Friday 15/11/19

  1. In MACRO NEWS, Germany avoids recession and Chinese manufacturing slows down
  2. In RETAIL NEWS, Walmart continues its winning streak while UK retail sales fall
  3. In DATA & SOCIAL MEDIA NEWS, Google plans to restrict data access, Apple launches a research app, Yahoo Japan and Line have merger talks and TikTok’s popularity in India continues
  4. In INDIVIDUAL COMPANY NEWS, Disney+ makes a strong start but FirstGroup gets hit by Greyhound woes
  5. In OTHER NEWS, I bring you the Japanese Elsa…



So Germany swerves recession and China manufacturing suffers…

Germany steers clear of recession…but only just (The Times, Gurpreet Narwan) shows that Germany managed to confound expectations yet again by showing a sliver of GDP growth (+0.1%) in the latest quarter. This means that it has avoided the fate of having two consecutive quarters of contraction which would have put it into technical recession. The country was once again rescued by strong consumer spending as its manufacturing capability continues to be buffeted by weaker global demand and ongoing trade tensions. * SO WHAT? * This is probably going to be greeted with relief rather than celebration and

eases the pressure slightly on the German government who would probably have had to unleash “emergency” fiscal stimulus measures if the economy had tipped into recession. They may well have to do so anyway, but this reprieve gives them a bit of leeway on the timing.

Chinese manufacturing slows as trade war with US dents confidence (The Guardian, Phillip Inman) cites the latest figures from the National Bureau of Statistics which show that the Chinese manufacturing sector slowed down for the sixth consecutive month in October. This was due to the ongoing US-China trade war and weakening consumer sentiment as retail sales fell to a 16-year low. * SO WHAT? * Continued weaker numbers would suggest that China’s economy is going to slow down even further going into the fourth quarter.



Walmart shows continued strength but UK retail sales take a dent…

Walmart’s sales growth streak hits five years (Wall Street Journal, Sarah Nassauer) heralds another strong performance from America’s biggest grocer as customers continue to stream through its doors – but interestingly, its e-commerce sales in the US rose by 41% versus the previous year. Walmart is the first major retailer to report its numbers this quarter and will be followed next week by Target, Best Buy and Macy’s. The company raised its guidance for the full year. * SO WHAT? * Although low unemployment and higher wages continue to support consumer confidence, the wider economy itself appears to be losing momentum. Still, the company is doing well but needs to continue its efforts to improve its offering. Its international business faces challenges with Brexit in the UK and civil unrest in Chile but had some wins in China, Mexico and India. President Trump tried to quell

criticism that China tariffs would hit retailers like Walmart by touting its strong performance, but despite what he says I think that those worries will remain. 

UK sales hit by surprise downturn despite discounting (The Guardian, Phillip Inman) cites the latest figures from the Office for National Statistics which shows that sales fell by 0.1% in October, surprising analysts who had expected a 0.1% rise due to discounting. This is the weakest monthly sales figure since April last year and shows that consumers kept their hands in their pockets going into the October 31st Brexit “deadline”. Interestingly, department store sales volumes increased by 2% due to promotional events and the introduction of Christmas lines – but sales are still trending down overall. * SO WHAT? * Lots of observers will be saying that this is a portent of a difficult Christmas trading period but I think it’s too early to tell at this stage. We’ve still got retail events like Black Friday to come yet and it may well be that consumers have decided to wait until then to have a retail splurge. Every data release in the retail sector will be pored over in great detail as everyone tries to second-guess their Christmas fortunes.



Google plans changes, Apple launches a research app, Yahoo Japan mulls a merger with Line and TikTok’s Indian success continues…

Google plan to lock down user data draw fire from advertisers (Financial Times, Madhumita Murgia and Alex Barker) highlights the company’s plan to restrict advertisers’ access to personal data in response to privacy concerns. It says that it will stop advertisers from viewing information that breaks down web page content but advertisers and publishers say that will just give Google more power over user data. * SO WHAT? * I suspect this story is going to continue to run as this use of really quite sensitive data is rather eye-opening to say the least. Advertisers obviously want as much detail as possible on their targets to give them more chance to sell, but you can understand their frustration if Google just continues to collect the information anyway and not let anyone else access it. 

Talking of data collection, Apple launches research app in push to gather users’ health data (Financial Times, Patrick McGee and Hannah Kuchler) highlights a new research app (called “Research App”!) that will “advance science” by collating information from its iPhone users and Apple Watch wearers. Apple said it will use this data to build new products. * SO WHAT? * This is all part of a general push by tech companies to get into healthcare but it comes at a time when more people are questioning the use of increasingly sensitive user data. Apple will try to differentiate itself from others by emphasising its “privacy first” model which does not rely on advertising. Users will control whether they participate, which groups they can join and will be kept in the loop about results without any information being sold to third parties. If this gets

widespread adoption, it could lead to some major developments in the future as Apple will have access to “live” information. Will consumers trust Apple more than Google? It remains to be seen…

In SoftBank-backed Yahoo Japan in talks over merger with Line app (Financial Times, Kana Inagaki) we see that the two Japanese companies are looking at creating a broad-based internet player to take on the likes of America’s Facebook and China’s Tencent. Line is Japan’s rival to WhatsApp and is 73% owned by South Korean internet search group Naver. Talks have been confirmed but no final decision has been made as yet. * SO WHAT? * Line has 82m monthly active users in Japan and has expanded into payments, banking and fintech businesses and so a merger with Yahoo Japan, which operates PayPay, could strengthen both sides and give Line potential access to SoftBank’s Vision Fund. This sounds like a good idea from a strategic standpoint as it will help both companies compete domestically with Rakuten, but I don’t think Facebook or Tencent will be losing any sleep over this.

TikTok – target of US suspicion – is a smash hit in China (Wall Street Journal, Eric Bellman) shows that TikTok’s popularity in India is exploding as the ByteDance-owned video sharing app’s efforts to raise its profile by backing government initiatives and investing big money in the business appears to be paying off. Farmers and Lambo drivers alike are among the users and it now has quadruple the number of downloads that America has. * SO WHAT? * TikTok has been a huge hit in India but it faced a ban in April over fears it could be used for child exploitation. However, the ban was lifted after a massive outcry from users and moves by ByteDance to impose measures to prevent abuse. The company has said that it will invest $1bn in India over the next few years and it will be interesting to see how this develops because if TikTok is just a one-hit wonder, it could all end rather badly. For the immediate future, though, it’s a winner!



Disney+ has a decent start but FirstGroup hits a bump…

Force to be reckoned with (Daily Telegraph) shows that Disney’s new streaming service hit 10m subscribers in only one day following its launch on Tuesday in the US, Canada and Netherlands. Mind you, Netflix’s content chief says ‘nothing has changed’ with Disney+ launch (Wall Street Journal, Joe Flint) shows that Netflix is confident that its raft of original programming will help combat too many subscriber defections. * SO WHAT? * Netflix may well be saying this now but the competition’s only going to get more intense. I know this is probably just my opinion but I have yet to see a Netflix film that is any good – some of the original series are excellent, but I think their movie

offering is decidedly meh. Netflix will have to continue to spend to keep its subscribers plied with fresh content – but anything that they haven’t made themselves will probably cost more as there will be more players bidding for it!

FirstGroup goes off the rails with £124m hit from Greyhound sale (Daily Telegraph, Oliver Gill) highlights a tough time for transport firm FirstGroup as its first-half profits were wiped out after the company had to writedown the value of its US long-distance bus service, Greyhound, that it is trying to sell. The company’s share price fell by a fifth as investors expressed their disappointment with the writedown and news of increased costs for the North American business. * SO WHAT? * There isn’t much light at the end of the tunnel, at least in the short term, as the company also runs South Western Railway, which will no doubt suffer as 27 days of strikes are being called by the RMT in December. Tough times.



And finally, in other news…

Given that Frozen 2 is due to be released next week, I thought I’d show you Japanese version of Frozen 2’s “Into the Unknown” is a powerful return for Elsa’s singer in Japan (SoraNews24, Casey Baseel because I always find it fascinating to listen to Disney characters you know speaking other languages! I had a job when I was a student tutoring young kids English in Tokyo and I have fond memories of meeting the Japanese Donald Duck – it was mind-blowing! The voice of Donald Duck – just speaking in Japanese! Apparently, the song Into the Unknown could well outdo Let It Go as one of those songs you will never get out of your head 😜

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Some of today’s market, commodity & currency moves (as at 0905hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq**DAX *CAC-40 *Nikkei **Shanghai **
7,293 (-0.80%)27,762 (-0.08%)3,096 (+0.06%)8,47913,180 (-0.38%)5,901 (-0.10%)23,303 (+0.70%)2,891 (-0.64%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)