Monday 10/02/20

  1. In CORONAVIRUS & POLITICAL NEWS, China tries to restart, factories struggle, the “Boris Bounce” could get knocked off course and the Irish election yields a major upset
  2. In TELECOMS NEWS, Huawei stripping comes at a cost and Samsung is to unveil an impressive phone
  3. In MISCELLANEOUS NEWS, Mattel revamps, Waitrose aims to charm and some argue “peak gin” calls are premature
  4. In OTHER NEWS, I bring you Marmite peanut butter and exactly how you should reheat pizza…



So China hits the restart button, factories continue to suffer, the Boris bounce may get less bouncy and the Irish election surprises…

China seeks to restart economy despite coronavirus outbreak (Financial Times, Tom Mitchell, Ryan McMorrow and Sun Yu) heralds an attempt to get back to normality as China’s State Council has urged critical industries to start normal operations as soon as possible and most provinces have appealed to local businesses to do the same. Some are encouraging people to work from home, but some such as Alibaba and Meituan have extended the already-extended break to February 16th or later. Schools will not, however, be opening. China’s factories struggle to resume operations after virus shutdown (Wall Street Journal, Chuin-Wei Yap) shows that although things are bad enough for big companies having to shut down operations, it’s even worse for smaller companies. There aren’t enough staff to run the factories, there’s a lack of quality controllers to certify them, shifting product around is difficult by road (loads of checkpoints where drivers are screened for the disease) and flights and shipping have been severely restricted. * SO WHAT? * As everyone keeps saying, the longer this continues, the longer its repercussions are likely to last. As things stand, China’s much-anticipated GDP growth target of 6% looks tricky and there’s even talk that the National People’s Congress in March (which is where this target is announced) could be delayed. In the meantime, the fatalities continue.

There have been a number of stories recently referring to the “Boris bounce” (an uptick in activity since the increased “certainty” following December’s general election) in house prices and manufacturing, but ‘Boris bounce’ in growth set to be battered by coronavirus (Daily Telegraph, Tom Rees and Russell Lynch) shows that many City economists are

cutting forecasts to take into account the effect of the coronavirus on first quarter GDP growth prospects. * SO WHAT? * I wouldn’t get too caught up in this as predicting the impact right now is a mug’s game. OK, so these economists are paid to have an opinion and come up with some BS backing up their workings 😜, but at the end of the day these things are only an indication and are not always right (plus they always change the figures anyway)! I think that a lot of the ‘Boris bounce thing is just hype. Yes, there was some amount of relief in certain quarters (I would argue rich people, who held off major purchases like houses because they were concerned about a Labour government) but there are still tough negotiations to be done with Europe. At least jobs and wages are holding up reasonably well for the moment.

Well it looks like Irish PM “did a Cameron” (my own terminology – will it catch on??) and massively misjudged the electorate in Sinn Féin demands government role after Irish poll breakthrough (Financial Times, Arthur Beesley) as the centre-left party made huge strides in the Irish election. It took 24.5% of the vote while Varadkar’s centre-right Fine Gael limped in in third place with 20.9%. However, centrist opposition Fianna Fáel looks likely to be the biggest party in parliament even though it came in second with 22.2% of the vote because Sinn Féin didn’t run enough candidates. * SO WHAT? * This is an especially notable victory as it only had 9.5% of the vote in local elections last year and will smash the decades-long dominance of Fine Gael and Fianna Fáel who have always tried to exclude Sinn Féin from government because of its links to the IRA. Although Sinn Féin will hold the balance of power, neither of the other parties wants to work with them although Fianna Fáel’s leader Micheál Martin, has been slightly more open to it than Varadkar. The electorate clearly didn’t give a 💩 about Brexit (an exit poll for RTÉ and others suggested that it was the priority for just 1% of voters!), but DID care a lot about housing and healthcare. It’ll be interesting to see what sort of impact this might have on the Brexit debate going forward.



Companies count the cost of Huawei stripping and Samsung is about to unveil a very cool phone…

Full Huawei ban ‘could cost phone firms £1.5bn’ (The Times, Alex Ralph) cites findings from research company Enders Analysis which says that a complete ban on Huawei equipment on Britain’s 5G network could delay its rollout by up to two years and cost the likes of BT, Vodafone and Three around £1.5bn. BoJo recently suggested a 35% cap on Huawei usage in 5G infrastructure and Vodafone has already estimated the cost of stripping out Huawei equipment but the US continues to put pressure on the UK for a 100% ban, as are some MPs. The debate rages on as China objects to this “witch hunt”.

Samsung eyes new halo with game-changing flip-phone (Daily Telegraph, Harry de Quetteville and Matthew Field) highlights the imminent launch of Samsung’s Z-Flip (yes, OK, so it will also launch the latest updated Galaxy with better cameras, battery and 5G connectivity 🥱) which is the company’s second foldable phone that will give users a big screen via a new/old clamshell design. Although last year’s Fold generated some embarrassing moments, Samsung actually ended up selling up to half a million units – way more than analysts were expecting. * SO WHAT? * This looks like one amazing phone and I’m sure that Samsung will do very well from it. However, the company always seems to produce the technically superior handsets while Apple, forever late to the party, makes even greater strides due to its better usability. This is another game-changer and I really think that the combination of foldable phones and 5G will drag the whole industry out of its current rut. Exciting times!



Mattel tries to change, Waitrose makes moves ahead of the Ocado farewell and it seems that there could be life in gin after all…

Mattel closes factories as it revamps supply chain (Wall Street Journal, Paul Ziobro) is a really interesting article that looks at the company’s struggles as the whole toy manufacturing industry wages war for childrens’ attention against the dreaded tablets. Mattel said that it had closed factories in China and Indonesia last year, with another one in Montreal scheduled to be closed down sometime this year as it struggles with its long-honoured tradition of making its own toys (unlike rival Hasbro, which outsources manufacture). * SO WHAT? * This is all part of a restructuring plan and investors will be watching with interest as both Mattel and Hasbro are due to announce their earnings this week that will cover the festive period.

Elsewhere, Waitrose to launch charm offensive as Ocado switches to M&S (The Guardian, Zoe Wood) shows that the supermarket, which is to part company with its long-time online partner Ocado in August this year, is going to launch a number of new and overhauled products in almost a third of its own-label products in a bid to keep existing/tempt new customers. * SO WHAT? * This comes just ahead of Ocado announcing its full year results tomorrow, which are expected to give an idea of how the new partnership with M&S is progressing. Ocado’s share price has shot up by over 40% in the last 12 months as it continues to sign deals all over the place! Interestingly, Ocado owns all the customer data (not Waitrose) so this will no doubt be used to pull Waitrose customers away when Ocado switches.

Then in Distillers raise a glass as our love affair with G&T continues (The Times, Tom Howard) we see that data compiled by IWSR, which tracks trends in alcoholic drinks, shows that gin sales are still strong and are predicted to rise by over 50% during the next four years. It said that flavoured gin has done particularly well in recent years. * SO WHAT? * This is interesting because mixer darling Fevertree had a profit warning recently and said that it is looking overseas for growth, implying that the UK may have hit “peak gin”. I am verging towards thinking this way and find it hard to believe the incredibly bullish predictions of IWSR, but hey. The gin market has become so fragmented in recent years with loads of tiny distillers popping up. Even if gin continues to gain in popularity, surely there will be some consolidation in the industry – there are loads of businesses to choose from right now for the drinks giants. Distillers shouldn’t get too snooty either about being bought out as I just can’t see the gin thing lasting forever.



And finally, in other news…

I thought I’d leave you today with a couple of food stories. Maybe I’m a bit late to the party but Marmite smooth peanut butter hits UK supermarkets in controversial new launch (The Mirror, Paige Holland just sounds plain wrong (for the record, I LOVE Marmite as well as peanut butter – but not at the same time!) and then we learn an important life hack in The best way to reheat pizza (Popular Science, Sandra Gutierrez You heard it here, people!

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Some of today’s market, commodity & currency moves (as at 0720hrs 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 **
7,467 (-0.51%)29,094 (-0.97%)3,328 (-0.54%)9,52113,514 (-0.45%)6,026 (-0.19%)23,686 (-0.60%)2,892 (+0.55%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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