burger King deal fuels plant-based meat group (Financial Times, Tim Bradshaw and Emiko Terazono) heralds a big moment for Impossible Foods as it is now seeking additional funding after signing a distribution deal with Burger King for its “Impossible Burger 2.0”, which was unveiled at CES Las Vegas earlier this year. Impossible believes that its burger offering could be rolled out nationwide by the end of this year. * SO WHAT? * This is the latest exciting development in the world of meat-alternatives as competition in this area is beginning to

sizzle quite nicely. Other than Impossible Foods, Beyond Meat also has its own popular burger (and sausage) offering and is making plans for an IPO to fund its international expansion plans. Nestle will will launch its own Incredible Burger via its Garden Gourmet brand in eight European countries later this month, with an eye to expanding in the US in autumn with its Awesome Burger (under the Sweet Earth brand). Unilever also recently bought meat-substitute company The Vegetarian Butcher, so you’d think they will be launching something as well down the line. Putting it bluntly, I think this is a MASSIVE growth area. I tried a Beyond Meat burger when it was launched in the UK last year and I was astounded by how good it was and how closely it tasted like “the real thing” – and I am very much a meat-eater (and a very keen cook). When you consider that meat and dairy give us only 18% of calories but utilise 83% of farmland and produce 60% of greenhouse gas emissions, according to recent research cited in Science Magazine, the arguments for just even having a go and skipping a meal or two with meat and using meat-substitute become quite compelling.

You may not necessarily be aware of this but Global music revenues grow at fastest rate in more than two decades (The Guardian, Mark Sweney) shows that the global streaming revolution has more than compensated for the falling popularity of CDs. The latest figures show that recorded music revenues increased by 9.7% last year – the fastest rate of growth since at least 1997 – bringing the highest level of income for the music industry since 2006, when CD sales accounted for over 80% of global revenues. Streaming revenues via the likes of Spotify, Apple Music and Amazon Music have shot up by 34% year-on-year and now account for 47% of the total global market for recorded music. * SO WHAT? * This just goes to show how important streaming has become to our daily lives and the continued demise of CDs and DVDs.

Then in Dunkerton putsch ousts entire board of Superdry (Daily Telegraph, Ashley Armstrong and Chris Johnston) we see that the company’s co-founder, Julian Dunkerton, was successful in his bid to return to Superdry in order to turn its fortunes around following a vote held yesterday. Dunkerton stepped down from the board last year and is now going to be the interim chief exec of the company and brings Peter Williams, chairman of Boohoo, with him. Good luck to ’em!

Tencent wades in on cloud gaming and TikTok’s popularity continues…

Tencent follows Google into cloud gaming with ‘Start’ pilot (Financial Times, Louise Lucas) highlights Chinese tech behemoth Tencent’s move into cloud gaming as it turns out that it is testing a new service called “Start”. At the moment, it’s available in Shanghai and Guangdong and promises to put high-quality gaming on any device because all the action happens on the company’s powerful servers

in data centres rather than the player’s own device. Sony, Microsoft and Amazon are all positioning themselves for cloud gaming and last month Google unveiled a cloud gaming service called Stadia, which is expected to launch later on this year. * SO WHAT? * I think that this is the future of gaming. Funnily enough, I think that the popularity of the Switch console has shown just how much people like the ability to swap between small screen and big (TV) screen and cloud gaming is a natural extension of this. It does make me think that the next generation of games consoles will be the last, however, as their need will continue to diminish over time.

And finally, in other news…

I thought I’d sign off today with something musical in Man plays bagpipes in 100 countries – a world record (Inside Edition http://tinyurl.com/y3z5mmud). Gotta love a bit of bagpipe music!

1. In MACRO AND MARKETS NEWS, German manufacturing weakens, British manufacturing strengthens and global markets rally on better news from US and Chinese manufacturing
2. In IPO-RELATED NEWS, Lyft falls on its second day and Slack considers a direct IPO on the NYSE
3. In INDIVIDUAL COMPANY NEWS, we see just how incredibly profitable Saudi Aramco is and Amazon cuts prices at Whole Foods
4. In OTHER NEWS, tidying sensation Marie Kondo could “spark joy” by endorsing tasers. For more details, read on…

So German manufacturing drags down the eurozone while UK manufacturing gets a boost from stockpiling and global markets recover on stronger figures from the US and China…

German factories drag down whole eurozone (The Times, Gurpreet Narwan) shows that, according to the latest IHS Markit/CIPS manufacturing purchasing managers’ index (PMI), German manufacturing shrunk at its fastest rate in six-and-a-half years last month. * SO WHAT? * The global slowdown in demand, tariff uncertainties and Brexit concerns are all believed to be taking their toll and Germany’s weakness, given that it is the biggest economy in the eurozone, is dragging everyone down. Phil Smith, principal economist at IHS Markit observed that “Uncertainty towards Brexit and US-China trade relations, a slowdown in the car industry and generally softer global demand all continue to weigh heavily on the performance of the manufacturing sector, which is now registering the steepest rate of contraction since 2012”.

Interestingly, UK manufacturers buoyed by Brexit stockpiling as eurozone slumps (The Guardian, Phillip 

Inman) shows that the same PMI for the UK indicated manufacturing activity ramping up to a 13-month high in March as firms stocked up on raw materials and finished goods at their fastest monthly rate of any G7 country since 1992! The main reason behind this is fears that imports and exports would be held up at the UK border. IHS Markit director Rob Dobson pointed out that “The stock-building boost introduces a major headwind for demand, output and jobs growth moving forward. Manufacturers are already reporting concerns that future trends could be constrained as inventory positions across the economy are unwound”. In other words, all this activity is great now, but it’ll probably lose a massive amount of momentum in the coming months as inventory levels are run down as there’s only so much you can stockpile!

US and Chinese manufacturing stabilise, while Europe lags behind (Wall Street Journal, Paul Kiernan and Paul Hannon) has a more upbeat tone as manufacturing activity in the US and China has improved, according to official figures. Given that manufacturing is an economic bellwether of the wider economy, markets reacted positively. * SO WHAT? * It would seem that the US is continuing the momentum it got from last year’s fiscal stimulus while others are sceptical about how sustained China’s rise in manufacturing activity really is given that it always improves after the long Lunar New Year holiday. The naysayers on China will certainly have to see a bit more evidence of an upturn before they wind in their scepticism.

Lyft wobbles and Slack ploughs on with its flotation plans…

Profit questions throw Lyft shares into reverse (Financial Times, Richard Henderson and Mamta Badkar) shows that the newly-floated company’s share share price fell below the listing price on the second day of trading as doubts weighed on investors’ minds about their touted route to profitability. Shares fell by 11.9% yesterday to a level that was 4.2% lower than the listing price. * SO WHAT? * This kind of thing happens quite often with tech IPOs – and Lyft is in good company with the likes of Facebook, Twitter and Alibaba all seeing their share prices fall on the second day of trading. TBH, the observation about investors suddenly starting to ask questions about Lyft’s path to profit are a load of codswallop because they will have known this all beforehand – you either believe the company’s BS or you ignore it and buy into the story anyway. I suspect that some of the luckier ones who managed to get allocated shares in the IPO saw them pop and then sold to lock in a quick profit. Given that Lyft was open to retail investors as well as institutional ones, you are likely to see a bit more volatility as their activity is more difficult to predict/control.

The problem will come if the shares continue to track downward. Uber in particular will not want that to happen given it is planning to list soon and could do with a good performance from Lyft to pump up the hype on ride-sharing.

Slack chooses NYSE for direct listing (Wall Street Journal, Corrie Driebusch and Maureen Farrell) shows another company with flotation on its mind as it prepares to follow Spotify by undertaking a direct listing, where a company places its stock on an exchange without raising money or having underwriters. Slack operates an app that’s used for group communication (it’s trying to be an e-mail killer!) and has already raised a ton of money – $1bn since it launched in 2013. Presumably it’ll use the extra cash from flotation for expansion. * SO WHAT? * Basically, a direct listing is a cheaper way to list (it saves on fat investment bank fees) and given that Spotify’s flotation went OK last year, it has obviously decided to go down the same road and save itself some money. The major risk with this kind of listing is that there isn’t an investment bank acting as a stabilising agent, calming any wild price swings in early trading. This will no doubt make investment bankers twitchy as they will be losing out on big fees if everyone starts doing this (and Airbnb looks like it is considering doing the same), so they will probably be praying that Slack has a disaster.

Saudi Aramco shows just how profitable it is and Amazon aims to cut prices at Whole Foods…

Saudi Aramco’s $111bn profits dwarf those of mega-rivals (Financial Times, David Sheppard and Myles McCormick) lifts the lid on just how much money Saudi Arabia’s state oil company makes as it disclosed its financial performance for the first time in 75 years . It turns out that the group generated $111.1bn of net income last year – double that of Apple and five times that of oil producer Royal Dutch Shell – as it supplies over 10% of the world’s crude oil. * SO WHAT? * Prince Mohammed bin Salman (MbS) is trying to wean his kingdom off oil revenues by embarking on a long term plan to boost other areas of the economy but given

that the oil sector currently accounts for 63% of total revenues in 2017, you can see how hard this is going to be. Luckily for him, he has access to tons of money (unlocked by Saudi Aramco’s purchase of Sabic) so at least he’s got something to throw at the problem.

Amazon cuts more prices at Whole Foods (Wall Street Journal, Heather Haddon) heralds a shift for Amazon as it tries to break the perception of Whole Foods as being a pricey option for grocery shopping (one of its nicknames is “Whole Paycheck”!) by announcing plans to cut prices on over 500 items at Whole Foods stores from tomorrow. * SO WHAT? * These prices cuts will be the most wide-ranging since it bought the grocer for almost $14bn in 2017 and shows Amazon’s intention to get more mainstream in its grocery offering and compete with the likes of Walmart, Kroger et al. It’ll be interesting to see what the effect will be, but I would imagine it is going to take some time to truly shift this perception.

And finally, in other news…

OK, OK I know this is an April Fool’s thing but I thought the headline was hilarious so here it is: Japanese company proposes Marie Kondo as mascot for new “Spark Joy” police taser weapons (SoraNews24, Scott Wilson http://tinyurl.com/y5s8pg7o).

1. In MACRO NEWS, Brexit rumbles on, the UK living wage increases and China’s factories crank up
2. In RETAIL NEWS, business rates come under attack, new rules on FOBTs put bookies under threat and Superdry faces a crunch vote
3. In INDIVIDUAL COMPANY NEWS, Lyft sets a precedent
4. In OTHER NEWS, I bring you some April Fools’ Day shenanigans. For more details, read on…

So Theresa May is about to have another go, the living wage rises and China’s manufacturing shows some signs of life…

Theresa May weighs fourth vote on Brexit deal (Financial Times, Jim Pickard) highlights the latest in the Brexit farce with backbenchers holding another series of “indicative votes” today on alternative options to May’s Brexit plan. There’s some talk of a general election, but who knows what will happen?!  May is even thinking about bringing her deal back for the fourth time after being voted down three times already. If it is rejected yet again, the main options on the table are the UK asking for a longer delay, a no-deal or abandoning the whole Article 50 process altogether. When the indicative votes were held last week, the options that won the most support were a customs union with the EU and a second referendum on any deal.

Pay rise for nearly 2 million as UK living wage goes up by 4.9% (The Guardian, Simon Goodley) heralds some good news for some and marks 20 years of the introduction of the “national minimum wage” which was rebranded the “national living wage” from 2016.  This is often confused

with the “real living wage” which is calculated independently and is meant to reflect what people really need (it’s now £10.55 per in London and £9 elsewhere, versus the new “national living wage” at £8.21 per hour  – and less for people under 21). * SO WHAT? * This is generally good news for consumers and feeds into the idea of wages going up across the board in the UK. 

China back on a roll as factories crank up (The Times, Louisa Clarence-Smith) shows that factory activity in China increased for the first time in four months, according to China’s official purchasing managers’ index. Analysts had been expecting another contraction due to the ongoing trade war with the US but it would seem that the government’s big stimulus measures may be starting to have an impact. Growth also accelerated in the services sector, which is good news because it accounts for over half of China’s GDP. * SO WHAT? * This looks like good news but, as always, you have to take the “official” figures with a pinch of salt because there is always the prospect of authorities massaging figures. TBH, you always have to cross-check PMI figures with other economic indicators anyway (not just in China) because they are only surveys which measure sentiment rather than cold, hard sales figures.

Business rates continue to stir opinion, new limits on FOBTs threaten betting shops and Superdry gears up for a big vote…

Retailers want MPs to tackle ‘madness’ of shop levies (Daily Telegraph, Oliver Gill) highlights ongoing retailer concern about business rates and the current state of affairs. A new “multiplier” is to come into force today that will effectively raise business rates for UK retailers, putting further pressure on an already-embattled sector. Business rates generate around £30bn a year for the Treasury but retailers argue that a complete overhaul of the system is required in order to take account of the rise (and unfair advantage given to) digital retailers. Chief exec of the British Retail Consortium, Helen Dickinson, observed that “retail accounts for 5pc of the economy, yet pays 10pc of all business taxes and a staggering 25% of business rates. This is simply not sustainable; the raft of shop closures and job losses are testament to that”.

Talking of which, Online retailers set for business rate rise (Financial Times, Jonathan Eley) gives an idea of what e-tailers and retailers could expect in the future as the government is about to assess the higher rents paid by warehouses before the next revaluation takes place. Rents on commercial properties today will be used to set the rates from April 2021 onwards. The last revaluation was in 2017 and based on rents in April 2015. Etailers currently pay way less in business rates than their high street counterparts, but that is likely to change in 2021 when they are expected to pay much higher bills due to a sizeable hike in rents for the distribution centres that are so integral to their operations. On the other hand, many high street retailers (if they manage to survive until then) will see their bills falling. * SO WHAT? * Business rates have been just one of many contributors to the current feeling of malaise that many retailers are feeling. A rise in the minimum wage, shortages of staff, Brexit uncertainties and stubbornly high

rents have all kept overheads high at a time when they are desperately trying to adapt to changing customer behaviour. Business rates are definitely contributing to retailer difficulties, but they are by no means the only thing.

In other news on the high street, New limits on FOBT gambling machines could shut third of outlets (Financial Times, Alice Hancock and Camilla Hodgson) heralds the arrival of what we all knew was going to happen, but the maximum stake of Fixed Odds Betting Terminals will be reduced from £100 to £2 from today. The move had been flagged a while ago, with betting shops up in arms over this effective quashing of the machines that have been referred to as the “crack cocaine” of gambling. GVC, which owns Ladbrokes Coral, expects to close around 1,000 of 3,475 shops as a direct result of this crackdown and only last week William Hill asked landlords for rent cuts of up to 50% to keep their shops open. * SO WHAT? * FOBTs were introduced in 2001 and were hugely popular – so much so that in 2005 legislation was introduced to limit their number to four per shop. They have been the lifeblood of the UK gambling industry, but the introduction of the £2 limit is going to kill this once mighty revenue stream as government caved to pressure and brought forward the introduction of this limit to today from a proposed date in October. Many larger bookmakers have turned their attentions to online gambling and expansion in the US since the limits were announced, but this is obviously not a realistic option for smaller operators. Critics say that this will drive gamblers into more dangerous alternatives, but advocates say that this move has been long overdue. Still, this will mean more of these outlets shutting down leading to more gaps in our high streets.

Stakes are high as Superdry investors prepare to decide (The Times, Alex Ralph) brings our attention to the crunch vote set for tomorrow for troubled retailer Superdry as its disgruntled co-founder Julian Dunkerton makes his bid to return to the company and oust the current management. He needs to garner at least 50% of the vote in order to return and it seems that the outcome is finely balanced with heavyweight investors on either side of the divide. We’ll soon see what happens!

Lyft floated on the NASDAQ, paving the way for more to follow…

Lyft IPO sets the stage for Uber listing (Financial Times, Shannon Bond) looks at Lyft’s IPO on Friday and how it managed to power up by 8.7% on its first day of trading despite an opening price that was above previous guidance. I think that Len Sherman, a professor at Columbia Business School summed it up best when he said “No companies have ever raised and lost more money

faster at a higher valuation than Uber and Lyft”. It was the biggest IPO of 2019 so far and the biggest one since Snap in 2017. * SO WHAT? * This will set the stage nicely for Uber, which is expected to come to market with a valuation as high as $100bn that could make it the biggest ever IPO of an American company. There was a minor blip in the celebrations, though, as Lyft’s two-tier share structure likely to bar it from S&P500 (Daily Telegraph, Olivia Rudguard) means that it might see less buying action from index trackers. It doesn’t like the two-tier structure where one class of stock (held by the founders) will have 20 votes per share while the other (held by everyone else) will only get one per share.

And finally, in other news…

Given that it’s April 1st today, I thought I’d leave you with April Fools’ Day LIVE: Best pranks from around the world including poo emoji 50ps (The Mirror, Toby Meyjes https://tinyurl.com/yxtpadfl)…

1. In TECH/SOCIAL MEDIA NEWS, Huawei posts strong results but is slammed by a UK intelligence panel and Grindr is forcibly sold
2. In CAR-RELATED NEWS, there’s consolidation among German autoparts makers and Lyft sets a high price
3. In INDIVIDUAL COMPANY NEWS, Grindserve has plans to power up, Franco Manca’s owners show how it’s done and Wow Air is the latest airline to go bust
4. In OTHER NEWS, I bring you the world’s most popular Airbnb. For more details, read on…

So Huawei benefits on the one hand and gets slammed on the other, Grindr gets forcibly sold and Line moves into payments…

Huawei shakes off US offensive to post strong results (Wall Street Journal, Dan Strumpf) highlights the fact that the Chinese tech giant’s revenues shot up by 20% last year to $107bn despite a US-led anti-Huawei campaign that went global. The company is actually privately held but it does release an annual report that gives a glimpse into its financial performance. But then in UK intelligence panel warns on Huawei security flaws (Financial Times, David Bond and Nic Fildes) we see that a report published yesterday by the UK watchdog set up to examine Huawei products came to a damning conclusion on the security risks posed by them – so damning, in fact, that it puts their future involvement in Britain’s mobile network into doubt. Huawei had already promised to spend $2bn to address concerns, but the UK watchdog said that it “has not seen anything to give it confidence in Huawei’s ability to bring about change via its transformation programme and will require sustained evidence of better software engineering and cyber security quality”. * SO WHAT? * You will recall that the US embarked on what could be described as an anti-Huawei roadshow last year where it approached governments around the world telling them that Huawei’s equipment could be used for spying or cyberattacks from China. This is a particularly sensitive time to be doing something like that as everyone is gearing up globally to roll out 5G networks and the US’s warnings were taken so seriously that members of the Five Eyes intelligence alliance (not to be confused with Five Guys, that sells burgers – this is an intelligence-sharing alliance between the US, UK, Canada, New Zealand and Australia) have all at least partially blocked the company from their respective

infrastructures. The official position thus far in the UK is that the risks can be mitigated, but a final official view is to be published by the government in the next few weeks. If Huawei equipment is banned, networks warn that a UK 5G roll out would be delayed and would also cost the industry hundreds of millions of pounds to replace older Huawei equipment with newer 5G-compliant equipment from an alternative supplier.

Talking about security concerns, Chinese firm seeks to sell Grindr dating app over US security concerns (The Guardian) highlights the enforced sale of gay dating app Grindr by the Chinese company that’s owned it since 2016. This follows an assessment by the Committee on Foreign Investment in the United States (CFIUS) which concluded that Beijing Kunlun Tech’s ownership of Grindr constitutes a national security risk, although there weren’t many details forthcoming on that. Interestingly, the US has been focusing on app developers regarding safety of the personal data they handle particularly when it involves military or intelligence personnel. Opportunities for blackmail are obvious given that the app collects personal data including photos, location, age, sexual preferences and HIV status. Kunlun had been preparing to float Grindr, but it will now sell it via an auction process conducted by US investment bank Cowen in order to extricate itself more quickly. * SO WHAT? * Dating apps are big business. According to Dating apps/trade war: Grindr’s keepers (Financial Times, Lex), Tinder saw its revenues double last year and shares in its owner Match Group have gone up by 70% since the start of 2018 so Grindr is bound to be on its radar (or “radr”?). However, Facebook has expressed an interest in the dating arena and has very deep pockets, so the auction could get interesting. From a wider perspective, this rare intervention by the CFIUS into a deal that has already been completed throws some doubt over Chinese ownership of social networking companies in general. It will also put the mockers on any ambitions for social media start-ups of getting Chinese investment. 

There’s consolidation among German autoparts makers and Lyft decides on a chunky flotation price…

German auto parts maker ZF buys Wabco for $7bn (Financial Times, Eric Platt and James Fontanella-Khan) highlights yet more consolidation within the auto industry, this time with car parts makers. * SO WHAT? * The strengths of both groups should slot quite nicely together as Wabco is good at commercial vehicle safety – which includes things like sensors that can slow or stop a car and keep it in lane – and ZF is good at driveline and chassis technologies. This acquisition will help to boost ZF’s expertise in autonomous technologies, which is obviously a red-hot area right now (and will be even moreso in the

future) and Wabco said that it needed to combine with ZF in order to compete with new rivals like Alphabet’s Waymo.

Lift-off for tech floats as taxi app priced high (The Times, James Dean) shows that Lyft has decided to price its shares at $72 versus the $62-$68 range it talked about at the beginning of this month and the $70-72 it spoke about on Wednesday this week. It will float on the NASDAQ today and is set to raise a chunky $2.3bn from its IPO that will value the whole company at $24.3bn. * SO WHAT? * This is the first of a slew of big tech listings since Snap (which owns Snapchat) floated in 2017. Uber is expected to come to market soon with a $120bn valuation, Slack (the corporate messaging service and “e-mail killer”) could be valued at around $13bn and Pinterest at $12bn. This feels like a massive bubble to me given the chunky valuations of loss-making companies that continue to promise jam tomorrow. But hey, investors just want to jump on that bandwagon! M&A bankers will be looking forward to bumper bonuses on the back of these listings…

Grindserve (not Grindr!) announces more power, Franco Manca owner shows how it’s done and Wow Air is the latest airline to go bust…

Grindserve charges into solar-powered electric car stations (Daily Telegraph, Jillian Ambrose) heralds some great news for fans of electric cars as Grindserve announced plans to build solar-powered forecourts capable of charging up taxis, buses and delivery vehicles in under 30 minutes and passenger vehicles in under 10 minutes. It will also include supermarkets and coffee shops to take advantage of the driver downtime. Grindserve’s fantastically-named boss and founder, Toddington Harper, said that “the latest generation of electric vehicles are awesome, and ready for mainstream adoption, but drivers still worry about if or where they can charge, how long it will take and what it will cost”. The company will build its first site this year and expects to build 100 by 2025. * SO WHAT? * This sounds like brilliant news but won’t really reach mass-consciousness until LOADS of them are knocking around. Until then, I suspect that punters will continue to be cautious on range, charging times etc. It’s a step in the right direction, though – and should be very good news for solar panel and battery makers at the very least! 

Generally speaking, high street restaurants have a very tough time of things, but Franco Manca owner ready to give investors a taste of its success (Daily Telegraph, Oliver Gill) shows that the owner of Franco Manca and The Real Greek – Fulham Shore – is about to start paying dividends to shareholders after both sales and profits continue to rise. Yesterday’s upbeat trading update contrasts rather sharply with the carnage surrounding it, with competitors like Gourmet Burger Kitchen, Carluccio’s, Prezzo and Gaucho all being forced into CVAs due to a combination of rising rents, high business rates and higher wages.

Then Wow Air leaves thousands stranded after collapse (Daily Telegraph, Oliver Smith and Hugh Morris) shows the latest collapse of a budget carrier as the Icelandic company made the announcement yesterday morning. It is the fifth airline to collapse this year and follows the likes of Primera Air, Cobalt Air and Flybmi, with blame being put on higher fuel costs and tight competition.

And finally, in other news…

I thought I’d leave you today with this: The most popular Airbnb in the world is a “mushroom dome” in California (Quartz, Rosie Spinks https://tinyurl.com/yymt4a96). I think it looks a bit pokey if you ask me ????…

1. In MACRO NEWS, the latest votes throw up no Brexit deal alternatives and Turkey hits big turbulence
2. In CAR NEWS, UK output drops sharply, Renault cosies up to Nissan, Ford leaves Russia and BMW expresses interest in Honda’s site in Swindon
3. In M&A NEWS, Saudi Aramco buys a $69bn stake in Sabic
4. In OTHER NEWS, I bring you an incredibly talented make-up artist. For more details, read on…

So MPs can’t agree on an alternative to May’s Brexit deal and Turkey sees turmoil in its financial markets…

Theresa May’s resignation gambit thwarted by DUP opposition (Financial Times, George Parker, Laura Hughes and Sebastian Payne) basically tells us that MPs failed to agree on any alternative to May’s Brexit withdrawal deal. Theresa May also offered to step down in the next few months in a bid to garner more support, but it looks like she won’t get DUP falling in behind her as it said her Brexit deal posed “an unacceptable threat to the integrity of the United Kingdom” due to the new barriers that would exist between Northern Ireland and Great Britain. The plan, at the moment, is to have yet another vote on her deal tomorrow. If the deal gets voted through (and it doesn’t look like it will, despite some high profile brexiteers like Jacob Rees-Mogg and Boris Johnson switching sides to support it), we will leave the EU on May 22nd and the PM will resign once the withdrawal agreement bill is passed. If it doesn’t, May will have to go back to Brussels before April 12th with an action plan which could well involve asking for a longer extension.

Turmoil in Turkey’s financial markets after currency crackdown (The Guardian, Richard Partington) shines the spotlight yet again on emerging markets as Turkey’s main index, the Borsa Istambul 100, fell by 5.7% yesterday (the sharpest fall since July 2016). Investors sold shares as a way of reducing their exposure to the country because the government tried to strangle foreign currency speculation by forbidding lending of lira to overseas financial institutions (although this was denied by the head of the Turkish banking association). This sudden intervention pushed the cost of offshore borrowing of the lira up by 1000%. * SO WHAT? * The country’s economy is still reeling from financial market unrest last year and it looks very much like this is an attempt by the government to prop up the lira ahead of local elections this Sunday. As David Cheetham, chief market analyst at the financial trading firm XTB, put it “Unfortunately for Turkey, these tactics to fight market forces almost always end in tears and what appears to be a last-ditch attempt to prop up the currency ahead of crucial local elections this coming weekend may well sow the seeds for another run on the lira”. More emerging market weakness to come on the back of this, I suspect.

British car production falls to new lows, Renault and Nissan cosy up, Ford decides to retreat from Russia and BMW expresses an interest in Honda’s Swindon facility…

Car output crashes to a six-year low (The Times, Robert Lea) is the leading headline in The Times’ business section today as the number of vehicles rolling off assembly lines fell by 15% last month. This should come as no surprise given all the recent negative newsflow on slowing China sales (exports to China have halved this year), tariff wars, manufacturing facility closures and job losses but these latest figures from the Society of Motor Manufacturers and Traders (SMMT) just provide more evidence of industry slowdown. The SMMT’s chief exec, Mike Hawes, complained that “Uncertainty has paralysed investment, cost jobs and damaged our global reputation. Business anxiety has reached fever pitch and we need parliament to restore stability so we can rebuild confidence and get back to the business of delivering for the economy”. * SO WHAT? * I think that the main thing that could help improve things short-term would be if the whole US-China tariff thing could be sorted (i.e. tariffs lifted). I’m not sure that would help boost car sales immediately in Europe and China, but I would have thought that it would at least help in America where the economy is still buzzing (albeit with a bit less fizz than last year) and wages are rising. I suspect that industry consolidation will continue as auto manufacturers try to adapt to changing technologies and customer behaviour.

I touched on this on my YouTube channel yesterday but Renault and Nissan take slow road to consolidation (Financial Times, Kana Inagaki, Leo Lewis, David Keohane and Peter Campbell) highlights a return to talks of a merger between Renault and Nissan before that whole Carlos Ghosn thing kicked off. It also refers to the potential acquisition of the enlarged group of Fiat Chrysler in a bid to keep the pace with rivals such as Volkswagen and Toyota. * SO WHAT? * Despite the long relationship between Renault and Nissan that stretches back twenty years, this is

not going to be a quick and easy process given that you have a heady mix of cross-shareholdings going on: Renault owns a 43% voting stake in Nissan, Nissan holds a 15% non-voting stake in Renault and 34% in Mitsubishi (which could also be part of a deal) and then you have the French government which has a 15% stake in Renault. Everyone is going to have to come to an agreement before a Renault-Nissan merger goes ahead – and that’s all before you even consider something like an acquisition of Fiat Chrysler! Still, as I said before, more industry consolidation is on the cards – not less.

Ford quits Russia car market in latest retrenchment (Financial Times, Henry Foy and Peter Campbell) shows Ford’s latest move to cut its overseas business as it announced its withdrawal from the car market after years of losses that will involve the closure of two Russian factories. It still plans to make and sell commercial vehicles in the country but Steven Armstrong, head of Ford in Europe said that “This represents an important step towards Ford’s target to deliver improved profitability and a more competitive business for our stakeholders”. * SO WHAT? * Ford has been making some pretty drastic moves recently, what with it pulling out of the saloon car market in the US to focus on pick-up trucks and SUVs, ceasing production of heavy trucks in Latin America and – looking a bit further back – pulling out of the Japanese and Indonesian markets completely three years ago. The landscape is rather different now when you compare it to ten years ago when Russia was seen to be the market to offset sluggish sales in western countries. Again, this is just more evidence of the shifting sands in the world of car manufacturing.

BMW shows interest in buying Honda’s Swindon plant (Daily Telegraph, Alan Tovey) heralds some potentially good news for Swindon as it turns out that BMW is thinking about taking it on after Honda closes it down in 2021 to boost UK production, with rumours that it could relocate some of its X1 small SUV production to the UK from the Netherlands to meet demand. BMW currently makes Minis in Oxford, Engines near Birmingham and body panels in Swindon. BMW’s official comment was “There are currently no plans for additional plant locations in the UK”. Possibly pipe dreams at the moment then, but it might not be Game Over for Swindon just yet…

Saudi Aramco looks like its about to put $69bn into Sabic while Centene and WellCare merge to become a major US insurance force…

Saudi Aramco to buy majority stake in petrochemicals producer Sabic for $69.1bn (Wall Street Journal, Summer Said and Rory Jones) heralds a big “payday” of sorts that will put the boosters under plans that Crown Prince Mohammed bin Salman (aka MbS) has to wean his country off its almost total dependency on oil revenues. Saudi Aramco is to buy a 70% stake in state-owned Saudi Basic Industries Corp (aka “Sabic”). This will give MbS a

significant lump sum to implement his “Vision 2030″strategy as the country’s two biggest companies join together because Sabic is currently owned by Saudi Arabia’s PIF sovereign wealth fund. * SO WHAT? * Call me an old cynic but this just sounds like an enforced cashreshuffle by MbS whose rather heavy-handed tactics are forcing together two companies that don’t really want to get together (well they haven’t until now, strangely enough). Saudi Aramco’s much-anticipated IPO – that had countries falling over themselves to accommodate – was eventually abandoned/postponed and then the Khashoggi thing happened, denting MbS’s credibility with the West. This amount of money is almost exactly the amount that would have been raised if Saudi Aramco had gone through with its IPO so it just goes to show that MbS has got the money he wanted – just via a different means.

And finally, in other news…

I thought I’d leave you today with the work of an incredibly talented makeup artist in Makeup artist transforms herself into amazing likenesses of famous oil paintings, celebrities (SoraNews24, Shannon McNaught https://tinyurl.com/y2rtjace). This woman’s work is astounding…

1. In M&A AND IPO NEWS, Uber buys Careem, Geely aims for Smart, Uber’s ex chief buys into ‘dark kitchens’, River Island takes control of Mint Velvet and Lyft eyes a chunky valuation
2. In TECH NEWS, Samsung has a profit warning while Apple and Qualcomm continue their spat
3. In INDIVIDUAL NEWS, Fever-Tree fizzes, Ocado signs up Coles and Debenhams continues to fend Ashley off
4. In OTHER NEWS, I bring you the Queen’s secret handbag language. For more details, read on…

So Uber buys Careem, Geely buys into Smart, Travis Kalanick buys into the food delivery wave, River Island’s handler takes control of Mint Velvet and Lyft aims high…

This deal has been well-flagged but Uber pays $3bn for Middle East rival Careem (Financial Times, Shannon Bond and Simeon Kerr) just confirms the news of Uber’s biggest acquisition thus far. This transaction is expected to close in the first quarter of 2021 – as long as it gets past the regulators – and will give it a decent leg up in a fast-growing market. Up until now, Uber and Careem have been competitors in passenger transport and food delivery in the Middle East, north Africa and South Asia. * SO WHAT? * This is a good strategic buy for the ride-hailer which has spent a lot of the recent past reversing OUT of markets such as China, south-east Asia and Russia where competition proved to be just too strong (although it’s kept a presence via stakes in Didi Chuxing, Grab and Yandex respectively). Careem has proved to be something of a local hero and it broke through the $1bn valuation threshold back in 2016 to become a “unicamel”. There is still the possibility that local regulators might not just wave this through, but as far as Uber’s expansion strategy is concerned this deal makes sense as Uber itself looks towards an imminent stock market flotation.

China’s Geely set to buy half of Daimler’s Smart unit (Financial Times, Olaf Storbeck, Patrick McGee, James Fontanella-Khan and Peter Campbell) highlights the proximity of a deal whereby Mercedes-Benz owner Daimler will sell a 50% stake in its Smart brand to China’s Geely – something that is expected to be announced more formally before the Shanghai Auto Show next month. * SO WHAT? * Geely became Daimler’s largest shareholder last year and its involvement in the loss-making Smart unit could be quite handy for both sides. Geely would get a brand that aims to be 100% battery-powered by 2020 (which is brilliant for a Chinese market aiming to be a world-leader in EVs) and Daimler gets to partially offload a business that has, frankly, struggled since it started 21 years ago. Geely owns Volvo Cars, Lotus, Malaysia’s Proton and has a slice of truckmaker Volvo Group.

Travis Kalanick’s new venture buys UK ‘dark kitchens’ business (Financial Times, Tim Bradshaw) heralds Uber’s bad-boy founder Travis Kalanick’s acquisition of London-based ‘dark kitchens’ start-up FoodStars last year via his company City Storage Systems (CSS). This takeover, which

was flagged by regulatory filings and represents the company’s first acquisition outside the US, gave CSS access to over a hundred commercial kitchens across London supplying the food delivery market. Kalanick bought a controlling stake in CSS a year ago for $150m, using some of the money he raised from selling $1.4bn worth of Uber stock as he hopes to surf the wave of food delivery. * SO WHAT? * Kalanick is a smart operator and I think that investing in dark kitchens is a great way to get involved in food delivery as it doesn’t matter who wins out of Just Eat, Uber Eats, Deliveroo etc.etc. – they will still benefit. I think the main thing here, though, is not to over-expand within each market because I would imagine the sites they operate in aren’t exactly prime and could be difficult to sell at a pinch if things start to go south. Mind you, transferring expertise from market to market could be attractive – but that is more of a long term thing I would have thought.

River Island group takes control of Mint Velvet in £100m deal (The Guardian, Sarah Butler) is a tiddler of a deal in the grand scheme of things but heralds the exercising of an option to buy for the Lewis Trust Group (LTG) who first bought a stake in Mint Velvet – which specialises in “relaxed glamour” (!) for the over 30s – in 2015. * SO WHAT? * This is good for Mint Velvet which took a hit from House of Fraser’s collapse last year and closed down about 10 of its 40 House of Fraser concessions as a result. Other brands that lost out from HoF’s demise have not been so lucky – Coast was bought by a sister company in a pre-pack administration, LK Bennett fell into administration and Pretty Green is currently seeking some kind of deal in order to avoid administration.

I thought I’d mention Lyft to price shares above targeted range of $62 to $68 in IPO (Wall Street Journal, Corrie Driebusch and Maureen Farrell) just because of all the hype surrounding the ride-hailing company ahead of its Initial Public Offering. Apparently, there is strong investor demand for the offering with standing-room-only crowds being present throughout the roadshow that started on Monday. * SO WHAT? * Clearly there is big investor appetite for IPOs at the moment – and the performance from Lyft’s flotation will be closely watched by Pinterest and Uber who are also about to take the plunge. I expect investment banks involved in the deal to be under huge pressure to ensure the deal goes well in order to keep the buzz going – even if they have to lose out financially in the short term. IMHO, buying into Lyft is complete madness at these high prices from a fundamentals point of view – and one could only really justify buying into it to take advantage of momentum. 

Samsung has a profit warning and Apple continues its fight with Qualcomm…

Samsung surprises market with first-quarter profit warning (The Guardian, Julia Kollewe) will set alarm bells ringing in the sector as it comes only two months after Apple issued its first profit warning since 2002. Samsung blamed the profit downgrade on falling memory chip prices and sluggish demand for display panels. * SO WHAT? * Analysts have been talking about the negative impact of China’s economic slowdown, the US-China trade war, weaker smartphone sales (Samsung puts its display panels and chips into iPhones, for example) and lower-than-expected demand for their chips from data centre

companies like Amazon and Google (leading to falling chip prices as they try to clear the resultant supply glut) for a while now. I guess this is all now just coming home to roost. I don’t think any of those factors mentioned above will turn around overnight, so there could be more disappointment to come.

Talking of which, Apple facing US ban on some iPhones after Qualcomm ruling (Daily Telegraph, James Titcomb) heralds the latest development in the ongoing spat between Apple and Qualcomm which has already led to sales restrictions on iPhones in Germany and China while Apple contends that Qualcomm owes it nearly $1bn. Basically, the International Trade Commission stated that Apple had infringed on Qualcomm’s tech and recommended a partial ban on phones assembled in China and shipped to the US. This matter will be subject to further review and is not over!

Fever Tree fizzes, Ocado signs up Coles and Debenhams continues to fend off Mike Ashley’s advances…

Fever-Tree eyes US expansion after posing 40pc rise in sales (Daily Telegraph, Ashley Armstrong) highlights the continued strong performance from the premium tonic maker as it decides to think big and expand in America. The company now has a £3bn valuation and saw UK sales shoot up by 53% thanks to the World Cup and royal wedding last year. Fever-Tree believes that the UK market will slow – hence its interest in US expansion where it is already active via its tie-up with Southern Glazer’s Wine and Spirits, which owns the North American rights to Grey Goose Vodka, Bombay Sapphire gin and Jameson whiskey. * SO WHAT? * It sounds like the company’s got a reasonable shot at US success given that it saw its US sales up by 20%.

Meanwhile, Deal in the bag as Ocado heads down under (The Times, Deirdre Hipwell) is something I mentioned

yesterday on my YouTube channel– that Ocado managed to sign up Australian supermarket group Coles to use its technology. The two companies have agreed to operate and develop two robotic warehouses and Coles’ online grocery business will migrate to Ocado’s Smart Platform. Coles has about 35% market share of the Australian grocery market. * SO WHAT? * More good news for Ocado! Things look like they are starting to snowball and there are very high barriers to entering this type of business…

Debenhams presses ahead with £200m lenders’ rescue plan (The Guardian, Sarah Butler) sounds the latest fending off of Mike Ashley’s constant advances as the ailing department store presses on with its plans to get more debt to help its survival. * SO WHAT? * AAAAAAARRRRRRGGGGGGH! Debenhams just looks like a money pit to me and is a business that is in terminal decline. I would be willing to bet that if Ashley DOESN’T manage to take over the business now that he will be able to buy it for a song within a year. You heard it here, people! As far as I can see, all the current management is doing at the moment is buying time – they are just treating the wounds and not the symptoms of the company’s massive malaise IMHO.

And finally, in other news…

I’m all about helping readers of Watson’s Daily – and so I thought I’d leave you with something useful for if you ever get to meet the Queen in How the Queen secretly communicates with her staff using her handbag (BestLife, Diane Clehane http://tinyurl.com/y3rttypv). Well now you know! Canny…

1. In MACRO NEWS, Brexit takes another turn and German manufacturing hits turbulence
2. In TECH NEWS, Apple unveils new services, Nintendo announces new Switch consoles, Inmarsat goes private and Naspers seeks a separate listing for its massive Tencent stake
3. In HIGH STREET NEWS, Majestic gets drastic and Sports Direct mulls a cash bid for Debenhams
4. In INDIVIDUAL COMPANY NEWS, Airbus gets a massive order from China and WeWork doubles its annual loss
5. In OTHER NEWS, I bring you Russian competitive slapping and some sashimi art. For more details, read on…

So Brexit takes a turn and German factories hit a tricky patch…

MPs vote to seize control of Brexit (Financial Times, George Parker, Jim Packard and Laura Hughes) shows that PM May was forced to forget plans to have a third vote on her Brexit deal yesterday as MPs voted by 329 to 302 to start testing support for a Plan B in a series of indicative votes to see whether there is a majority for a softer Brexit or a second referendum. The EU has said that if the existing deal isn’t passed in the Commons this week, the UK will leave the EU on April 12th. The European

Commission said yesterday that a no-deal Brexit on that date was looking “increasingly likely”. The saga continues…

German factories ‘in the grip of recession’ (Daily Telegraph, Anna Isaac) is a dramatic headline that shines a light on the latest conclusions of the closely-watched Ifo Business Climate Index, a bellwether of economic confidence. Basically, manufacturing is still suffering from political uncertainty in Europe and sluggish demand for German goods in China which implies that Europe’s biggest economy will have a poor first quarter. However, the outlook for more domestically focused sectors was actually a bit brighter with services and construction looking particularly healthy. * SO WHAT? * Exports are key for Germany, however, and the factors that are holding it back aren’t going to change overnight.

Apple launches new stuff, Nintendo announces new Switch models, Immarsat goes private and Naspers hives off its Tencent stake…

Apple pushes beyond iPhone with launch of TV, finance, gaming, news services (Wall Street Journal, Tripp Mickle) heralds the launch of new services at a glitzy event yesterday in Cupertino. The company will be making its new TV+ app (with all that exclusive content you’ve been hearing about) available on competitors’ TVs and other devices, there will be a new credit card called Apple Card (which will be launched in partnership with Goldman Sachs and eliminate late fees and annual fees), a new subscription news service called Apple News+ which will charge $9.99 per month giving users access to over 300 magazines and newspapers as well as a new gaming subscription service called Apple Arcade. The latter’s monthly subscription price was not revealed, but the company did say that it would give access to over 100 games. * SO WHAT? * This all sounds great, but Apple is late to the party and trying to turboboost its services offering because revenues from its hardware seem to be topping out. Percentage gains so far for services have been impressive, but they have been from a relatively low base and the competition on the services and hardware front has got way better while Apple was fiddling around with its niche TV offering. Yes, it’s spending a lot of money here, but it’s peanuts compared to what Amazon and Netflix spend. It IS good, however, that Apple is opening up its walled garden in terms of hardware access to all this stuff (this is LOOOONG overdue) because distribution will be key to the ongoing success of its services. It will also be interesting to see how successful its News+ service is. If it proves to be a hit, it might help stem the decline of newspapers and offer the latter a real lifeline. Mind you, if subscribers just end up reading trashy magazines on the service, it could actually hasten the decline of quality newspapers because they won’t get paid (I believe that the amount each publication gets paid depends on how many subscribers access their content and how long readers spend on each article, but I’ll check this out and get back to you) and dumb down content as journalists are forced to be more sensationalist to get the clicks and read time. In short, my verdict on the new services are as follows: TV+ – meh, but we need to see the programming, Apple Card – whatevs, it’s just another thing to put in your “wallet”, although lower fees is nice, Apple News+ – sounds great, but depends on how much access there is (will it be limited on certain publications?),  the publications themselves and whether punters can be bothered to pay $9.99 per month, Apple Arcade – sounds good but will depend on what the subscription price will be, the quality of the games and gameplay.

Meanwhile, Nintendo to launch two new Switch models (Wall Street Journal, Takashi Mochizuki) highlights the imminent launch of two new versions of its Switch consoles in an effort by the company to keep sales momentum going into the third year. One version will be

more powerful for serious gamers and the other one will be a cheaper option for casual gamers. It is thought that the two models will be unveiled at the E3 expo in June and released a few months thereafter. * SO WHAT? * This is within expectations given console life cycles tend to be around five or six years with updated devices being introduced about halfway through to keep the party going. The Switch has been wildly successful and so it will be important to keep sales momentum going for as long as possible. FWIW, I think that Nintendo needs to continue efforts to migrate its games catalogue to use for mobile devices in preparation for a day when consoles will become obsolete. OK, so phones with foldable screens are ridiculously expensive at the moment, but as they get cheaper more people will buy them and have access to screens in their pockets that will be at least as big as devices like the Switch. I don’t think we are that far away from this state of affairs.

In UK satellite operator Inmarsat agrees $3.4bn takeover (The Guardian, Julia Kollewe and Rob Davies) we see that British satellite comms company Inmarsat has agreed to be bought by a consortium of investors led by private equity firms Apax and Warburg Pincus that effectively values the company at around $6bn, including debt. The HQ will remain in the UK and R&D spend will remain unchanged. The company has struggled in the last few years from increased competition from the likes of Elon Musk’s Space X and Richard Branson-backed OneWeb. Inmarsat currently has 13 satellites in orbit that underpin e-mail, internet and video conferencing in addition to in-flight WiFi. * SO WHAT? * This will reignite debate over the trend of leading UK tech businesses being taken over by investment companies coming after Melrose’s contested £8bn acquisition of GKN and the £24bn takeover of ARM Holdings by Japan’s SoftBank.

Naspers to shift $100bn Tencent holding to European listing (Financial Times, Joseph Cotterill) highlights a move by Naspers, South Africa’s largest media group that owns a 31% stake in the Chinese internet giant (it was an early investor), to list its interest in Tencent in a separate vehicle that will be quoted on Euronext Amsterdam at some point in the second half of this year. The vehicle will also include Naspers’ stakes in Russia’s Mail.ru and India’s Swiggy, among other global digital and e-commerce interests, and Naspers is expected to maintain a 75% stake in the new company. It doesn’t have a name yet, but it will become Europe’s largest listed consumer internet company by asset value. * SO WHAT? * I would say that this is a good move on Naspers’ part as it gives investors the choice of focusing more on its media business or its investments. Chief exec Bob van Dijk said that “As well as opening up investment to a broader category of investors, the listing aims to reduce our weighting on the Johannesburg Stock Exchange, which we believe will help us maximise shareholder value over time. Its outsize weighting on the JSE exceeds most South African institutional investors’ single stock limits. As a result, many have been forced to sell as Naspers grows”. Naspers made the investment of the century when it bought into Tencent back in 2001 – it’s now worth over $130bn!

Majestic gets drastic and Sports Direct continues to pursue Debenhams…

I mentioned this in yesterday’s Watson’s Daily TV (on my YouTube channel here) but Majestic Wine to close high street stores and focus on Naked success (Daily Telegraph, Julia Bradshaw) heralds a massive revamp that will see its retail business put up for sale or run down as it focuses on its online Naked Wines division. The cash it gets from selling Majestic and its 200 stores will be ploughed into the faster-growing Naked, which was bought by Majestic for £70m four years ago. The company will be renamed Naked Wines and will trial a number of different formats. Chief exec Rowan Gormley said that “We may have pop-up shops, or high street shops, or may be at

music festivals. Face-to-face works with Naked. Where we won’t be is out-of-town shopping centres”. * SO WHAT? * You expect this sort of drastic move when a company is in its death throes, so I think that it would be fair to say that this caught a lot of people off guard. When I first heard the news yesterday, I thought that this would just make it another internet wine company with nothing really to distinguish it. However, if Gormley is serious about continuing with a face-to-face presence but in a different way, then this might just set it apart. I would have thought finding a buyer for the shops is going to be pretty tricky given current circumstances, though.

Ashley considers cash bid for Debenhams (The Times, Deirdre Hipwell) just gives us the latest on Sports Direct’s Mike Ashley’s continued bid for control of the ailing retailer. The company, which is the largest shareholder in Debenhams, announced last night that it was considering a cash offer for the business. It continues to try to fend off the advances of Ashley, but clearly he is not one to back down.

Airbus gets a China boost and WeWork doubles its losses…

In a quick scoot around other big news today, Airbus agrees €30bn jet deal with China (Financial Times, Sylvia Pfeifer) highlights one of 15 commercial agreements and 13 other deals signed between France and China following President Xi’s visit to France. The order for 300 aircraft will be a kick in the teeth for rival Boeing, which is currently having a nightmare following crashes involving its 737 MAX aircraft.

WeWork’s annual loss doubles to nearly $2billion amid rapid expansion (Wall Street Journal, Eliot Brown) highlights the impact of big expansion costs and raises questions about future problems given that its occupancy rate appears to be falling. Losses continue to pile up for the company but investors continue to throw money at it. * SO WHAT? * This sounds like a disaster waiting to happen, but as long as investors keep pouring money into it it will probably be OK. However, if that stops – and we have already seen that SoftBank’s Vision Fund is getting more reluctant about putting even more money into it – the repercussions could be huge IMHO and the company could tank badly. And if THAT happens, it could be disastrous for the whole sector as the market could suddenly be flooded with loads of cheap properties.

And finally, in other news…

I thought I’d leave you with a contrast in content today. On the one hand, we have These Russian men slap each other silly for sport (Inside Edition, Stephanie Officer https://tinyurl.com/y4g7pdvh) which looks VERY painful and then Japanese artist crafts beautiful Disney princesses, anime stars, and mythical beasts from sashimi (SoraNews24, Casey Baseel https://tinyurl.com/y292vxbq) as a bit of a contrast. Beauty and the beast, you might say!

1. In MACRO NEWS, we look at the latest options for May/Brexit
2. In INDUSTRY NEWS, UK bookies continue to look to the US and vape companies get nervous
3. In INDIVIDUAL COMPANY NEWS, Uber closes in on a deal with Careem and we look at what Apple might cover at tonight’s event
4. In OTHER NEWS, Marmite is set to create controversy with a new product. For more details, read on…

So we look at what might be next on Brexit…

What’s next for Theresa May and her Brexit deal? (Financial Times, Henry Mance) outlines another tough week ahead as there will be a special meeting of the cabinet today and an expected vote in the Commons on whether MPs should take control of the Brexit process that will give them the vote on alternative ways forward. May tried to win over leading Eurosceptic critics like Boris Johnson and Jacob Rees-Mogg in a meeting at Chequers yesterday, but failed to make any kind of meaningful breakthrough. At the moment, options include Theresa

May’s deal (but this would need the support of MPs and John Bercow who said last week that it would have to be substantially different to the one that has already been rejected), May’s deal + a customs union/membership of the customs union and single market (which could attract support from more MPs, including Labour leader Jeremy Corbyn but some see it as the worst of both worlds), a no-deal (which is threatenened but it seems that not many really want – although May would prefer a no-deal to a soft Brexit) and a second referendum (still a possibility although not favoured by Downing Street, but appears to be gathering momentum). A general election is threatened, but it would take another vote and a long Article 50 extension. We will just have to see how events unfold.

UK bookies continue to bet on the US and vaping companies continue their nervousness…

British bookmakers take punt on US (Financial Times, Alice Hancock) is a really interesting article that gives a decent commentary on why and how UK bookmakers are seeking to make inroads into the US. It all kicked off with the US Supreme Court ending a 25-year federal ban on sports betting in May last year which sent bookmakers salivating at the thought of revenues potentially reaching $19bn by 2023 (which seemed realistic when you consider that the American Gaming Association said that up to $150bn a year was being spent on illegal sports betting prior to the May ruling). New Jersey and Delaware were the first states to legalise sports betting and were then followed by Mississippi, West Virginia, New Mexico, Pennsylvania and Rhode Island. PaddyPower Betfair wasted no time in announcing the first major partnerhip with a US company by taking a 60% stake in FanDuel. Then GVC, owner of Ladbrokes Coral, signed a $200m deal with MGM Casinos to create Roar Digital and William Hill signed an equity deal in September with Eldorado, a casino operator. 888 then launched in New Jersey, focusing on the online market. * SO WHAT? * The opening up of the US market has come at a time when UK bookmakers are having a tough time at home with a huge cut in the maximum stake of previously lucrative fixed-odds betting terminals (aka FOBTs) and higher taxes on digital gaming revenues. The timetable of other states legalising sports betting is unknown and, currently, none of the UK

companies have made any money from their US joint ventures. FWIW, I think that this is a huge and largely untapped market that can benefit from the technical expertise of UK bookies. I believe that long term success for them will depend on how long the legalisation momentum will last and who can build the most scale in the quickest time.

In Vape makers fear profit going up in smoke (The Times, Tom Knowles) we see that the tobacco industry is still reeling from a proposal made by San Francisco last week to ban the sale of all electronic cigarette products. The main problem is that vaping is popular among teenagers, with a study by the Centres for Disease Control and Prevention finding that 20% of all high schoolers in the US “vape” and that their use of e-cigarettes has rocketed by 30% between 2017 and 2018 alone. San Francisco-based Juul has been responsible for a lot of this by making it “cool”, but it seems that the tide might be turning. * SO WHAT? * A spokesman for Fontem Ventures, which makes Blu e-cigarettes and is owned by UK listed Imperial Brands, voiced concerns about last week’s events as well as Reynolds American, which makes Vuse vapes owned by British American Tobacco. Altria (well known for making Marlboro cigarettes) must be getting particularly uncomfortable at this latest development given that it paid $12.5bn for a 35% stake in Juul last July. San Francisco apparently has a history of doing things like this, but the danger here is if what IT does starts to get adopted by everyone else. With an election on the not-too-distant horizon, you would have thought that vaping among youths could be important enough to become a campaign issue which I would imagine won’t be great PR.

Apple prepares for its big reveal and Uber edges closer to Careem…

So the hype has reached fever-pitch and With the iPhone sputtering, Apple bets its future on TV and news (Wall Street Journal, Tripp Mickle) has a stab at what is going to be revealed tonight as the company is expected to announce new video and news subscription services that will generate billions of dollars in new revenues. While mobile phone sales are reaching maturity, Apple hopes the slack will be taken up by the fast-growing services side of the business which grew by 33%  last year, making up about 15% of company revenues. Tonight, the company is expected to show the first footage from some of its new original TV shows, having used a $1bn budget to buy a ton of original TV shows. There is no word yet on how much

Apple will charge for the new programming. It is also expected to reveal a reworked News app that has a premium tier with access to over 200 magazines and newspapers – including the Wall Street Journal – for $9.99 per month. I would recommend you read this article as it does a brilliant potted history of what got Apple to where it is now. * SO WHAT? * This all sounds great, but its success will depend on how good its programming is. Also, $2bn sounds like a lot but it is dwarfed by what Netflix spends and what Amazon COULD spend on programming. We’ll just have to see what the company comes up with tonight.

Uber set to buy Careem for $3.1bn (Daily Telegraph, James Titcomb) shows that Uber is on the verge of buying Middle Eastern ride-hailing competitor Careem in what could be the company’s biggest ever acquisition. Careem was set up in 2012, is based in Dubai and has been something Uber’s had its eye on for years. Details are expected to be announced imminently.

And finally, in other news…

I’ll say it now – I love Marmite. However, I’m not sure about this new product: Why Marmite is about to be more controversial (Sky News, https://tinyurl.com/y3zhowg3). Just. Yuck.

1. In MACRO NEWS, Brexit gets a tight window and the Bank of England leave interest rates unchanged
2. In HIGH STREET NEWS, Ted Baker and Next stumble, The Entertainer gains on parental fear as a number of Giraffe and Ed’s Easy Diner restaurants face closure
3. In INDIVIDUAL COMPANY NEWS, Facebook admits user password sharing and Tencent profits are hit by restructure spend
4. In IPO NEWS, Levi Strauss has a strong opening and Pinterest edges closer to flotation
5. In OTHER NEWS, I bring you a warning about office mugs. For more details, read on…

So Brexit gets a short deadline extension and the Bank of England leaves interest rates untouched…

EU imposes new Brexit timetable allowing May last chance for deal (Financial Times, Michael Peel, Jim Brunsden and George Parker) is the leader in today’s FT and says that the 27 EU members (aka “the EU27”) demanded that Theresa May either gets the Brexit deal through in a Commons vote next week (in which case the Brexit date would be moved from March 29th to May 22nd) or “indicate a way forward” by April 12th if it did not go through. Either way, the June 30th date she had floated before is toast. The drama continues as Germany’s Merkel and France’s Macron argued over how much leeway to give Britain, the CBI and TUC wrote a joint letter to May pleading for a Plan B and an online petition calling on the UK

government to revoke Article 50 got over 2 million signatures by yesterday evening, causing the government website to crash. Talk about chaos…

In the midst of all this, Bank of England holds interest rates as Brexit clouds outlook (Financial Times, Chris Giles) tells us that the Bank’s Monetary Policy Committee (MPC) decided to leave interest rates unchanged at 0.75% on Thursday, in a unanimous vote. * SO WHAT? * Virtually everyone expected the interest rate to remain unchanged but some economists have been saying that the rate will rise once we get more clarity on Brexit given recent strength in labour market, retail sales and public finances data. Interestingly, the MPC also published results of a survey designed to give it an idea of what companies are doing as the March 29th deadline approaches. It found that 80% of companies who responded “judged themselves ready for a no-deal, no-transition Brexit scenario” – up from 50% when the Bank asked the same question in January.

Ted Baker and Next stumble, the Entertainer picks up and more restaurant closures are about to hit…

Ted Baker profits fall after founder resigns (The Times, Alex Ralph) highlights trouble at Ted Baker as its profits have fallen for the first time since the financial crisis. The company will also cut its dividend – for the first time since the company floated in 1997 – after a 26.1% drop in profits due to a combination of increased discounting among fashion retailers, department store woes and one-off costs related to the controversy surrounding the eventual resignation of its founder, Ray Kelvin. * SO WHAT? * Ted Baker is usually seen as one of the high street’s “winners” with a distinctive brand identity, swift global expansion and successful online business. However, allegations of “forced hugging” by employees and a “culture that leaves harassment unchallenged” have led to Kelvin’s departure from the business. This is a problem because Ted Baker’s success thus far is very closely associated with the founder himself, who had a very tight grip on the business. Having said all that, the fall in profits was widely expected after the company announced a warning last month. It seems to me that the company has done its best to “kitchen sink” its problems, which should clear the way for management to step up and fill the void left by Kelvin. Let’s hope they are up to the task otherwise Ted Baker could just shrivel up and go the way of other less successful fashion retailers on the high street.

Next profits fall but boss says Brexit not affecting spending (The Guardian, Zoe Wood) highlights Next’s third consecutive year of falling profits due to poor performance in its high street shops. Lord Wolfson, Next’s chief exec and prominent Leave campaigner, remarked that “Our feeling is that there is a level of fatigue around the subject that leaves consumers numb to the daily swings in the political debate. It appears to us that consumer behaviour will only be materially changed if the UK’s departure from the EU begins to affect employment, prices or earnings”. * SO WHAT? * I think that the most interesting bit of its announcement yesterday was the massive difference in performance of its shops (poor) and its online operations, which saw profits storming ahead by 14%. For the moment, it doesn’t seem like Wolfson is angling to close more stores, but it certainly looks like online is more than compensating for offline underperformance.

Elsewhere on the high street, The Entertainer benefits from parental fears of addiction (Daily Telegraph, Charlie Taylor-Kroll) highlights a strong performance from the children’s toy retailer, with a 31% rise in pre-tax profits and a 22% rise in revenues. Founder and executive chairman Gary Grant said that it had benefited from “parents starting to restrict screen time and encouraging [their children] to interact more with other people through playing with toys”. The Entertainer is another retailer that is experiencing strong performance from its online division – sales from TheToyShop.com increased by a whopping 38%. Online sales now account for almost 20% of sales. * SO WHAT? * I think that this is a stunning performance from a retailer that doesn’t open on Sundays or sell Harry Potter merchandise (because of Grant’s Christian beliefs – the Harry Potter thing is due to its association with the occult) in an area which has been beaten up pretty badly (just ask Toys R Us, Hasbro and Mattel). It remains to be seen whether it can sprinkle some of its magic The Entertainer fairy dust on its recent Early Learning Centre acquisition from Mothercare, but if anyone can I suspect that The Entertainer can! It’s certainly doing a lot right at the moment.

Giraffe restaurants to close after vote (The Times, Dominic Walsh) heralds the demise of 27 restaurant closures and at least 340 job losses after KPMG confirmed that a company voluntary arrangement (CVA) would go ahead as part of restructuring Giraffe Concepts, the holding company of Giraffe and Ed’s Easy Diner. 20 Giraffes and 7 Ed’s Easy Diners are slated for closure as part of the CVA and Boparan Restaurant Group (BRG), which is the ultimate owner said it will inject up to £10m into the streamlined business to put it back on track. * SO WHAT? * This will be tough to take for employees, but both chains were distressed purchases in the first place – BRG bought Giraffe from Tesco in June 2016 for around £13m and then a few months later bought Ed’s via a pre-pack administration for £8.75m. Since BRG got involved, performance improved but ultimately it wasn’t enough. BRG’s chief exec Tom Crowley observed that “The combination of increasing costs and over-supply of restaurants in the sector and a softening of consumer demand have all contributed to the challenges both these brands face”. BRG also owns Harry Ramsden, Fishworks, Cinnamon and has the UK franchise to Slim Chickens – but none of these are affected by the CVA.

Facebook makes another admission and Tencent’s profits fall sharply…

Just when Facebook thought it was safe, Hundreds of millions of user passwords exposed to Facebook employees (Wall Street Journal, Jeff Horwitz and Robert McMillan) highlights another privacy problem and PR headache for the social media giant. The company disclosed yesterday that it had for years stored passwords for millions of users in a format that was accessible by employees – but it added that no passwords were exposed externally and that it hasn’t found any evidence of the information being abused. The company’s VP of engineering, security and privacy, Pedro Canahuati said that those affected would be notified. * SO WHAT? * As things stand at the moment, this looks more like a headache rather than an outright disaster as no damage has been identified. The thing is, given the criticism that Facebook has been facing over the last year regarding data security, any kind of data-related problem was bound to be jumped on. This is bad news for Facebook, but not insurmountable IMHO.

In Tencent profits plunge 32% as it ramps up restructuring spending (Financial Times, Louise Lucas) we see that China’s second most valuable listed company saw fourth quarter profits fall by a very chunky 32% year on year as it increased restructuring spend following a slowdown in its gaming business. The company is currently trying to wean itself off its heavy reliance on gaming (this division accounted for 36% of revenues in Q4, down from 45% a year ago) and diversify its earnings as it faces increased competition in messaging, livestreaming and social media services. It is trying to up its efforts on serving business customers with cloud computing and data analytics. * SO WHAT? * Tencent has been suffering from a nine-month government suspension on new licences after authorities decided to crack down on the addictive properties of computer games and their impact on kids – so it’s good to see that they are making proper efforts to diversify.

Levi Strauss has a successful float and Pinterest gets closer to its own…

Levi Strauss shares surge 32% in debut (Wall Street Journal, Allison Prang and Suzanne Kapner) heralds a successful first day of trading for the jeans company, but I just wonder about the longer term success of a company that is heavily reliant on one very common product.

Meanwhile, Pinterest steps up planning for IPO, aims to list shares on NYSE in April (Wall Street Journal, Maureen Farrell) highlights yet another company about to jump on the IPO fun bus and take advantage of investors’ seemingly insatiable appetites for flotations.

And finally, in other news…

I thought I’d leave you this week with a warning on your office mugs in 1 in 5 office mugs contain faecal matter – and it’s probably not your own (The Mirror, Zoe Forsey http://tinyurl.com/y4dn3mfy). YUCK!

1. In MACRO NEWS, the Fed keeps US interest rates unchanged, May gets push-back from the EU, UK inflation rises, Spain shows solid growth and Nigeria pledges to sell down oil assets to finance its budget
2. In CAR NEWS, BMW has a downer and Suzuki gives UK car manufacturing some good news
3. In RETAIL NEWS, B&Q’s owner is in a fix and Aldi opens a new “metro” store format
4. In INDIVIDUAL COMPANY NEWS, Google gets a big fine and Bayer’s legal nightmare continues
5. In OTHER NEWS, I show you a very cool new restaurant. For more details, read on…

So the Fed keeps rates unchanged, May gets push-back from the EU, UK inflation increases, Spain’s economy show some impressive growth and Nigeria announces a sell-down of oil assets…

Market relief as Federal Reserve rules out rate rise until 2020 (Daily Telegraph, LaToya Harding) shows that US interest rates will remain unchanged and that there are unlikely to be any more changes this year as economic growth slows down. * SO WHAT? * After raising the interest rates for the last five quarters consecutively, Fed Chairman Jerome Powell has decided to pause for breath, saying that “it’s a great time to be patient”. He cited risks in the ongoing US-China trade negotiations, a tricky Brexit and expectations for a slowing domestic economy as being behind the decision to keep rates on hold. Basically, markets don’t like interest rate rises (it makes the stock market look less attractive as an investment option among other things), so they were up initially on the back of this news.

No Brexit delay without MPs backing deal, warns EU (Financial Times, Jim Brunsden, Alex Barker and George Parker) heralds the latest twist in the Brexit drama as EU leaders look to put more pressure on British MPs to get behind May’s Brexit deal or leave the EU on March 29th with nothing. May is seeking a short extension to the March 29th deadline to June 30th but it looks like this will only be granted if MPs back her existing Brexit deal. The saga continues…

Amidst all the Brexit drama going on at the moment, House price growth at six-year low and inflation rises to 1.9% (The Guardian, Phillip Inman) cites the latest data release from the Office for National Statistics which shows that house prices grew at their slowest rate since 2013 in January, putting the UK on course for the first fall in property values since the financial crash if this current trend continues. The release also shows that inflation was stronger than expected in February with increases in food,

alcohol and tobacco prices. * SO WHAT? * Brexit is the key here – and if we end up with a no-deal, then I would expect prices to rise, pushing inflation over the 2% target. If prices go up, household budgets get squeezed and people will have less money knocking around which would have a direct impact on the housing market and other areas.

Elsewhere, you might be surprised to see Spain leads the way on eurozone growth (Financial Times, Valentina Romei) which highlights the fact that Spain is currently the largest single contributor to eurozone growth with a GDP growth rate of 2.5% in 2018, the fifth quarter in a row of economic growth and the fastest growth rate in the bloc! It is all the more surprising when you consider that the country has the largest number of unemployed in the EU (3.3m – about 14% of the population) and one of the worst poverty rates. * SO WHAT? * I just thought I’d mention this as a little light relief given all the drama going on in Europe at the moment! It charts Spain’s “recovery”, but let’s face it, it’s from a VERY low base and the fact that its politics is very unstable (it is currently facing its third election in four years) means that future growth at this level should not be taken for granted.

Nigeria set to sell down stake in oil ventures to boost finances (Financial Times, Anjli Raval and Neil Munshi) heralds a major development in Nigeria as President Muhammadu Buhari is pressing ahead with his plans to boost state coffers and speed up energy reforms by reducing ownership of joint ventures from the current 60% down to 40% within this year. The government will need this money to power the most expensive budget in the country’s history and companies like Royal Dutch Shell, Chevron and Exxon Mobil will be affected through their joint ventures through the state-owned Nigerian National Petroleum Corporation. There has been talk of doing this in the past, but plans were shelved in 2014 following prolonged oil price weakness but have come to the fore once more given recent oil price strength. * SO WHAT? * This sounds good in theory, but the problem is that the non-Nigerian oil partners will know that the government is, in effect, a forced seller meaning that the government’s position isn’t a particularly strong one. This will be something worth following as oil is key to Nigeria’s economy.

BMW suffers while Toyota/Suzuki have good news for UK car manufacturing…

BMW warns of falling profits as it ramps up e-vehicle spending (Daily Telegraph, Alan Tovey) signals tough times in 2019 for beemer as it warned that profits will come in “well below” the €9.8bn it made last year. The company blamed major investment in electric vehicles and self-driving cars, tighter emissions regulations and increased production costs on the warning. If you add tricky currency rates, ongoing trade wars with the US and China and Brexit, you have a recipe for a cr*p year. * SO WHAT? * The news sent its share price down by 5%, but the company said that it would increase efforts on cost-cutting that will involve the retirement of poor-selling models and the number of drivetrain and country-specific models axed.

BMW wasn’t the only one kitchen-sinking all its troubles – Volkswagen also moaned about the costs of electrification yesterday. This followed on from what VW said last week about having to cut 7,000 jobs over the next five years as it moves towards electric cars.

Suzuki cars to be built at Toyota’s UK factory (The Times, Robert Lea) highlights some rare good news for the UK car manufacturing industry as Mitsubishi is considering moving some production to the UK (if Brexit goes OK – good news for Nissan’s Sunderland factory because that’s where the car would be manufactured as part of a shareholding agreement between Nissan and Mitsubishi) and Toyota and Suzuki also announced that small Suzuki estate cars will be rolling off Toyota production lines in Burnaston as part of a global manufacturing collaboration. The new Suzuki is expected to go into production next year and will be the first car to be produced by the company in Britain. * SO WHAT? * This is great even if it won’t mean any news jobs – but at least it will be safeguarding existing ones.

B&Q’s owner is in a quandry and Aldi rolls out a “metro” format…

In B&Q owner in a fix as boss leaves with turnaround left unfinished (Daily Telegraph, Ashley Armstrong) we see that B&Q’s owner, Kingfisher, is in a bit of a pickle as the company’s CEO Veronique Laury announced that she’s leaving the company half way through executing her plans to streamline international sourcing operations. * SO WHAT? * The writing has been on the wall for some time as the company continued to fall short of the ambitious targets Laury set out to achieve. The fact that profits didn’t improve and the company’s share price fell by 25% since she got the top job also pointed to the fragility of her

tenure. This is not good for the company and will no doubt increase speculation of a break-up of the company into its B&Q, Screwfix, Castorama and Brico Depot constituent parts.

I suspect that Aldi opens its first ‘local’ high street store in London (Daily Telegraph, Ashley Armstrong) will be putting fear into the hearts of convenience store operators as the German discounter opened its first “Local” store in Balham, South London, last week. It’s target audience is urban consumers and it obviously stocks less product lines than its bigger sibling. * SO WHAT? * An Aldi spokesman said it wasn’t part of an effort to take on the likes of Tesco Express and Sainsbury’s Local stores, but – yeah, right. This is only a one-off, but I’m sure that if it is successful, it will be rolled out elsewhere. It would be a good way to plug gaps in areas where it has no current presence.

Google is slapped with a big fine and Bayer’s nightmares continue…

EU fines Alphabet’s Google €1.5bn for antitrust violations (Financial Times, Rochelle Toplensky) highlights the bigger-than-expected fine from the EU after a competition investigation found that Google has been blocking rival online advertisers for the ten years between 2006 and 2016! EU competition commissioner Margrethe Vestager said that “the misconduct last over 10 years and denied other companies the possibility to compete on the merits and to innovate – and consumers the benefits of competition”, adding that the size of the fine reflected the “serious and sustained nature” of the breach.

Bayer shares fall after jury finds exposure to roundup helped trigger cancer (Wall Street Journal, Ruth Bender) shows the latest development in the whole Roundup-cancer saga as a San Francisco jury found that a man’s exposure to the company’s weedkiller was a “substantial factor” in causing his Hodgkin lymphoma. The company is facing lawsuits from 11,200 farmers, gardeners and landscapers. Ouch. * SO WHAT? * I bet that Bayer wished that it hadn’t splashed $63bn on buying the US agriculture giant as it is proving to be an absolute nightmare. The other danger here is that other plaintiffs might start jumping on the legal bandwagon and make things even worse. Still, if Roundup DID contribute to cancer, the company deserves everything that’s going to be thrown at it – even if it was Monsanto’s and not Bayer’s fault. 

And finally, in other news…

I thought I’d bring you news of a new super-cool restaurant in Going ‘Under’: Europe’s first underwater restaurant opens in Norway (Reuters, Lefteris Karagiannopoulos https://tinyurl.com/y55hfrqz). Wow!

1. In MACRO NEWS, US-China trade talks take another step and UK unemployment reaches record lows
2. In RETAIL NEWS, ASOS has US troubles, Ocado says its fire was a one-off, Superdry’s Dunkerton gets a knock-back and Office Outlet (used to be Staples) goes into administration
3. In SOCIAL MEDIA NEWS, Google outlines a move into gaming and Instagram tries shopping
4. In INDIVIDUAL COMPANY NEWS, the FDA approves a new postpartum depression drug and Boeing publishes an open letter
5. In OTHER NEWS, I bring you a VERY hot chilli sauce. For more details, read on…

So US-China trade talks are set for next week and UK unemployment hit record lows…

High-level US-China trade talks to resume in final push for deal (Wall Street Journal, Bob Davis) signals another round in high level talks as US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are to fly to Beijing next week to meet with Chinese Vice Premier Liu He. Some observers are saying that this is an indication that talks are getting to their final stages – executive VP of the US Chamber of Commerce even went as far as saying that the US and China would be able to close a trade deal by the end of April. A deal is expected to encompass increases in exports to China, more substantial intellectual property protection, a cessation of pressure on US companies to transfer tech know-how to their Chinese partners and a reduction in subsidies to Chinese firms. The major stumbling block of how to enforce these new measures still remains, however. * SO WHAT? * It ain’t over till it’s over and I think we’ve all learned that you can never make assumptions as far as the freewheeling President Trump is concerned. A quick look at the markets would

suggest that this is being treated with a collective shrug of the shoulders – if everyone really thought that an agreement was imminent I would expect markets to roof it, but they haven’t.

UK unemployment rate falls to lowest since 1975 (Financial Times, Gavin Jackson) highlights Britain’s tight labour market as the latest data from the Office for National Statistics shows that the employment rate is now down at 3.9% – the lowest level since 1975 – and the pace of hiring in the three months to the end of January was its fastest since November 2015. Total pay growth slowed down to an annual rate of 3.4% versus analyst expectations of 3.2%. This data is at odds with recent releases from the likes of IHS Markit, whose Purchasing Managers’ Index suggested that companies were slowing down their hiring plans. * SO WHAT? * I must say that I find it surprising, to say the least, to see such figures and can only assume that there must be some kind of lag in the labour market versus the sentiment being shown in surveys. On an anecdotal basis, some headhunters I’ve been in conversation with recently (I used to be in that market and have chats from time to time about how business is going) have said that companies have actually been INCREASING their hiring plans – although you never know with headhunters as they tend to paint a rosy picture sometimes ;0)

ASOS has US troubles, Ocado’s fire was a blip, Superdry’s Dunkerton suffers a blow and Office Outlet goes into administration…

In a quick scoot around retail news today, Asos struggled to cope with surge in US demand (Financial Times, Adam Samson) shows that its US warehouse couldn’t cope with higher-than-expected demand in the most recent quarter and that it is also facing challenges in Germany and France as consumer confidence shows signs of waning in both economies. Overall, Asos said it retail sales increased by 13% over the quarter (or 11% if you strip out the impact of a weak pound), which fell short of the 15% that the market was expecting and its share price fell by 7% on the news. * SO WHAT? * 13% (or 11%) retail sales growth doesn’t sound that bad for a retailer given current circumstances but Asos is supposed to be a swashbuckling online retailer targeting millennials and expectations are high. Still, a 7% fall is relatively mild compared to the 37% drop it suffered after announcing a “significant deterioration” in its trading in December. Many retail observers are interested in the fortunes of the likes of Asos and Zalando given that they are pure e-tailing plays and are a yardstick against which any fashion retailer with online aspirations are measured.

You may recall the fire that Ocado had last month at its Andover warehouse, which spooked investors because of the possibility that its robot tech may have been faulty. Well Warehouse fire was a blip, Ocado reassures City (Daily Telegraph, Ashley Armstrong) is the predictable conclusion that the company has reached so far in its investigations. The £45m facility was completely destroyed in the blaze and the company ramped up capacity at its newest warehouse in Erith to take up the slack. * SO WHAT? * The company did a good job of calming investors as the stock was up by 5.4% on this news as investors continue to believe in the fast-growing tech side of the business. If its tech had been the cause of the problem in Andover, that

would have sent shockwaves around the world for their existing partners (e.g. Kroger, Casino and Sobeys) and given any future potential partners room for doubt. The company will hope that nothing else negative will emerge from this story as it could cause serious problems.

Cold water poured on Dunkerton’s Superdry bid (The Times, Deirdre Hipwell) gives us the latest regarding Superdry co-founder Julian Dunkerton’s bid to “save” his company as Institutional Shareholder Services, the world’s biggest proxy voting agency (a company that represents  shareholders who can’t be *rsed to vote themselves on important decisions ????), has poured cold water on his bid to return to the board. It said that “Given that the current issues at the company seem to have at least partially arisen as a result of combined decision-making by Julian Dunkerton and management, shareholders’ support for these proposals is not considered warranted at this time”. * SO WHAT? * I’m only half-joking about what proxy voting agencies do – because officially, this particular agency is used by 1,600 institutional investors who want impartial advice (some cynics might say that this is just passing the buck so if things go wrong as a result of the vote, investors have got someone to blame). Anyway, it will represent a chunky number of investors and its opinion won’t make Dunkerton’s bid any easier. Another shareholder advisory group called Pirc is also thought to be advising against Dunkerton’s return. It just means that he’ll have to convince more shareholders to support him. His reinstatement will go to a vote on April 2nd.

And then there’s Office Outlet is latest retailer to go into administration (The Guardian, Zoe Wood) which shows the stationary-chain-formerly-known-as-Staples (it was owned by Staples Inc, but was sold off to Hilco and rebranded at the end of 2016) has collapsed. It has 90 stores and will put 1,200 jobs at risk. This comes less than a year after it entered into a Company Voluntary Arrangement (CVA) to sell stores and cut its rent bill. An administrator said that it had suffered from falling stationary sales and the broader weakness of the high street. The administrator is currently looking for a buyer.

Google goes gaming and Insta goes shopping…

Battle begins as Google enters the $140bn gaming market (Daily Telegraph, Tom Hoggins and Laurance Dodds) highlights Google’s new foray into the gaming market as it outlined its future intentions at the Game Developers Conference (GDC) in San Francisco via its cloud streaming initiative, Google Stadia. Google says that it will allow anyone anywhere to stream better-than-console-quality games on any device without having to download or buy physical copies. Stadia will stream games to Chrome browsers, Pixel devices and TVs with Google’s Chromecast dongle using Google’s data centres. * SO WHAT? * This sounds brilliant and could well be the future of gaming BUT it’s unclear yet how Google will monetise it and I suspect that the success will depend hugely on the games line-up AND internet speeds around the world. In the meantime, Microsoft and Sony confirmed that they will be

releasing next-generation consoles. Everyone – including Apple, Amazon and China’s Tencent – is racing to be the “Netflix of gaming”, but I suspect that this will take quite some time before it actually comes to fruition. Interesting, though!

Instagram tests online market with checkout app facility (Daily Telegraph, Olivia Field) heralds a new development for Facebook-owned Instagram as it has signed up major fashion brands including H&M and Burberry to test a feature (called “Checkout on Instagram”) that enables users to buy goods within the Instagram app, with Facebook taking a cut of the sales. So far, 23 US fashion retailers have signed up and there are plans for expansion. In essence, when users see and Instagram post containing a product, they can tap on it and be sent to a shopping page to select more options like colour and size. They can then enter payment details and confirm an order without leaving Instagram. * SO WHAT? * I think this is a brilliant idea and will create yet another chunky revenue stream for Facebook in addition to ads. No doubt others will try to copy this as well. One for Snap and Pinterest, maybe?

The FDA approves a new postpartum depression drug and Boeing makes some admissions…

In Sage Therapeutics’ drug for postpartum depression gets FDA approval nod (Wall Street Journal, Peter Loftus) we see that the FDA yesterday approved Zulresso, the first medication specifically targeting women with postpartum depression, a condition that affects some women after childbirth, causing sadness and loss of interest in activities. Until now, doctors have prescribed general antidepressants such as Zoloft (aka brexanolone), but they can take a few weeks to have any effect and don’t work on everyone. * SO WHAT? * While this is a definite step forward, the cost is very high (about $34,000 on average per patient for the full course) and it has to be administered as a 60-hour intravenous infusion at a hospital or clinic. This will obviously limit its appeal to only the most severe cases. It is notable, however, that this comes soon after another antidepressant drug, Johnson & Johnson’s

Spravato, was approved earlier this month after NO approvals for new antidepressants for a number of decades.

Boeing’s chief executive breaks silence on double crash (Daily Telegraph, Alan Tovey) gives us the latest from Boeing following the Ethiopian air crash. Chief Dennis Muilenburg issued a video message and open letter to “airlines, passengers and the aviation community” to provide some reassurance after two crashes in the space of five months involving its 737 Max planes. Investigators in the Ethiopian Airlines crash say that there are “clear similarities” between the crashes which may suggest problem with systems. Muilenburg said that a software update would be released soon and there will be pilot training that “will address concerns in the aftermath of the Lion Air accident”, with some saying this will be within the next two weeks. * SO WHAT? * Clearly this is a very sensitive time and we’re not at the end of investigations just yet. Boeing is obviously trying to mitigate the negatives here, but it will no doubt be facing huge compensation claims from airlines who have been forced to ground the planes. Some say that these claims could be as much as $5bn.

And finally, in other news…

Do you relish a challenge? Like some oomph in your sauce? Well how about trying this: Venomous hot chilli sauce which mimics spider bite will give you muscle spasms (The Mirror, Zahra Mulroy https://tinyurl.com/yxlrjbel). My eyes are watering just thinking about it…

1. In POLITICAL NEWS, May hits a Bercow-shaped roadblock for Brexit
2. In RIDE-HAILING NEWS, Lyft targets a chunky IPO and Gett wants to get on the bandwagon
3. In INDIVIDUAL COMPANY NEWS, Worldpay goes to a US rival for $43bn, Marriott pledges more hotels and JD Sports buys Footasylum
4. In OTHER NEWS, I bring you the most ridiculous spin class ever. For more details, read on…

So Bercow scuppers May’s Brexit plans…

Commons Speaker delivers fresh blow to May’s Brexit deal hopes (Financial Times, Henry Mance and George Parker) highlights the latest (and possibly insurmountable) hurdle to May’s Brexit plans as John Bercow said he wouldn’t allow another vote on the deal unless it was substantially changed, which would mean that May will have to go back to Brussels again to try and eek out some kind of concession(s). He cited a parliamentary precedent from 1604 (!) that does not allow the same measure to be voted on twice in the same parliamentary session. May’s

team are now scrabbling around for ways around this – solicitor-general Robert Buckland has even suggested “crashing” the current session and getting the Queen in to open a new one! * SO WHAT? * May is due to go to Brussels on Thursday and is expected to seek an extension to the Article 50 exit process. If she gets Parliamentary backing for her deal, the extension will be likely to last until June 30th, but if she DOESN’T get MPs to swing in behind her deal, the delay could be for much longer (which is likely to result in a softer Brexit). It does seem rather ridiculous that the Speaker of the House can do this – by citing a ruling made over 400 years ago – and defy the Prime Minister! It does makes you wonder what kind of muppets Theresa May is getting her advice from if she didn’t see this coming. The drama (unfortunately) continues…

Lyft seeks out a chunky valuation in its IPO and Gett wants some similar action…

Lyft seeks valuation of up to $23billion in IPO (Wall Street Journal, Maureen Farrell) highlights the next over-hyped company to come to market seeking a stellar valuation and legging over anyone who buys the shares because they’re worth it. It’s looking for a whopping $21-23billion valuation (equivalent to between $62 and $68 for a share) as it kicks off its marketing roadshow ahead of its flotation on Monday on the NASDAQ. This will follow the trend of tech companies that have dual categories of shares – so Lyft’s founders John Zimmer and Logan Green, who have 7% of their company’s shares, will have 50% of the voting rights as their shares will receive 20 votes each versus all the other mugs whose shares will only get one vote each. It’s all about having your cake and eating it! * SO WHAT? * I must say that the more of these IPOs I see the more I think “It’s a stag!” (a phrase used to describe the act of buying shares in an IPO and selling them almost immediately as retail investor frenzy powers the shares up for a nice little virtually-risk-free gain). Lyft is the younger, less-obviously vilified version of Uber but also loses money like Uber. The chunky valuation it is giving itself for the valuation relies on promises of rapid growth over the next few years as it concentrates on its core US and Canadian markets. From what I can see, Lyft can afford to make losses for a number

of years while it keeps growing because investors seem to be content just throwing money at it – but the problem will come at some point where stakeholders start to call in their chips. If Lyft has nothing to offer at that point, things could go downhill very quickly. Or it could sell itself.

Well whaddaya know? Gett looks to join taxi-hailing rush to IPO (Financial Times, Peter Campbell) shows that taxi-hailing company Gett is looking jealously stateside at the whole Lyft/Uber hype and obviously wants a piece of the action. Gett differs from both of these companies because it offers rides via established taxi operators (like black cabs in London or yellow taxis in New York) rather than minicabs, but is now considering a listing in either London or Tel Aviv. Its more up-market approach has helped it to earn almost half of its revenues from business accounts as 20,000 companies use it as its taxi-booking service. Its corporate sales rose by 54% last year alone. So far, the company’s European business made a loss of $2.4m but it is expected to make a profit by the end of the year. * SO WHAT? * If you want to get into ride-hailing, I would have thought Gett would be a more conservative choice than the giant American loss-makers given that it has a more “legit” business model that is scaleable in an area where you can probably make better margins (being the provider of choice to companies wanting to ferry their employees around). Yes, it’s smaller, but given the bad publicity that minicab drivers have received over the years (and this is a worldwide phenomenon) versus that of licensed taxi drivers you would have thought that demand would be less volatile and subject to negative news stories.

Worldpay is bought for $43bn, Marriott pledges more hotels and JD Sports buys Footasylum…

Payments group Worldpay to be acquired by US rival in $43bn deal (Financial Times, Nicholas Megaw, Arash Massoudi and Sarah Provan) highlights Fidelity National Information Services’ (aka FIS) acquisition of Worldpay, which is the UK’s leading payments processor. This is the latest deal in a flurry of M&A in this sector as payments providers continue to consolidate in order to chase scale in a world where card or online payments are increasing at a rapid pace. The most recent deal in this space was US payments processor Fiserv’s acquisition of rival First Data for $39bn in January. FIS develops an array of tech from core banking platforms that power retail lenders’ systems to asset management software while Worldpay specialises in services that enable digital payments. * SO WHAT? * This sounds like a good deal strategically as payments processing needs scale in order to compete with big banks.

In Marriott plans to open over 1,700 hotels (Wall Street Journal, Allison Prang) we see that the hotel chain plans to add between 275,000 and 295,000 rooms by 2021 that will bring in $400m in fee revenue and that it will embark on a chunky share buy-back programme over the next three years. It expects 44% of the new rooms to be in North

America while the remainder will be split between Asia-Pac, EMEA, the Caribbean and LatAm. * SO WHAT? * This sounds pretty punchy to me and signals a certain confidence in the US and global economy as hotels rely on economic “good times” to keep on rolling. Businesses send their execs around more and everyone else goes on more holidays or spends more on them when things are going well but obviously this all slows down when the economy hits the skids. The share buy-back thing also says to shareholders that there will be a floor in any potential weakness in the share price for the next few years as it’s allocating between $7.6bn and $9bn to underwrite any subtantial falls. Shareholders love a share buyback programme as it makes them feel all snuggly and warm, safe in the knowledge that any potential losses will be limited.

Who said nepotism is dead? Footasylum family to cash in after JD offer (Daily Telegraph, Julia Bradshaw and Charlie Taylor-Kroll) shows that nepotism is alive and well as the children of Footasylum co-founder, David Makin (the “D” in JD Sports), will share in £50m as JD Sports just offered to buy the struggling shoe retailer for £90m. Clare Nesbitt, (the older sis and chief exec of Footasylum), and younger bro Thomas Makin and sis Amy Mason will be sharing in the payout which comes only weeks after JD Sports bought an 8.3% stake in the troubled company. Although the workers will no doubt be looking at an uncertain future in a very crowded market, it’s good to know that daddy will bail out his kids who nearly ran the company into the ground.

And finally, in other news…

I thought I’d leave you today the most ridiculous (and, I think, pointless) spin class I have ever seen in This gymnastics spinning class will have you defying gravity and burning 600-700 calories an hour (Inside Edition, Stephanie Officer https://tinyurl.com/y2a8rlpk). Call me old-fashioned, but this looks like a recipe for disaster and a whole load of lawsuits! Impressive, yet ultimately pointless…

1. In RETAIL NEWS, US retailers profits get downgraded and own brands take on the big names
2. In INDIVIDUAL COMPANY NEWS, Commerzbank and Deutsche Bank get the official blessing to engage in merger talks, Interserve proves to be a mess and Disneyland Paris makes its first profit in a decade
3. In TECH NEWS, the New Zealand shootings bring Big Tech’s shortfalls back into focus
4. In OTHER NEWS, I bring you a very unusual in-flight safety video. For more details, read on…

So US brokers downgrade retailer profits, US own brands dent household names and the UK toy market continues to be challenging…

Wall Street cuts profit forecasts for US retailers (Financial Times, Alistair Gray) shows that Wall Street is feeling rather downbeat about the prospects for US retailers after a weaker-than-expected holiday season. According to FT analysis of Bloomberg data, estimates for the current quarter have been cut for 62 US retail companies in the last three months and increased for only 16 as retailers have been facing rising transport and logistics costs as well as a slowdown in demand. Those who have had the biggest estimated earnings cuts include L Brands (owner of Victoria’s Secret), Barnes & Noble (books) and JC Penney (department store). On the other hand, earnings estimates have increased for the likes of Amazon (up by almost 12%) Best Buy (up by 5%) and Foot Locker (up by 4%). * SO WHAT? * Although wages are increasing and the wider economy appears to be doing well, recent macroeconomic data showed that US retail sales fell by 1.6% in December – which is the sharpest drop in ten years – and then only recovered by a measly 0.2% in January. Commentators are saying that this is due to a combination of rising costs, bad weather, a late Easter and smaller than usual tax refunds. The pressure is certainly intensifying on US retailers.

US retailers trump Warren Buffett with push into own brands (Financial Times, Alistair Gray and Shannon Bond) looks at a very interesting phenomenon that’s happening at the moment in the US – the shift in the balance of power between big retailers and their suppliers. New data from Nielsen shows that retailers including Walmart, Costco and Target are increasing sales of their own brands almost four times faster than household brand names as increasingly cost-conscious consumers are seeking out good quality at cheaper prices. Kroger, Costco and Target are among those to have put a lot of work in on their own brands with successful outcomes and others, such as Walmart, are putting a lot of effort into this area as well. * SO WHAT? * There is a risk here for companies like Campbell Soup and General Mills that this isn’t just a blip – that it’s actually a trend that could continue to gather momentum. Stats from Euromonitor International show that sales of own-label products in the US are behind Europe – for instance, in tissues, own-brands only have a 27% market share versus a 55% share in Europe – so there is plenty of room for own-brands to make further inroads into the American consciousness. And that’s not even including the potential effect that Aldi and Lidl could have as they expand in the US – look at what’s happened over here! The biggest threat, however, comes from Amazon as its Amazon Basics label covers a vast array of products and obviously its distribution power is excellent. It looks like it’s up to companies like Kraft Heinz and the rest to up their game otherwise they are all going to lose out.

The Deutsche/Commerzbank combo gets the green light for talks, Interserve’s nightmares continue and Disneyland Paris makes a profit…

I did mention this last week but German banks see way to €25bn merger (The Times, Deirdre Hipwell) shows that talks between the two are now “official”, according to a statement made yesterday. Deutsche has lurched from scandal to nightmare over the last few years and investors have been scathing about the bank’s ability to cut deeply and quickly enough to stop the rot. Deutsche’s chief exec, Christian Sewing, has previously thought that a merger Germany’s two biggest banks wouldn’t get enough political and union approval (given that it would result in massive job cuts). However, a statement made by Olaf Scholz, Germany’s finance minister, in an interview with Bild am Sonntag over the weekend was interpreted as giving tacit government approval for this potential merger. * SO WHAT? * Germany is in a right mess at the moment and its banks aren’t looking too clever either. Merging the two would create a national/European champion, but merging for merger’s sake (or just doing it to survive) generally isn’t the best recipe for success. Sure, both of them could cut overheads by sacking thousands of workers (German service sector union Verdi said that up to 30,000 jobs could be on the line!), but there is a risk that this would just kick the can down the road when a root-and-branch strategic overhaul is what’s really required. Having said that, if they are going to merge now would be as good a time as any to give it a go as I would have thought it would encounter less resistance given the overall weakening of the German economy. It’s not a done deal, however, but everyone will be watching with interest.

In Interserve’s suppliers face losses from outsourcer collapse (Financial Times, Gill Plimmer) we see the fallout from the outsourcer’s ongoing problems in the wake of it going into a “pre-pack” insolvency arrangement on Friday. The takeover by its debtholders means that the company’s 69,000 staff worldwide will be able to continue working but around 200 companies that provide IT, HR and property management services face losing their contracts or not being paid for work. Interserve is one of the UK’s biggest providers of privatised public sector services and has contracts to clean and maintain jobcentres and army bases as well as building hospitals and schools. Just to give you an idea of the scale of the problem, it has 45,000 staff in the UK – double the number of employees that Carillion had when it collapsed. * SO WHAT? * Expect a massive bun fight on this one as accusations have been flying around about the government awarding Interserve big contracts despite them knowing that it was in big trouble. It sounds like Carillion all over again and will turn the spotlight once more on all major outsourcers to prove they won’t be the next in line…

Disneyland Paris in profit for the first time in 10 years (Daily Telegraph, Christian Sylt) heralds some good news for the Magic Kingdom as increases in attendance and customer spending helped to increase revenue by 12.9% to a level not seen in a decade. It is Europe’s most visited tourist attraction but has struggled with making profits since it opened in 1992. A lot of this has been due to it having to make interest payments on loans for its construction, but things have been improving and Bob Iger, Disney’s chief exec, announced last year that the company will invest an additional £1.8bn, which will see new attractions inspired by Star Wars, Marvel Comics and Frozen. * SO WHAT? * Disneyland Paris is the largest private employer in the Paris region and the latest expansion is expected to boost job numbers by 1,000. British firms could also benefit as a 2016 study said that over 25% of Disneyland Paris’ European suppliers were British businesses (although obviously that might change with Brexit).

The New Zealand massacre shines the light on Big Tech once more…

New Zealand terror attacks spark fresh criticisms of Big Tech (Financial Times, Tim Bradshaw, Martin Coulter and David Bond) shines the light once more on the failings of big tech companies such as Facebook and YouTube over their inability to control footage of Friday’s terror attacks. The shooter used Facebook Live to livestream his actions and Facebook, along with YouTube, Google and Twitter are now under increasing pressure to take ownership of the problem and do something about it. However, the danger is not just confined to these sites as it turns out that there

has been a proliferation of smaller sites that are harder to monitor – the shooter used an anonymous messageboard called 8chan to publish his “manifesto”. * SO WHAT? * I think that most people would agree that the majors should do a lot more to stop spread of hate, false news and bullying, and incidents like the one in New Zealand continue to highlight the increasingly important roles they play in the way society behaves. Social media companies have been on a roll after recovering from last year’s bad publicity – but I would expect this momentum to at least falter as they will undoubtedly have to show they are addressing these problems by throwing a lot more money and resource at them. They just can’t pretend to be innocent bystanders any more IMHO.

And finally, in other news…

I thought I’d leave you today with what must be the most bizarre in-flight safety video ever in Japanese airline ANA promotes traditional culture with kabuki-theme safety video (SoraNews24, Koh Ruide https://tinyurl.com/y2oq63um). Strap in, people – this is very weird!

1. In MACRO NEWS, Parliament votes for a Brexit delay
2. In HIGH STREET NEWS, Superdry’s former boss launches a new attack, Cineworld benefits from Regal, Savills flags a slowdown and it’s sofa so good for DFS
3. In CAR-RELATED NEWS, Uber’s self-driving unit closes in on a big cash injection and Tesla announces the Model Y
4. In INDIVIDUAL COMPANY NEWS, there’s more detail on what’s going on at Boeing
5. In OTHER NEWS, I bring you the partnership between music and cheese (not cheesy music). For more details, read on…

So MPs vote for a Brexit delay…

UK parliament votes overwhelmingly to seek Brexit delay (Financial Times, George Parker, Laura Hughes and Sebastian Payne) shows that Theresa May actually won a vote for a change as MPs voted to delay the March 29th Brexit date. She will now apply to the EU for a extension in the deadline to June 30th if MPs finally get behind her Brexit deal at another vote next Tuesday. If MPs do not vote through her deal, though, the extension could go much further out meaning that the UK would have to take part in European Parliament elections in May. In other words, MPs will have to choose whether to accept May’s deal or face a much longer delay that some say could drag on into 2020 or longer. The House also voted by 334-85 to reject an amendment calling for a second EU referendum. There are

now rumblings to the effect that the DUP and some of the pro-Brexit European Research Group are thinking of supporting May’s deal. * SO WHAT? * It is starting to look like May is getting a tiny bit of traction here. Eurosceptics face the prospect of long, expensive and undesirable delays that will probably involve a much softer Brexit than is currently on the table if they dig their heels in OR they get behind May’s current deal and let things move forward. It seems to me that although our MPs voted for an extension it kind of means nothing because the other 27 members of the EU will have to vote for the extension as well – and they’re unlikely to vote this way just for the sake of it. I would have thought that they will only allow the extension for something concrete (i.e. that it gives the UK time to implement the terms of its Brexit deal) or for a second referendum (which doesn’t look like an option any more). Those who have been holding out for a second referendum may just decide to back the deal because the alternative is worse.

There’s more high drama on the high street with the “Battle for Superdry”, Cineworld benefiting from Regal, Savills’ slowdown and DFS’ uptick…

Former boss launches ‘Save Superdry’ campaign (Daily Telegraph, Sophie Smith) should come as no surprise to Superdry-watchers as Julian Dunkerton, co-founder and former CEO of the company, has upped the pressure on current management by launching a formal campaign called “Supercharging Superdry”. He is seeking support from shareholders to reinstate him and appoint Peter Williams, chairman of Boohoo, as non-exec director. Dunkerton wants to take control of the design process and revive the brand. * SO WHAT? * You can see why he’s getting p!ssed off – since January 2018, the share price has plummeted by 75% and the company was kicked out of the FTSE250 last month! He believes that he can return the company to profitable revenue growth within two to three years and promised that he would not sell his shares in the company for at least two years as part of the deal. Current management are obviously blaming his legacy for the company’s current woes, but Dunkerton is saying that their strategy just isn’t working. The management team have a 0.25% share holding in the company while Dunkerton and his co-founder James Holder have a rather chunkier 28.5% in the business, so the argument that his interests are more closely aligned to shareholders does make some sense.

In contrast to Superdry, Cineworld aims for FTSE100 after success of Regal takeover (Daily Telegraph, Charlie Taylor-Kroll and Oliver Gill) takes a look at a company that is on the up as its £2.7bn takeover of US chain Regal, which made it the world’s second largest cinema chain with almost 10,000 screens in 10 countries, has helped pre-tax profits shoot up by 125% over the last year. Cost savings and synergies were both higher than market expectations. * SO WHAT? * There will be a certain sense of vindication here because Cineworld’s market value took a £400m hit

when it originally announced it would buy Regal but blockbusters such as Black Panther, Avengers: Infinity War and Incredibles 2 all helped box office revenues. Prospects this year are also looking good with Avengers: Endgame, Toy Story 4 and Star Wars: Episode IV in the pipeline. Cineworld just missed out on FTSE100 inclusion in the latest reshuffle, but if momentum continues it is surely only a matter of time before it makes the grade – and if it does, it will get an immediate little boost as tracker funds buy in.

I doubt there will be much surprise about Savills warns over political uncertainty (The Times, Louisa Clarence-Smith) as the estate agent announced that it is expecting a slowdown in property dealmaking this year because of global macroeconomic and political uncertainty (in other words, US-related trade/tariff wars and Brexit). Its deal advisory division brings in almost 50% of its business. On the other hand, Savills kept its guidance for the year as it expected growth in other areas such as property management and investment management. * SO WHAT? * It’s unsurprising that a real estate agent is hunkering down amidst a storm of economic and political uncertainty but it seems to me that everyone is preparing for the worst and not even considering what might happen in a scenario where things really aren’t quite so bad. I’m not saying that I think things will be rosy – just that NO-ONE is talking about a huge amount of pent-up demand having to be released at some stage IF the talk of doom and gloom turns out to be overdone.

Talking of worries that proved to be overdone, DFS sitting pretty after late show by customers (The Times, Tabby Kinder) shows that profits roofed it as customers who stayed away in the hot summer months purchased soft furnishings like they were going out of fashion in the last five months of 2018. The retailer, which also owns Dwell and Sofa Workshop, said its profits before tax more than doubled in the 22 weeks to January! * SO WHAT? * This is quite a turnaround given that the company had a profit warning in June last year due to falling footfall at its stores and a slowdown in the housing market. The share price did falter slightly yesterday, however, as it warned of a tough 2019 with consumer spending expected to fall and potential delays hitting goods moving around after Brexit.

Uber nears a cash injection for its driverless unit and Tesla unveils the Model Y…

Uber in talks to sell $1bn stake in self-driving unit to SoftBank (Financial Times, Shannon Bond) heralds a potentially chunky cash injection (at least $1bn) for its Advanced Technologies Group from a consortium of investors including SoftBank’s Vision Fund and Toyota ahead of Uber’s anticipated stock market flotation. * SO WHAT? * The negotiations are still ongoing, but if this went ahead it would give the ATG a valuation of between $5-10bn, depending on how much cash was thrown at it. Uber has been thinking about selling a stake in ATG since at least October as investors were increasingly questioning the high costs of developing autonomous technology.

Musk unveils Model Y SUV in next big wager (Wall Street Journal, Tim Higgins) highlights the unveiling of what Tesla hopes will be to SUVs what the Model 3 is to the saloon/sedan market – the Model Y compact SUV. Its initial starting price will be $47,000 and it will have a range of up to 300 miles on a single charge, hitting 0-60mph in 3.5secs, but a more budget-friendly version will follow with a range of 230 miles and a more “sedate” 0-60mph time of 5.9secs. Musk expects to start deliveries of the Model Y in the autumn of 2020, with the cheaper version rolling out in Spring 2021. * SO WHAT? * I think that this is an important development for Tesla as the SUV segment continues to be red hot in the world of cars. The Model X is fine and dandy, but out of reach of mainstream budgets. The sooner Tesla can get a reasonably-priced SUV on the road the better – but then you are always faced with the whole thing of will they have production problems, will they be able to deliver without massive delays, will they run out of money etc.etc. Let’s hope so – but then again even if they do, everyone else is catching up fast with more new models and less production issues.

Boeing’s woes continue…

Following on from all the news on Boeing this week, Boeing 737 Max planes grounded until May for software tests (Daily Telegraph, Alan Tovey) puts a timeline on how much time is being allocated to fixing faulty flight control software in

the wake of the Ethiopian Airlines crash and Boeing halts 737 MAX deliveries after two fatal crashes (Wall Street Journal, Andrew Tangel and Ben Kesling) highlights the company’s current actions as well as a new nightmare as an official from the US Air Force raised concerns about one of the company’s largest military plane programmes. It never rains but it pours. Investigations are ongoing.

And finally, in other news…

You may well have heard in the past about farmers playing music to their cattle to improve the flavour of their meat, but I must admit that this is a new one on me: Hip hop best bet for a cheese that will please: Swiss study (Reuters, Denis Balibouse and Cecile Mantovani https://tinyurl.com/y46dvagy). Nice…

1. In MACRO NEWS, May loses another vote and Hammond announces the Spring Statement
2. In STREAMING NEWS, Spotify files a complaint against Apple and Google’s YouTube Music launches in India
3. In RETAIL-RELATED NEWS, Starbucks feels the heat in China, Inditex lifts its dividend, Morrisons sees sales rise and Sports Direct offers Debenhams a £150m loan
4. In INDIVIDUAL COMPANY NEWS, Boeing tries to limit fallout and the FDA moves to limit e-cigarette sales
5. In OTHER NEWS, I bring you the Triangle Challenge. For more details, read on…

So May loses out yet again and Hammond issues the Spring Statement…

I wish we could have a rest day on Brexit news, but unfortunately that’s not possible at the moment so Theresa May issues ultimatum after MPs ditch no-deal Brexit (Financial Times, Jim Pickard and Laura Hughes) tells us that the PM, after MPs voted yesterday to take a no-deal off the table permanently, has said that MPs need to now get behind her Brexit deal or face a delay of a few months that would force Britain to hold elections to the European Parliament. * SO WHAT? * Sterling staged a bit of a relief rally last night as the prospect of a no-deal Brexit was defeated, but then the European Commission stated that it wasn’t actually up to the UK to decide whether it left the EU with a deal or not – it was up to its remaining 27 member countries to decide whether to extend the March 29th

deadline, with the implication being that if members vote against a deadline extension, the UK may end up with a “no-deal” by default. As one commission spokesman put it, “To take no-deal off the table, it is not enough to vote against no-deal – you have to agree to a deal. We have agreed a deal with the prime minister and the EU is ready to sign it”. The next vote will be about extending Article 50.

Chancellor Phillip Hammond announced the Spring Statement yesterday, which covered things like climate change (no gas boilers or hobs in new homes built from 2025 onwards), extra money for the police to fight knife crime, free sanitary products to be given out at schools, a review on the living wage, a relaxation in immigration rules for top scientists and academics and a delay for the introduction of new income tax reporting rules for the self-employed etc. If you want to see how it may be relevant to you personally, then I’d recommend you have a look at the table of data in How the Statement affects you (Daily Telegraph).

Spotify takes on Apple and YouTube Music debuts in India…

In Spotify lodges antitrust complaint against Apple (The Times, James Dean) we see that Spotify has just filed a competition case with the European Commission accusing Apple of abusing the power of its App Store to favour its own music streaming service. The App Store takes a 30% cut of fees if developers enable its “in-app purchase” service where customers can be charged for a service, like upgrading from a free to a paid subscription and it is this fee that is getting Spotify’s goat. Spotify also complained that Apple unfairly restricts developers who don’t enable this in-app purchase system by not allowing users access via Siri and HomePod. * SO WHAT? * I think that this case signifies how deeply tech companies have become woven into the fabric of our daily lives and, while you can understand the commercial reasons for Apple wanting to hobble the competition on their own platform, this does go against the ethos of consumer choice. At the moment, I guess going to the App store is like a trip to your local Sainsbury’s only to find that all the McVitie’s Jaffa Cakes, Heinz ketchup and baked beans were only available in the

warehouse (where a bloke on the door charges you a fee to enter), with the shop floor only selling own-brand goods. I would have thought that this case will drag on and become a debate on how these tech giants will have to be regulated more broadly going forward in order to keep competition fair.

Google’s YouTube Music launches in India to take on Spotify (Financial Times, Stephanie Findlay) heralds the arrival of YouTube Music, the music subscription service launched by Google in June last year, in India two weeks after Spotify debuted in the country. It offers a free version with ads as well as a premium paid version for $1.42 per month to go ad-free. YouTube Music’s subscription is Rs99 versus Spotify’s price of Rs119 per month. * SO WHAT? * This is a crowded market as everyone can see the potential (plus many have failed in the “other” big market, China), so YouTube Music will be competing with local giants Gaana (which is backed by China’s Tencent) and JioSaavn as well as Spotify, Amazon Music and Apple Music. However, it will hope that India’s thirst for video will set it apart from its rivals. Interestingly, only a year ago there were no music videos on YouTube that had Indian artists with over 500m views – now eight videos have breached that level and this week, the three top artists on YouTube’s global artist chart were all Indian: Neha Kakkar, Alka Yagnik and Kumar Sanu. Great news for Indian consumer choice!

Starbucks has a fight on its hands in China, Zara owner Inditex ups its dividend, Morrisons has rising sales and Sports Direct offers Debenhams a chunky loan…

I’ve mentioned the company before but Starbucks fights hot startup in China (Wall Street Journal, Julie Wernau and Julie Jargon) looks at the fight that Starbucks has on its hands with domestic start-up Luckin Coffee as the latter is experiencing exponential growth on the back of increased demand for beverage deliveries. This has pitted Starbucks, Luckin and McDonalds against each other to determine who can have the best and most efficient delivery system. The preponderance of deliveries for food, meals consumer goods – and now coffee – has become such an issue in some cities that office and apartment buildings have robots to receive deliveries and avoid clogging up the elevators! * SO WHAT? * Starbucks’ business in China has been built on the premise of customers relishing the experience of drinking their expensive coffees in plush surroundings, but the market is changing. Luckin Coffee only started in October 2017 but has already raised $1bn in funding and opened 2,000 stores offering mainly delivery or pickup. Starbucks signed a deal with Alibaba-owned food delivery platform Ele.me in August last year to boost its delivery capability, but the fact is that its coffee is quite a bit more expensive than Luckin – a 16 oz Americano in Beijing costs 37 yuan ($5.52!) from Starbucks and 27 yuan from Luckin if you have it delivered. Mind you, the pain is worth it as Sanford C. Bernstein researchers say that annual coffee consumption per capita in China is about 5 to 6 cups versus over 300 cups per capita in America. I presume that Luckin’s offering is heavily subsidised in order to grow popularity, but the luxury that Starbucks has enjoyed over the past decades of being pretty much the biggest fish in the pond is being rudely interrupted by a rapidly growing piranha. If it doesn’t do something drastic, it may have to do an Uber and abandon the country altogether (but I don’t think we’re at that stage yet).

Zara parent Inditex lifts divident on higher online sales (Financial Times, Ian Mount) highlights the clothing retailing giant’s decision to boost its dividend as online sales increased by a respectable 27%. Revenues and profits were, however, slightly lower than analyst expectations as the company suffered from a strong euro – this is a major factor for Inditex given that almost 60% of its sales are in non-euro countries, meaning that its products are more “expensive” in said countries. * SO WHAT? * Sounds like a decent enough performance to me and it’s good to hear that its online offering is going well.

Meanwhile, back home, Morrisons investor windfall as grocer hails rising sales (Daily Telegraph, Ashley Armstrong) shows some rare good news from a British grocer as higher sales enabled it to pay out a third special dividend in a year. Some analysts were hoping that the proposed takeover by Sainsbury’s of Asda would help to turbo-charge Morrisons’ presence in the south of England as “Sasda” disposed of overlapping properties – but this deal is looking increasingly unlikely to come to fruition.

Sports Direct offers Debenhams £150m interest-free loan (The Guardian, Sarah Butler) shows that Mike Ashley is not taking “no” for an answer as his company Sports Direct has now offered to give struggling department store Debenhams a big loan in exchange for an additional 5% stake in the company and him taking over as chief exec. * SO WHAT? * Debenhams is continuing in its efforts to fend off his advances (mainly because almost all the board will lose their jobs, I would have thought!) but the noose appears to be tightening. I would back Ashley and have done with it. He can then meld the best bits of House of Fraser and Debenhams and jettison/repurpose the rest. I just don’t think that Debenhams as a standalone is a long term prospect.

Boeing’s woes continue and the FDA cracks down on e-cigarettes…

US grounds Boeing 737 MAX jets (Wall Street Journal, Andy Pasztor, Alex Leary and Andrew Tangel) shows the ongoing aftermath of the weekend’s fatal Ethiopian air crash after Federal Aviation Administration (FAA) officials said that it had similarities with another recent crash involving the same model. President Trump said that the FAA was grounding the planes and banning them from US airspace, his actions following those already taken by the UK, Australia and Canada. Boeing tries to limit the fallout (Wall Street Journal, Doug Cameron and Andrew Tangel) shows how this latest news is hitting the company hard as the 737 MAX is its most popular plane and it is racing against time to salvage its reputation. * SO WHAT? * This is a major headache for the plane maker (which is obviously nothing compared to the death and anguish it has caused) as it had nosed ahead of rival Airbus in being

the supplier of choice to an industry that is seeing surging international demand. It’s unclear as to whether this will affect the current order book (planes take rather a long time to make and so if they find the problem now, they can rectify the design), but sentiment is obviously very bad at the moment.

FDA sets limits on retail sales of flavoured e-cigarettes (Wall Street Journal, Jennifer Maloney) shows that although chief Scott Gottlieb is about to leave his post next month, he is continuing to push forward with his crusade against e-cigarettes with an effective ban on convenience stores and petrol stations selling most flavoured e-cigarettes. The new directives were originally proposed in November and are starting to come into force. Gottlieb added that if underage vaping continues to increase, the FDA would consider an outright ban on all pod-based vapourisers. * SO WHAT? * This is obviously bad for Juul, which has 73% of the US e-cigarette market and it is also bad for convenience store operators who will be losing a valuable stream of income. Mind you, given that Gottlieb’s leaving, it remains to be seen as to whether his successor will pursue this cause quite so assiduously.

And finally, in other news…

I thought I’d leave you today with The triangle dance challenge: newest challenge to take over the Internet is harder than it looks (Evening Standard, Georgia Chambers https://tinyurl.com/yyf5j29u). Disastrous possibilities abound…

1. In MACRO NEWS, Brexit takes another turn but the UK economy rebounds
2. In CAR NEWS, VW targets electric, Nissan’s Infiniti production stops in the UK and Pendragon focuses on secondhand
3. In HIGH STREET NEWS, Mothercare sells its toy business, French Connection is a mixed bag and Dick’s Sporting Goods stops selling guns in 125 stores
4. In OTHER NEWS, I bring you a birthday idea and Pigcasso. For more details, read on…

So the Brexit drama continues while the UK economy has a bit of a rebound…

Power over Brexit slips from May’s damaged hands (Financial Times, George Parker, Jim Packard and Alex Barker) highlights May’s latest Commons defeat as her slightly reworked Brexit was rejected by a big margin yesterday evening by MPs. There will now be a Commons vote today to block a no-deal exit on March 29th followed by a second vote tomorrow that would let MPs get an extension to the formal Article 50 process from the EU. * SO WHAT? * It would seem that we are no further along than we were before as the current deal is scuppered, we face an extension that could cost us money and still get us nowhere and the prospect of no-deal is still on the table. Some argue that taking a no-deal option off the table would remove one of the last bargaining chips we have with the EU, Labour is desperate for an election (which I believe will just make things worse and merely serve to kick the can down the road) and more MPs are calling for Theresa May’s head (but again, what’s that actually going to do?). There’s

still the possibility of a “People’s Vote” (which is a term, by the way, that I find annoying – it was the “people” who voted for Brexit in the first place! 75% of MPs in the House of Commons voted for Remain!) but I don’t know at the moment the mechanics of how that would come about. The drama/farce continues…

UK economy rebounds in January despite Brexit uncertainty (The Guardian, Richard Partington) is a headline that runs somewhat at odds with everything else that’s going on at the moment, but data from the Office for National Statistics shows that monthly GDP actually grew by 0.5% in January – the biggest jump since December 2016! This appeared to be down to  stronger performances from the services, production, manufacturing and construction sectors following a weak ending to 2018 when they all fell. * SO WHAT? * Although January’s stats are good news, it is worth noting that monthly data can be rather volatile and Suren Thiru, head of economics at the British Chambers of Commerce, observed that “The data for the longer three-month period recorded an economy that was continuing to slow under the weight of uncertainty over Brexit and weakening global trading conditions”. Clarity on Brexit will be needed to get Britain out of the rut it is currently in – and this is something that a deadline extension will not help.

VW targets electric, Nissan halts Infiniti production in the UK and Pendragon focuses on secondhand…

Volkswagen sets bold targets as it steps up electric ambitions (Financial Times, Peter Campbell) highlights VW’s renewed commitment to making electric vehicles (EVs) as the company outlined some concrete targets for battery car sales and promising to cut carbon emissions. This sounds like great news for the environment (targeting 70 fully electric models by 2028 – up from an earlier target of 50 by 2025 – and 40% of group sales by 2030 to be battery-powered versus an earlier estimate of 25% by 2025) but not so good for employees, whose numbers will be cut according to chief exec Herbert Diess at VW’s annual press conference yesterday. The company also outlined a goal to be completely carbon-neutral by 2050 including its factories, offices and cars and will adopt shorter-term measures like moving plants to using renewable energy and “trying” to reduce executive use of private jets (!). * SO WHAT? * This all sounds rather lovely, but the fact is that these are just wishes. They’re close enough to sound sort of within reach but far enough away to tweak according to the whim of whoever’s in charge at the time. Shareholders will be more concerned about what the company is going to do about falling margins at marques like Audi, Porsche and Bentley and near-term strategies for an environment where sales are generally falling.

Just when you thought that British car manufacturing was nursing its wounds in a dark alley having been given a right kicking from Honda, Nissan halts production of Infiniti vehicles at Sunderland (Daily Telegraph, Alan Tovey)

shows another Japanese company sticking the boot in. Nissan has decided to stop production this summer of the Q30 hatchback and QX30 crossover at the giant Sunderland plant as sales in Europe have been poor. Nissan’s premium marque added that the decision would be part of a broader restructure “in anticipation of a planned withdrawal from western Europe in 2020”. Infiniti said that it will focus its efforts on the growing markets of America and China. * SO WHAT? * A nightmare for car manufacturing in the UK. Jaguar Land Rover announced in January that it would cut 10% of its workforce (about 4,500 jobs), Nissan’s withdrawal from Swindon will put 3,000 jobs on the line and although Infiniti will “only” shed/redeploy 200 employees who were working on Infiniti out of 7,000 staff at the Sunderland plant, EVERYONE is going to be pretty nervous. The uncertainty of Brexit is obviously a factor, but the overall downward trend in car sales is affecting all manufacturers. If I was working in a car factory right now I’d be trying to retrain and get skills that I could use to apply to other jobs. 

Talking of falling sales, Pendragon focuses on used-car market as new car sales slide (Daily Telegraph, Alan Tovey) shows that UK new car registrations were down by 6.8% last year as customers became increasingly wary of making a big ticket purchase ahead of Brexit. Pendragon is one of the UK’s biggest car dealers with almost 200 outlets and its chief exec, Trevor Finn, said that the company is focusing more on the secondhand market – which is triple the size of the new car market – because it offered a “more stable and reliable supply chain”. * SO WHAT? * This sounds like a decent-enough move as punters still want cars – but they are getting less enamoured by the new car smell and more conscious of the depreciation of a new car as it rolls off the forecourt. Pendragon wants to double its sales of used cars by 2021 and part of that effort has involved the company developing its online sales.

Mothercare sells off Early Learning Centre, French connection sees revenues fall but profits rise and Dick’s Sporting Goods cuts its sale of guns…

Mothercare sells Early Learning Centre to rival in £13.5m deal (The Guardian, Zoe Wood) highlights the sale of ELC to competitor chain The Entertainer. Back in the day, ELC had over 200 UK stores but time has not been kind and the brand is currently sold in Mothercare outlets as well as other chains. The Mothercare chief exec, Mark Newton-Jones, sounded somewhat wistful when he said “It is a brilliant brand and we simply don’t have the resources to nurture it” but Mothercare is still scrabbling around to survive and will use the £13.5m proceeds from the sale to reduce its £21.5m of bank debt, which is hoping to clear by the end of this year. It will also give The Entertainer control over the running of its toy departments. * SO WHAT? * This was a tough but necessary part of Mothercare’s efforts to survive as it follows a cull of 40% of its branches against the backdrop of ongoing competition from online retailers and increasingly thrifty customers. The Entertainer, on the other hand, has bought a business for a steal. Gary Grant, founder and exec chairman of The Entertainer said that he would review the business in the first instance and then think about reintroducing it to the high street.

Black is in fashion as retailer makes profit (The Times, Deirdre Hipwell) shows that French Connection managed to make its first profit in seven years, but sales have continued to fall in the UK in difficult trading conditions. * SO WHAT? * This announcement came as founder and chief exec Stephen Marks continues to try to offload his 42% stake in the business. Oh how times have changed since the company’s heyday in the 90s with its naughty FCUK logo as it has long since been overtaken by the likes of Zara and H&M. Well done in turning a profit, but it’s going to take a brave company to buy a fashion chain that has lost its way in these current economic circumstances. FWIW, I think it still has intrinsic value and is long overdue a major overhaul. 

Although I assume that most readers of Watson’s Daily don’t normally have the urge to go and buy a gun, Dick’s Sporting Goods to remove guns from 125 stores (Wall Street Journal, Sarah Nassauer) says that the American sporting goods retailer will stop selling firearms at 125 of its outlets. It will use the space to sell higher-margin products such as licensed sports gear and outdoor recreation equipment after the company decided last year to tighten up its policies on gun sales. Would-be massacre merchants will be dismayed to hear that the decision was hastened due to falling sales after the company stopped selling to those under 21 and curtailed the sale assault-style weapons (!). Although stock in the company fell by 9% in trading yesterday, its share price has risen by 25% since the start of the year.

And finally, in other news…

Today, I thought I’d bring you an original birthday idea in Sons wish dad happy birthday with huge billboard (Inside Edition, https://tinyurl.com/y2ehxpj4) and a very talented pig in Painting sow Pigcasso hogs the limelight at South Africa farm (Reuters, Alexandra Hudson https://tinyurl.com/yy8pg4ha).

1. In MACRO NEWS, Turkey hits recession, Mexico tries to avoid it, Venezuela’s Maduro feels the heat and German Industrial Production hits the skids
2. In TECH-RELATED NEWS, Microsoft moves into biological computing and Nvidia splashes $6.9bn on an Israeli chipmaker
3. In INDIVIDUAL COMPANY NEWS, Tesla makes a U-turn and Levi Strauss prepares for market
4. In OTHER NEWS, I bring you one flatmate’s plea to her fellows. For more details, read on…

So it’s all kicking off in Turkey, Mexico and Venezuela while German IP weakens…

Turkey falls into recession as currency crisis takes toll (Financial Times, Laura Pitel) highlights the country’s first fall into recession for a decade at the end of last year as its currency fell off a cliff and its interest rates sky-rocketed. This isn’t great news for Turkish president Erdogan ahead of nationwide local elections at the end of this month. Opposition parties have criticised his ruling party presiding over the country’s current 20% inflation rate and rising unemployment – so they can now add recession to the list. * SO WHAT? * The currency crisis that was triggered by the spat between Trump and Erdogan last summer was always going to have consequences but the depth of economic contraction for the fourth quarter was worse than the market had been expecting. The sudden interest rate hike to 24% in September arrested the slide in the lira but caused a massive fall in bank lending, business confidence and consumer spending. Industrial production, car and house sales have all cratered. Turkey is highly reliant on foreign financing and so would be especially vulnerable to any shifts in sentiment given its current precarious state.

In Mexico’s Lopez Obrador rejects recession fear in ‘100-day’ speech (Financial Times, Jude Webber) we see that Mexico’s President Andres Manuel Lopez Obrador (aka “AMLO” – a bit like “J-Lo” but more boring) is talking a good game by saying “There is no hint of recession as our political adversaries and conservatives want, or analysts forecast with bad faith” at a speech marking his first 100 days in office. He talked about some key infrastructure projects to be completed during his six-year term in office and vowed to ensure that Mexico lived within its means whilst also committing to eliminate corruption and simplify bureaucracy. * SO WHAT? * Decent enough sentiment, but it’s early days yet. I suspect that Mexico’s fortunes will be highly dependent on Trump’s whims across the border.

Blackouts raise political heat on Venezuela’s Nicolas Maduro (Financial Times, Gideon Long) gives us a snapshot of Venezuela as its power outage extended into a fifth day yesterday, leaving thousands of homes without

electricity. Shops and businesses have had to close as the government ordered them to stay at home. President Maduro blames the nationwide blackouts on US-based sabotage, but the opposition says that the outages are due to government incompetence and years of neglect regarding the country’s creaking infrastructure. Opposition leader Juan Guaido, who is trying to oust Maduro, is pushing for the National Assembly to declare a national emergency. * SO WHAT? * The situation is getting pretty dire as people in Caracas are starting to troop up the Avila mountain, which looks over the city, to find water and supermarkets have been selling food at discount prices before it rotted. The metro is also out of action, phonelines don’t work and many people don’t have mobile signal. The pressure is building on Maduro to quit as the US and about 50 other countries are now recognising Juan Guaido as the country’s interim leader. Having said that, Maduro still has the support of Russia, China and his military. Ironically, Venezuela sits on the world’s largest energy reserves, but oil output has fallen by two-thirds since 2001 to about 1m barrels per day. Clearly, if Maduro’s regime gets cleared out, the next lot will have to sort out corruption and turn its oil industry around as a matter of urgency.

German industrial production drops unexpectedly (Financial Times, Claire Jones and Sarah Provan) cites the latest data from the German statistics office which show that industrial output fell sharply in January indicating sluggish exports due to weaker global demand and political uncertainty. * SO WHAT? * This just confirms other recent business surveys which show that manufacturers are really feeling the pinch in Europe’s largest economy. Although there’s a lot of pessimism abounding in the market about the current state of Germany’s economy, some are painting a more upbeat picture with JP Morgan economist Greg Fuzesi saying that “The IP weakness in January was entirely due to a 9.2% month on month slump in motor vehicle production. This does not make much sense and could reflect the one-week strike at a Hungarian engine plant in late January” and Oliver Rakau, of Oxford Economics, saying that “A normalisation in the car sector is under way with factory orders over the past two months up by 9 per cent from the third quarter’s low, and already published February car production data strongly suggesting a bounceback”.

Microsoft goes biological and Nvidia makes a chunky acquisition…

Microsoft moves into biological computing with Platform B (Financial Times, Clive Cookson) heralds a major move by Microsoft into biotechnology as it is launching a new system that helps scientists engineer living cells using machine learning and data analysis. The company is partnering up with Princeton University researchers and two UK companies – Oxford BioMedica and Synthace – to roll out the new system, called Platform B. Basically, Platform B analyses huge volumes of biomedical data and advises scientists how to proceed with their research. Oxford BioMedica’s chief business officer Jason Slingsby said that the aim of Platform B was to “dramatically lower the costs of life-saving treatments and put them within the reach of more patients”. * SO WHAT? * This sounds like a good move and adds another string to Microsoft’s bow as it tries to diversify away from almost complete reliance on Windows.

Nvidia to acquire Israeli chipmaker Mellanox for $6.9bn (Financial Times, Eric Platt, James Fontanella-Khan, Mehul Srivastava and Tim Bradshaw) highlights Nvidia’s acquisition of Israeli rival Mellanox in the biggest deal ever done by a US semiconductor company as it tries to boost its business in data centres. The deal is all-cash, at a 14% premium to Mellanox’s closing price on Friday, and will go some way to reducing the company’s reliance on the gaming industry. Nvidia beat Intel’s rival bid for the company. Mellanox makes cables and switches that transfer data between servers, storage systems and infrastructure equipment and will fit in nicely with Nvidia’s graphics processors which are increasingly being used in machine learning systems. * SO WHAT? * This is a major deal which will give Nvidia a real boost in what is expected to be a growth business as increased use of AI will necessitate growth in the number and power of data centres to do all the processing. The combined entity will serve every major cloud computing services provider and power over half of the world’s fastest supercomputers with clients including the likes of Dell, Alphabet and IBM. The deal is expected to complete before the end of this year after getting regulatory approval in the US, China and other areas.

Musk does a U-turn and Levi Strauss prepares for market…

In a quick scoot around other news stories today, Tesla, in reversal, to keep more stores open (Wall Street Journal, Kimberly Chin and Esther Fung) shows Elon Musk going back on his recent pronouncement where he said that almost all Tesla sales outlets would be closed to save costs, with all sales going online-only. Funnily enough, there was a lot of resistance to this from landlords, car

dealers and lawmakers and some prospective customers also complained. Tesla will instead raise vehicle prices by about 3% worldwide to offset some of the costs of keeping the stores open (although the price of the Model 3 will remain unchanged).

Then in Levi Strauss seeks $6.2bn valuation in stock market listing (The Guardian, Rob Davies) we see that the company announced plans to go back into public ownership after over thirty years as a private company as demand for denim surges around the world. * SO WHAT? * The company said that it will use the profits to fund acquisitions.

And finally, in other news…

I thought I’d bring you the plight of one girl who I think many of us can sympathise with in Woman hilariously gets her own back on housemates who never put the bin out (The Mirror, Courtney Pochin https://tinyurl.com/y3dxwyq6). Good move!

1. In BANKS NEWS, Deutsche starts talks with Commerz while Revolut bolsters its governance
2. In HIGH STREET NEWS, footfall weakens and Debenhams continues its anti-Ashley efforts
3. In TECH NEWS, we see how big tech has powered ahead and that TikTok’s owner could be another candidate for flotation
4. In OTHER NEWS, I bring you the right way to eat a pineapple and a troubled running man. For more details, read on…

So Deutsche Bank and Commerzbank start talks while Revolut beefs up its governance…

In Deutsche Bank begins talks over merger with rival Commerzbank (The Guardian, Patrick Collinson) we see that the two German banks have begun merger talks which could lead to the creation of Europe’s second biggest bank behind HSBC. It is thought that both banks have been under political pressure to consider a merger in order to avoid a foreign takeover of the smaller Commerzbank in particular as Berlin is keen to create a bigger national champion. * SO WHAT? * Deutsche has had to deal with a lot of flak in the last few years what with money laundering issues, unstable leadership and being the biggest lender to Trump’s business empire – and although its chief exec Christian Sewing has been opposed to such a merger, pressure has been building from investors to reconsider given that the share price has fallen from €32 five years ago to the current €7.68. Commerz might not be all that keen to merge either given that it has slimmed down its investment banking activities to become a simpler – and less volatile – retail and corporate lender. Although I can see the political logic behind this, it just sounds like the two banks are going in opposite directions – and certainly for Commerz, I think it would be a strategic step backwards

given that it has made great efforts to distance itself from the rollercoaster world of investment banking. If the two banks don’t really want to merge, I just don’t think it’s going to work as it would just be a merger for size’s sake and to please politicians and shareholders.

Under-fire digital bank Revolut bolsters its governance (Financial Times, Nicholas Megaw) highlights the latest developments at the fast-growing challenger bank that has faced recent criticism for shortfalls in compliance and encouraging unhealthy working practices like long hours and unpaid work. It has just appointed Standard Life Aberdeen co-chief exec Martin Gilbert as an adviser in addition to a number of other senior hires in regulatory compliance and governance but the company said that it had actually initiated the search last year, before any of the recent criticisms came to light. * SO WHAT? * This is a positive development – but I guess that these new employees will have to put in a decent stint to counter Revolut’s reputation for being a tough working environment. I’m pretty relaxed on all this because I believe that this is part of the growth trajectory of a start-up as it transitions from fleet-footed disruptor to having more mainstream appeal. Let’s hope there aren’t any more unsavoury bits of news to come out (e.g. involvement with the Russians etc.) and that the bank can concentrate on growing for the future (it was valued at $1.7bn at its most recent funding round last year).

Footfall drops and Debenhams continues to try to fend off Ashley’s advances…

Little cheer on the high street as footfall drops to five-year low (Daily Telegraph, Vinjeru Mkandawire) is the latest kick in the teeth for Britain’s high street as the latest figures from Springboard show shopper footfall dropped by 2%, taking it down to its lowest level for five years and its 15th consecutive month of decline. High street footfall was down by 1.9% but shopping centre footfall dropped by 3.4%. Retail park visitor numbers also fell sharply. Helen Dickinson, chief exec of the British Retail Consortium said that “While real incomes have been rising over the last year, the uncertainty surrounding Brexit appears to be driving a needs-not-wants approach to shopping” and warned that a no-deal Brexit “would likely result in higher costs, higher prices and less choice for consumers – all of which would further harm struggling retailers”. * SO WHAT? * Lower shopper numbers implies lower spending – and this would seem to chime with the overall gloom in the lead-in to Brexit. This is just the latest piece of evidence to reflect that.

Debenhams eyes larger refinancing to fend off Mike Ashley (Financial Times, Jonathan Eley) shows that the ailing department store is continuing its attempts to fend off a takeover by Mike Ashley, the billionaire chief exec of Sports Direct, by trying to increase the size of its upcoming refinancing. It had originally said that it would need around £150m to cover it over the coming year and had secured £40m of this last month in an additional credit facility. However, following Mike Ashley’s dramatic move last week where he demanded an extraordinary meeting of shareholders to kick out all but one of the company’s directors and install himself as chief exec, it sounds like the management is looking at ways to structure the refinancing in a way that will scupper any of his advances –  including targeting a larger amount. * SO WHAT? * Given the calls for an EGM, Debenhams HAS to respond to Ashley’s request within 21 days and hold the meeting within 28 days of that response, which gives the department store until late April to sort something out. The clock is ticking, but I have to say that the amount the company asks for will have to strike a balance between being high enough to scupper Ashley’s chances but low enough that investors don’t just run off. I think that giving more money to Debenhams is just throwing good money after bad as it’s in terminal decline anyway. We’ll just have to see how the drama unfolds for now.

Big tech bounces back and TikTok looks like a potential flotation candidate…

How big tech has powered global stocks (Wall Street Journal, Akane Otani) highlights a recovery in global tech shares since the beginning of the year as companies including Facebook, Netflix, Alibaba and Rakuten have all risen by over 25% in 2019, marking a sharp change following the tech weakness we saw going into the end of 2018. * SO WHAT? * Some companies, including Facebook, Tencent and Dutch semiconductor firm ASML Holdings are trading below last year’s earnings multiples but brokers including RBC Capital Markets and Morgan Stanley have advised caution on tech stocks this year, citing the potential for disappointing growth and tighter regulation. This has been particularly true of Tencent, which has fallen foul of a government that’s trying to clamp down on video game and gambling addiction. Mind you, lthough tighter regulation is definitely a trend, investors will have to decide what’s more important – regulatory risk or missing out on further (untapped) growth potential.

Talking of China tech, Clock ticking as next big thing looks to float (The Times, Simon Duke) takes a look at the potential of popular video-sharing app TikTok’s owner ByteDance. TikTok is the international version of the original Douyin video app that came out in China in 2016 and has sky-rocketed in popularity, becoming the first ever Chinese app to cross over to the mainstream in developed economies including the US and UK. Bytedance was valued last November at a chunky $75bn and TikTok has given it international recognition as it now has over 200 million international users, including 3.7 million in the UK in addition to the 500 million users it has on Douyin. * SO WHAT? * TikTok offers huge potential for exposure to a teenage audience, but it is facing growing doubts over whether it is a safe place for young people online and how the company collects childrens’ personal information. Still, if it can sort this out, it could be even bigger than it is already. Definitely one to watch! 

And finally, in other news…

Today, I thought I’d let you in on something that may surprise you in Man reveals we’ve all been eating pineapples wrong – and our minds are blown (The Mirror, Courtney Pochin https://tinyurl.com/y3rpt5xo). Also, were any of you out in the strong winds yesterday? I was, and I can really identify with the protagonist in this story: Man running race dressed as Big Ben has absolute nightmare in the wind – with hilarious results (The Mirror, Zoe Forsey https://tinyurl.com/yy6wscu4).

1. In MACRO AND OIL NEWS, the ECB does a U-turn while Exxon and Chevron make a big statement in shale
2. In RETAIL NEWS, Kroger suffers, Greggs sales top £1bn but LK Bennett, Primark and Quiz have a ‘mare while John Lewis cuts its staff bonus and Mike Ashley continues his pursuit of Debenhams
3. In INDIVIDUAL COMPANY NEWS, Airbnb buys Hotel Tonight
4. In OTHER NEWS, I bring you the correct way to reheat a sausage roll and an interesting candle. For more details, read on…

So the ECB does a U-turn and Exxon and Chevron put their might into shale…

After quite some time pretending things are going OK in Europe, ECB unveils fresh bank stimulus amid rising eurozone gloom (Financial Times, Claire Jones and Michael Hunter) shows that the European Central Bank has decided to reverse its policy of the last two years of weaning the bloc off economic stimulus measures, and reintroduce them. It will, once again, offer cheap loans to eurozone banks and hold off any interest rate rises until next year as ECB policymakers slashed GDP forecasts from 1.7% (which they announced only three months ago) to 1.1% as well as their inflation forecasts (they will be below the 2% target until 2021). * SO WHAT? * It seems to me that the ECB has been burying its head in the sand and hoping that all of this will just go away. ECB President Mario Draghi was probably hoping to eek out his remaining time in office and then hand his successor the mother of all hospital passes, but things have just got so bad that he couldn’t put things off any longer. There are hopes that a tight labour market, rises in government spending and a recovery in Germany will drag things back from the brink, but the fact is that the ECB is in a very tricky position. It can’t cut interest rates and Germany is in a  right old state at the moment what with a leadership crisis, the looming prospect of Trump turning the tariff screws even more on its car industry and banks in a state of turmoil and scandal. And then there’s the unknown quantity of Brexit, of course.

Exxon and Chevron place long-term bet on Permian shale boom (Financial Times, Ed Crooks) heralds a major development for the US shale industry as two of the world’s biggest oil companies have decided to make up for lost time and ramp up production in the Permian Basin, an area stretching from west Texas to east New Mexico. Output in the region has doubled since the summer of 2016 and now accounts for a third of total US daily production, so Exxon and Chevron’s commitment to the region is going to keep the party going (and then some). Thus far, it’s been small and medium-sized exploration and production (E&P) companies, such as Pioneer Natural Resources and Concho Resources, that have been leading the development of shale production in the Permian basin. However, they’ve had trickier times over the past two years because investors’ initial excited frenzy has cooled somewhat and it has been increasingly difficult for shale operators to raise the cash needed to develop. * SO WHAT? * With Exxon and Chevron throwing their considerable resources wholeheartedly into the Permian Basin, financing operations shouldn’t be a problem. Also, Chevron happens to own a lot of assets in the region outright, which means that its breakeven costs are the lowest in the US and both companies’ respective size should help to develop large areas in a co-ordinated way to maximise production. This will have the effect of lowering oil prices and, if they can apply the lessons learned in this region to shale operations elsewhere this will result in even more downward pressure. OPEC will no doubt be monitoring this development very closely.

Kroger’s profits get dented, Greggs passes a sales milestone while LK Bennett, Primark and Quiz suffer, John Lewis’ staff bonuses get cut and Mike Ashley continues in his pursuit of Debenhams…

Kroger shares fall as online investments dent profit (Wall Street Journal, Heather Haddon) highlights the struggles of America’s biggest supermarket chain as its share price fell by 10% in trading yesterday following news that its revenues and profits were hit by its investment in online operations. * SO WHAT? * Kroger is investing heavily in improving its offering in an environment where Walmart and others, including Aldi and Lidl, are fighting over the same customers whilst simultaneously fending off the might of Amazon. Supermarket shares have had a bit of a sell-off recently following the announcement by Amazon that it was going to launch a chain of urban grocery stores which would offer a broader product range than what is currently on offer at its existing Whole Foods stores. I guess that Kroger is at a stage where it is investing for the future but the benefits are yet to filter through. Let’s hope for Kroger’s sake that it doesn’t have to wait too much longer and/or that Amazon continues to make massive inroads to its existing business.

Savoury tale of the great £1bn British bake off (Daily Telegraph, Jon Yeomans) is a really interesting article which takes a closer look at the company that just passed the impressive mark of £1bn in sales. Not bad for a company that opened its first bakery in 1949 and now has 2,000 outlets across the UK! Greggs has, over the years, rejigged its product lineup (including the famous vegan sausage roll, of course!) and invested in technology by expanding its click and collect service for breakfast orders and experimenting with home delivery via Uber and Deliveroo. * SO WHAT? * This is an impressive landmark, but it’s not all sunshine and rainbows. Greggs thinks that there is “greater risk of a slowdown” in the second half of this year as it has tough 2018 comparisons to beat and it

will also have to deal with supply chain disruption from Brexit as well as a potentially weak pound pushing up ingredients costs. Still, it remains a compelling retail proposition with a robust position in its market and a tenant that many retail landlords value highly.

Retail nightmares persist for others, however, in LK Bennett, latest victim of high street, falls into administration (Daily Telegraph, LaToya Harding) where 500 jobs are now at risk at its 41 shops unless it finds a buyer (Mike Ashley again, I wonder?!? We might have to stop calling it the High Street at this rate and rebadge it Ashley Avenue!), Questions raised as Quiz reveals falling sales (Daily Telegraph, Oliver Gill) highlights a massive profit warning that sent shares of the fast fashion retailer south to the tune of 52% and Primark tells 200 UK staff to move to Dublin or risk redundancy (The Guardian, Rob Davies) shows the impossible dilemma facing almost half of the staff at Primark’s UK office in Reading as the clothing retailer continues to adjust to the UK’s competitive environment and changing consumer behaviour.

If that wasn’t enough drama for you on a Friday morning, in the tricky world of department stores, John Lewis cuts staff bonus pot to lowest level in 65 years (Daily Telegraph, Vinjeru Mkandawire) signifies a tough period in the venerable retailer’s history as bonuses were cut for the sixth year in a row due to falling consumer demand, economic uncertainty and weaker sterling. It also announced that it would close five “unprofitable” Waitrose supermarkets in June that would involve the loss of 440 jobs. Then in Ashley starts Debenhams power grab (The Times, Tabby Kinder) we see that Mike Ashley is intensifying efforts to get on the board of the ailing department store, even offering to step down from running Sports Direct if he is successful! Debenhams’ responded to the surprise attack by saying “The board has been engaging with Sports Direct and our other stakeholders and is disappointed that Sports Direct has taken this action”. * SO WHAT? * Mike Ashley really isn’t going to let this one go and I guess that this rather drastic action has come about following news of imminent attempts of a refinancing that could severely dilute Ashley’s 29.7% stake in the company. Get popcorn and sit back – this could get very interesting! 

Airbnb buys Hotel Tonight…

In Airbnb agrees to buy Hotel Tonight (Wall Street Journal, Maureen Farrell) we see that the home-sharing company has decided to buy the hotel booking site Hotel Tonight, which sells discounted hotel rooms for last minute

travellers, for an undisclosed sum. * SO WHAT? * Airbnb is trying to boost its inventory ahead of an expected IPO. Hotel Tonight was last valued at $463m in March 2017, its most recent funding round.

And finally, in other news…

Given that I mentioned Greggs earlier, I thought it only right to make you aware of this: Man’s bizarre trick for re-heating a Greggs sausage roll – without making it soggy (The Mirror, Courtney Pochin https://tinyurl.com/yyzqfrj7). Classy. Alternatively, if you have more of a penchant for burgers, how about this: McDonald’s cheeseburger scented candle has fans’ mouths watering and lasts ages (The Mirror, Zahra Mulroy https://tinyurl.com/y3vsrejn). A suitable gift for Mothers’ Day, perhaps?!?

1. In TRADE-RELATED NEWS, Trump’s tariff tampering leads to deficit as Volvo and Jack Daniel’s talk about tariff impact
2. In INDIVIDUAL COMPANY NEWS, US regulators approve the first drug to treat depression since Prozac, Grab grabs $1.5bn to expand in Indonesia, Paddy Power has a flutter and Amazon closes its pop-up shops
3. In OTHER NEWS, I bring you the future of broadcasting. For more details, read on…

So Trump’s trade war comes home to roost while Volvo and Jack Daniel’s talk tariff troubles…

Trump’s tariff war pushes US trade deficit to 10-year high (The Guardian, Phillip Inman) highlights the gap between the the amount of goods US companies sell to China and the amount of Chinese imports to the US as being the largest in ten years and occurred despite a surplus in services trade. Trump’s $1tn of tax cuts and higher government spending had boosted domestic consumption, but had also increased imports as customers continued to buy imported goods. On the other side, the strong dollar made American goods more expensive, meaning that consumers outside the US looked for more competitive goods. The US imported from 60 countries in 2018, with most imports coming from China, Mexico and Germany. * SO WHAT? * If you just look at this data, it would seem that Trump’s efforts to reduce the gap have failed spectacularly. These disappointing figures may even make him less likely to sign off on a deal with China later this month but it will also intensify subsequent negotiations with Europe.

In Volvo’s Polestar electric car brand warns of US tariff impact (Financial Times, Peter Campbell) we see that Volvo Cars is already assuming the worst as it said that it will cut sales targets for its all-electric model in the US if Trump imposes higher tariffs on exports from China. The Polestar 2, a new potential competitor for the Tesla Model 3, was shown at the Geneva Motor Show this week and will

go on sale next year as one of the first mid-market all-electric cars from a volume car manufacturer (it’ll be priced at $63,000, which includes a 27.5% tariff on Chinese auto imports). * SO WHAT? * Trump has obviously instigated the whole tariff war in an effort to protect/nurture the US automotive industry, but his actions have resulted in some manufacturing leaving the US already (BMW and Daimler have moved some production out of the US to avoid sanctions) and a reduction in the number of models available (e.g. Ford cancelled plans to sell the Focus, which is made in China, in the US). Although Volvo’s new factory in South Carolina could be tooled up to produce the Polestar 2, it is deemed to be too risky if it doesn’t build brand recognition in the US first. This just goes to show that it is too simplistic to assume that slapping tariffs on imported vehicles will automatically help the US automotive industry. Globalisation has made this much less clear-cut than it would have been in the past.

Whiskey tariffs drag on sales for Jack Daniel’s maker (Financial Times, Matthew Rocco) highlights the effects of the trade war on Jack Daniel’s maker Brown-Forman as tariffs on American Whiskey took a sizeable chunk out of its sales growth in the last quarter. Investors took fright, sending the stock price down by 6.9%, but the company said that it expected to limit tariff impacts in 2019. * SO WHAT? * It seems that the spirits industry has been an easy target as Trump’s tariffs have prompted China, Canada, Mexico and Europe to impose their own. Clearly, the longer this drags on, the more painful things are going to become. 

A new anti-depressant gets approval, Grab grabs a chunk of dosh to expand, Paddy Power rebrands and Amazon shuts its pop-ups…

US approves first depression drug in decades (Financial Times, Hannah Kuchler) heralds a huge moment as the US Federal Drug Administration (FDA) has approved a new antidepressant, called esketamine and branded Spravato, to treat patients who have already tried at least two other antidepressant treatments. Johnson & Johnson make the drug and it will be sold as a nasal spray. The drug was given a “Breakthrough therapy” classification, which meant that it was fast-tracked through the approval process. * SO WHAT? * This is huge news because it is the first new antidepressant to get approval since Prozac was released 30 years ago. Although tests have shown that it can work fast (sometimes in as little as two days), there are risks of serious side-effects (particularly sedation and dissociation), which mean that it must be administered at a doctor’s office or clinic with patients having to be monitored for two hours after getting a dose. Despite this breakthrough, and the fact that it could be a life-saver for a third of people with major depressive disorders who have not yet responded to existing therapies, Johnson & Johnson’s share price stayed pretty flat after the approval was announced. Allergan, a Dublin-based pharmaceuticals company, is developing another antidepressant based on similar principles and will announce the results of its phase III clinical trials on Rapastinel soon.

Grab pockets $1.5bn from SoftBank to expand in Indonesia (Daily Telegraph, James Cook) heralds a nice little boost for South East Asian ride-hailing service Grab as it just got $1.5bn in new funding from SoftBank’s Vision Fund and will use most of it to expand its operations in Indonesia. * SO WHAT? * Including this latest injection, Grab has managed to raise more than $4.5bn over the past year and the company has grown rapidly since it bought

Uber’s regional ride-hailing and food business in March last year. The company will continue to grow its existing services and add additional ones like on-demand video, digital healthcare, insurance and hotel bookings. It certainly sounds like it is “crushing it” in the region.

Paddy Power has flutter on value of new name (The Times, Dominic Walsh) is a story cropping up in a few of the broadsheets today as it turns out that the company is intending to rebrand itself as Flutter Entertainment to reflect the “increased diversity of our brands and operations”. A vote on the change will be held at the company’s AGM in May. * SO WHAT? * I guess that this is an effort to simplify things after a period of consolidation in the industry as Flutter Entertainment is much less of a mouthful than Paddy Power Betfair (which came from the merger of the Irish bookmaker Paddy Power and Betfair back in 2016). It is aiming to buy more brands in the US and other emerging gambling markets as it searches for new growth.

I thought that Amazon to shut all US pop-up stores as it rethinks physical retail strategy (Wall Street Journal, Esther Fung) was worth mentioning because it seems that it has been expanding its footprint of physical stores of late. However, it’s now shutting down all of its 87 US pop-up stores, which were small and showcased devices like its voice assistant speakers, Kindles and other new products. On the other hand, Amazon is expanding its number of bookstores and its so-called 4-star stores (which sell products rated four stars or more by Amazon customers) which provide a broader product range – as well as rolling out a new line of grocery stores and more Amazon Go cashierless outlets. * SO WHAT? * Amazon really is trying to find its feet in the physical retail space and I think that initiatives like the pop-up shops have probably provided valuable insight into the real world by giving the company exposure to the end customer. It’s rare for a retailer to have deep enough pockets to finance this kind of experimentation, but having pretty much conquered online retailing, Amazon is now coming for the high street. Competitors should be very scared.

And finally, in other news…

You know that I’m always trying to bring you new trends – well, this could be the future of newsreaders: Chinese news agency unveils world’s first AI news presenters in jaw-dropping videos (SoraNews24, Koh Ruide https://tinyurl.com/yxswyarf). Although this is impressive, you won’t get TV gold like this with a robot: https://tinyurl.com/y25np3da (BBC newsreader Simon McCoy was clearly having a bad day!).

1. In MACRO AND INDUSTRY NEWS, China cuts its growth forecasts and the FDA loses its chief
2. In HIGH STREET/CONSUMER-RELATED NEWS, Debenhams has a profits warning, Superdry announces cuts and Papa John’s calls a truce with its founder
3. In INDIVIDUAL COMPANY NEWS, BMW and Toyota make Brexit warnings and Harley-Davidson goes electric (well, sort of)
4. In OTHER NEWS, I bring you unusual pancake toppings. For more details, read on…

So China’s growth forecasts are cut and the FDA’s chief departs…

China’s ‘tough struggle’ as growth falls to 29-year low (Daily Telegraph, Tom Rees) shows that China is steeling itself for its slowest annual GDP growth rate for almost thirty years by targeting a range of 6-6.5% (although I would add that China cuts taxes in bid to stimulate economy (The Times, Didi Tang) says that this is the lowest rate since 1993 – whatevs, it’s a long time!). Li Keqiang, the Chinese Premier, warned that “There will be more risks and challenges that are either predictable or unpredictable and we must be fully prepared for a tough struggle”. The Chinese government announced a major stimulus package worth £227bn in higher spending and tax cuts whilst also saying that VAT would be lowered for the manufacturing sector to help it out of the rut it has found itself in (it contracted for the third straight month in February). * SO WHAT? * If you were a glass-half-full sort of person, you might say that this is a very sizeable stimulus that is meaty enough to do something meaningful, but if you were in the glass-half-empty camp, you could say that the size of this stimulus belies the fact that the trade war has done a lot of damage and that it reflects

uncertainty about the outcome of the current negotiations. It is possible, however, that China’s industrial sector could get a boost sooner-than-expected because the trade deal that is currently expected to be signed at the end of this month may prompt Trump to lift taxes on over $250bn-worth of goods, but it’s not in black-and-white yet and the longevity of any accord will hinge on China sticking to what it says otherwise we’re all back to square one.

FDA chief Scott Gottlieb to leave Agency (Wall Street Journal, Thomas M. Burton and Jennifer Maloney) looks like a bit of a “meh” story at first glance because you may be tempted to think “Oh it’s just some suit resigning – he’ll just get replaced”. However, Scott Gottlieb has been head of America’s very powerful Food and Drug Administration (FDA) and been instrumental in pushing some major initiatives during his tenure – including a proposed ban on menthol cigarettes, the speeding up of generic medicine approval and restriction in the use of flavoured e-cigarettes among teenagers (after having helped the growth of vaping in the first place). He’ll be in place for the next month after which he’ll hand over the reins to someone else. It’ll be interesting to see whether his successor will carry on his initiatives or concentrate on other things – the tobacco industry in particular will be following events very very closely!

Debenhams continues to suffer, Superdry announces cuts and Papa John’s calls a truce with its founder…

Debenhams isssues profit warning as sales continue to slump (The Guardian, Julia Kollewe and Sarah Butler) heralds yet another bit of bad news from the troubled department store as it issued a profit warning only two months after issuing its most recent profit forecasts and three weeks after it got a cash injection of £40m. Chief exec Sergio Bucher came out with the usual BS, saying “We are making good progress with our stakeholder discussions to put the business on a firm footing for the future. We still expect that this process will lead to around 50 stores closing in the medium term” but Debenhams’ forecasts ‘no longer valid’ – like its shops (Daily Telegraph, Ashley Armstrong) makes some valid points in that the only reason why it avoided a profit warning in January was because it just came up with £50m of cost savings from nowhere and that the company’s appeals to landlords and councils for rent and rates cuts sounds like it’s asking for charity. * SO WHAT? * The company’s performance continues to be poor but Mike Ashley may yet exit this situation smelling of roses if Debenhams fails to refinance successfully because if it goes into administration, he’ll be able to cherry pick the best bits WITHOUT all the nasty pension liabilities via a pre-pack administration. I think that Debenhams is an absolute disaster, Sergio Bucher is just rearranging the deckchairs on the Titanic and Mike Ashley is in a souped-up RNLI lifeboat waiting to whisk away the fittest survivors.

The gloom continues in Superdry to axe up to 200 jobs as part of £50m cost-cutting plan (The Guardian, Zoe Wood) as the fashion retailer announced that it would be cutting 20% of the workforce at its Cheltenham HQ as part of a broader plan to make £50m-worth of cost savings over the next three years. * SO WHAT? * Current chief exec Euan Sutherland is having a tricky time at the moment with his company performing poorly on the one hand and then the constant threat of co-founder Julian Dunkerton returning to sort things out on the other. Superdry will be holding an extraordinary meeting this month to consider Dunkerton’s plan that would involve installing Peter Williams, current chairman of online fashion retailer Boohoo, as a non-exec director. Dunkerton is arguing that Sutherland doesn’t know what he’s doing and Sutherland is arguing that it’s Dunkerton’s thinking that got them into this current mess. The weaker the share price gets, the more compelling Dunkerton’s actions will become. I think that Sutherland is going to have to turn things around pretty quickly in order to survive this battle.

Then in Pizza chain Papa John’s calls truce in battle with its founder (Financial Times, Pan Kwan Yuk) we see that founder John Schnatter struck a deal yesterday with Papa John’s International whereby he will vacate his seat on the board and drop all lawsuits against the company in return for being allowed to chose a replacement director. * SO WHAT? * Things have been pretty heated between John Schnatter, who started the company back in 1984, and Papa John’s since he was pushed out of the company last summer after a series of high-profile gaffes. The company has been doing all sorts of things to stop him from regaining control and he had been fighting it in the courts over the circumstances of his removal. Shares in the company have fallen by around 30% in the last 12 months and rose slightly on the latest news. The company still has a (pizza) mountain to climb in turning around sluggish sales, but at least this cloud has now gone, leaving everyone to get on with things.

BMW and Toyota sound warnings over Brexit and Harley-Davidson goes sort-of electric…

Threat to Mini factory as BMW and Toyota raise no-deal alarm (Daily Telegraph, Jillian Ambrose and Chris Johnson) highlights carmaker concerns about the impact of Brexit as BMW said that the production of some or all of the Mini could move to Holland (which would be another blow for Swindon, which is still reeling from the recent Honda announcement) in a no-deal Brexit scenario and Toyota said that such circumstances would make it very difficult to justify making new models in its Derbyshire plant. * SO WHAT? * I can see where they are coming from, but I would suggest that car sales are generally on a downward trend anyway and Brexit is a convenient excuse to justify pulling production that shifts the blame onto something outside the company. Obviously it is a factor, but there are so many others – like tighter emissions

regulation, the increasing need for electrification, changing ownership trends etc.etc. – which form part of these moves. The companies are just rattling cages IMHO.

Harley-Davidson aims to put tykes on bikes with StaCyc deal (Financial Times, Eric Platt and Pan Kwan Yuk) shows that Harley-Davidson just bought StaCyc, a small producer of electric bikes for kids. This is part of an overall effort to diversify the company’s client base away from old men with handlebar moustaches and bandanas and they justified this acquisition by saying “The StaCyc electric two-wheelers will provide an entry point for the youngest riders to enjoy the thrill of riding”. * SO WHAT? * My *rse. This smacks of desperation to me! The fact is that the company’s share price is now 50% below its 2014 high and no amount of tinkering around the edges with opening stores selling H-D branded sweatshirts and jeans or buying kiddie bikes is going to mask the fact that it has been killed by the tariff wars. I don’t think it’s going to get much better soon either as Trump’s next battle (if he manages to sort the Chinese) will be with Europe.

And finally, in other news…

I thought I’d let you know about this “unusual” topping for pancakes that some people were enjoying in yesterday’s Shrove Tuesday celebrations: People are putting gravy on their pancakes – and the internet is divided over it (The Mirror, Courtney Pochin http://tinyurl.com/y69yrv34). Although my first reaction was ????, the ingredients for Yorkshire puddings and pancakes are actually the same – so really it makes perfect sense. One for next year, maybe?

1. In INDUSTRY NEWS, China’s tech sector sees cuts and UK construction stalls
2. In CAR NEWS, we see the contrast between Ford’s failure and Toyota’s triumph in China plus Tesla’s new model
3. In HIGH STREET NEWS, we see weaker sales, “Mr” Ted Baker standing down, more restaurant closures and Paperchase’s woes
4. In OTHER NEWS, I bring you a ninja training opportunity. For more details, read on…

So China’s tech industry gets a dose of austerity while the UK construction sector weakens on Brexit…

Chinese tech scene hit by job cuts as austerity bites (Financial Times, Louise Lucas and Nian Liu) looks at how previously red-hot start-ups are cutting costs as the wider economy slows down after years of seemingly-unlimited cash flows. Didi Chuxing (ride-sharing) has cut free snacks and gym membership, ByteDance (internet tech company operating various content platforms, also developer of TikTok) cut its new year bonuses and others are cutting staff, fruitbowls and other perks. Online recruitment site Zhaopin.com, which has 180m registered users, is showing record numbers of CVs doing the rounds and Li Qiang, exec VP, pointed out that after a long period of growth, internet user numbers have plateaued while competition has intensified, margins have shrunk and regulations have got tighter. Investors believe that there will be more job cuts in the pipeline and, according to estimates from brokerage firm Jefferies, advertising budgets are only going to grow by 17% this year – half the rate it’s been for the last two years – which is notable considering that advertising spend is often seen as a leading economic indicator (i.e. reduced ad spend is a sign that the economy will slow down). * SO WHAT? * It was inevitable that the exponential growth that big Chinese tech names like Didi, JD.com, Alibaba, ByteDance and Meituan Dianping (food delivery app) have experienced in the last few years was bound to

hit the buffers given the broader economic slowdown. I guess that for them, what happens next will be important. I think that a pause for breath with a reshuffling of staff is not a bad thing but companies are clearly concerned that any sign of weakness could be pounced upon and negative chat could become a self-fulfilling prophecy – which is probably why many of the names above are keen to put a brave face on things. Having said that, I suspect that the Chinese government will be keen to support its tech industry and so would expect it to swoop in to help if things get really bad given that it is an area it has targeted as being key to its future economic success.

This is a bit of a “no-sh!t-Sherlock” kind of story but Construction industry stalls amid disquiet over the future (The Guardian, Richard Partington) cites the latest findings of the IHS Markit/CIPS Purchasing Managers’ Index (PMI) which show that, after 10 months of expansion, construction companies reported a drop in activity levels in February with commercial building and civil engineering projects being particularly weak. The no-sh!t-Sherlock conclusion is that the slowdown was due to Brexit uncertainty slowing down decision making, leading to weaker demand. Tim Moore, the economics associate director at IHS Markit, observed that “Risk aversion in the commercial sub-category has exerted a downward influence on workloads throughout the year so far. This reflects softer business spending on fixed assets such as industrial units, offices and retail space”. Interestingly, some companies found that stockpiling by manufacturers had led to shortages of transport availability, which meant that builders had to wait longer for products and materials.

We look at where Ford’s going wrong and Toyota’s going right in China as well as the imminent unveiling of Tesla’s new model…

Why Ford is stalling in China while Toyota succeeds (Financial Times, Tom Hancock) takes a look at how foreign manufacturers are faring in the Chinese market. There is a definite contrast in fortune between “losers” like Ford, which is one of many carmakers cutting production in China, and “winners” including makers like Toyota – whose joint venture with Guangzhou Automobile saw sales up 35% last year – and BMW, whose venture with Brilliance Auto saw a 20% rise. Ford was a late starter in China, now the world’s largest car market which accounts for 30% of global car sales, but enjoyed some good years initially until its sales started to fall at its main joint venture with Changan in 2017. Many believe that sales have continued to fall because their model line-up is too old – Jochen Siebert of consultancy JSC Automotive pointed out that “Their problem is really the model cycle, the majority of their cars are in year five or six, that’s when sales drop rapidly”. Ford then introduced new models last year, but this was when the whole market started to slow down. PSA Group (which owns the Peugeot and Citroen brands) saw sales at its joint venture with Dongfeng fall by 44% last year and, although it also introduced new models like Ford did, it suffered from its mid-market position as less flush customers felt the pinch of the economic downturn and stopped buying cars or went secondhand instead. The group also suffered as Chinese brands like Geely and BYD continue to climb the value chain and become more

competitive. JLR has suffered from a dent in its reputation following a number of safety recalls and inventories have been building up while Toyota, in contrast, sold a record 1.5m vehicles in China last year, and benefited from having a reputation for selling good quality, fuel efficient cars and consistently bringing new models to market. Mercedes, BMW and Audi all did pretty well as wealthier customers have been more insulated from the economic slowdown. * SO WHAT? * The main consolation for Ford is that because it was later than others to the market, its China business is not as key to worldwide sales as it is to players like GM and VW. Still, I think that it needs to get its act together otherwise it will just continue to drift. There may be opportunities for a refresh soon, though, as China’s abolition of the joint venture rule means that foreign companies will be able to buy majority stakes in their partners in 2021. Some of the Chinese partners won’t like this and will seek out alliances with other manufacturers – which is where Ford may be able to do a bit of a reset.

Tesla gets set to unveil new compact SUV next week (Daily Telegraph, Hannah Boland) heralds the imminent arrival of the Model Y SUV next week which Elon Musk says will cost about 10% more than the Model 3 and have slightly less range for the same battery. The Model Y is expected to go into volume production next year and will share many components with the Model 3 (and no, it won’t have those Falcon Wing doors of the larger Model X). Morgan Stanley’s Adam Jonas put a positive spin on the new model, saying that an “all-new mid-sized crossover/SUV is Tesla’s chance to take the learnings from the Model S, X and 3 in design and manufacturing to offer a product in a far larger and faster growing global segment” although there was a danger that something as “exciting” as this might cannibalise potential sales of the Model 3.