Monday 11/11/19

  1. In MACRO NEWS, Spanish elections disappoint and Bolivia’s Evo Morales resigns
  2. In TECH NEWS, Apple’s share price continues to rise and Tencent looks to Nintendo for US inspiration
  3. In RETAIL NEWS, October rain keeps shoppers at bay, Clintons wobbles and Sainsbury’s sells products to Coles
  4. In INDIVIDUAL NEWS, Easyjet buys Thomas Cook assets, and British Steel gets closer to getting a Chinese buyer
  5. In OTHER NEWS, I bring you chess-boxing and some AMAZING knife skills…



So the Spanish election is a bit meh and Bolivia’s President Evo Morales resigns…

Spanish election fails to resolve political deadlock (Financial Times, Daniel Dombey) shows that Spain’s fourth election in four years over the weekend failed to bolster the governing Socialists and handed more clout to the far-right Vox party. Vox increased its voting share from 10% in April (when the last election was held!) to 15%. The other major loser from this election was the pro-market party Ciudadanos, which saw its April share of the vote of almost 16% slashed to less than 7% this time around. * SO WHAT? * This whole election thing was instigated by current/caretaker Spanish PM Pedro Sanchez who couldn’t form a government following the last election and took a gamble in trying to increase his wafer thin majority – but it looks like it blew up in his face. Vox appeared to have won votes over its strong stance over Catalonian independence. Sanchez is now going to have to question his position, but it looks likely that he may well have to get in bed with Podemos, the far-left party, to counter the rise of the far-right. What a position to be in! This just goes to show how

difficult coalition governments can be. Funnily enough, the Spanish economy has been doing OK despite all this kerfuffle but unless the government sorts itself out pronto I suspect that the economy will also go down the pan – and without a proper government in charge the country could embark on a downward spiral that will be difficult to get out of.

Bolivian president resigns after re-election marred by fraud allegations (Wall Street Journal, Juan Forero and Ryan Dube) heralds the sudden resignation of embattled president Evo Morales, who had to escape the capital La Paz after the head of the armed forces, General Williams Kaliman, “suggested” that he leave power following last month’s election result that outside monitors said had shown “clear manipulation”. * SO WHAT? * Morales was one of the longest-serving Latin American leaders, having taken office in 2006, and his resignation will be felt by other socialist leaders in the region (such as Venezuela’s Nicolas Maduro whose leadership is currently being disputed by Juan Guaido and many Western countries) who are currently trying to stem a political tide coming in from the right. He said he was resigning to “bring calm” to his people. Vice president Alvaro Garcia also stepped down, meaning that as of last night, no-one was governing the country. What an absolute mess!



Apple’s share price strengthens, Tencent wants to learn from Nintendo and Blackstone makes a couple of dating acquisitions…

In Apple’s profits fade but share price defies gravity (Financial Times, Patrick McGee and Richard Henderson) we see that the company has seen its market cap rise by over $400bn so far this year despite falling margins and lacklustre performance from Apple’s latest iPhone. The 65% rise in share price this year has been its best bull run for ten years and it’s risen at almost triple the rate of the S&P500. * SO WHAT? * This year’s share price performance has been helped by the stock being particularly weak going into the end of 2018 – it tanked by a whopping 31% between October and the end of the year – as well as an investor “flight to quality” and hefty share buybacks mitigating the effect of falling earnings and revenues. This is a very impressive performance and many expect next year to be more exciting as the company’s “services” revenue continues to grow and the 5G mobile

phone replacement cycle starts to kick in, boosting sales of hardware.

Tencent looks to leverage its partnership with Nintendo in the US (Wall Street Journal, Takashi Mochizuki and Shan Li) shows that China’s biggest videogame company by revenue, Tencent, wants to use its partnership with Nintendo to boost its US business. Although Tencent has been buying into game makers such as Epic Games (makers of Fortnite) and Activision Blizzard (makers of Call Of Duty) and dominates its domestic market, it has yet to make a splash in the world of console games in the US. * SO WHAT? * Chinese authorities have been cracking down on games companies’ business over the last few years by putting limits on play, slowing down licence approval etc. and so Tencent is looking to grow its overseas business by targeting US and European console game players. Tencent and Nintendo announced a joint venture back in April that would give Nintendo better access to Chinese gamers (in theory) while Tencent would get access to Nintendo characters that it could use in its own games as well as Nintendo’s know-how for entertaining American gamers. Interestingly, both sides are playing down the sales potential of the Switch in China as gamers there are more accustomed to playing on mobile phones or PCs.



Wet October hits UK retail sales, Clintons looks shaky and Sainsbury’s goes down-under…

October rain brings more retailer pain as footfall dips (Daily Telegraph, Oliver Gill) cites the latest data from the British Retail Consortium and Springboard which showed that high street shopper numbers fell by 3.2% last month in its biggest October fall for seven years due to rain and cold weather. This isn’t great as we head into the critical Christmas trading period…

…which brings us to Accounts overdue at struggling Clintons (The Times, Alex Ralph) that highlights troubles at Clintons the greetings card retailer. It is currently discussions with landlords and others to close 66 of its 332 shops and reduce rent on another 206 as part of a CVA (company voluntary arrangement) that was discussed at a meeting at the end of last week. The troubled retailer’s woes have been exacerbated by a Brexit-inspired weak pound that has effectively increased the cost of goods and

services from its US suppliers. Its accounts, which were due by October 31st, are still to be filed with Companies House. To make matters worse, the company is potentially facing an investigation by the HMRC for potential non-compliance with national minimum wage regulations. Another high street casualty…

Sainsbury’s groceries go down under (The Times, Ashley Armstrong) is an interesting story that shows the British grocer signing a partnership deal with Australia’s #2 food and drink retailer Coles to supply it with a range of cupboard essentials such as soup, beans and dried pasta as well as its homeware range. Coles is trying to broaden its own-brand ranges to fend off rivals such as Aldi and newer threat Kaufland, a German hypermarket chain. * SO WHAT? * Sainsbury’s had been looking to expand its wholesale business but put it on hold while it worked on its ultimately unsuccessful attempt to buy Asda. Given the mature state of the UK grocery market, it’s good to see that Sainsbury’s is looking at potential areas of growth. At least by expanding like this you don’t get all the costs associated with putting your brand abroad and buying/leasing properties that just drain your finances. Many a UK retailer has been burned by expanding abroad – including Sainsbury’s!



Easyjet takes on Thomas Cook assets and British Steel gets close to another rescue…

Easyjet decides there’s still life left in the package holiday business (The Times, Robert Lea) shows that the cheap flight operator is about to reveal plans to relaunch its own holidays business after buying some of Thomas Cook’s assets, including its take-off and landing slots at London Gatwick and Bristol airports. It is expected to reveal more details about moving into the package holiday void at its results next week. * SO WHAT? * Ryanair chief Michael O’Leary said that the package holiday was dead following

the failure of Thomas Cook, but clearly Easyjet’s chief exec Johan Lundgren thinks otherwise. It seems likely that Easyjet will provide package holidays that will be protected by Atol travel insurance. Let’s hope it learns from Thomas Cook’s mistakes!

Chinese industrial giant poised to buy British Steel for £70m (The Guardian, Rob Davies) highlights what could be some good news for the embattled British Steel as Jingye Group looks like the leading contender to buy it out of liquidation after talks with Turkey’s military pension fund, Ataer Holdings, stalled. * SO WHAT? * If it goes ahead, it could potentially save the jobs of over 4,000 employees, most of whom are based on the Scunthorpe site. This will come as welcome good news after the company collapsed in May under the ownership of investment firm Greybull Capital.



And finally, in other news…

I thought I’d sign off today with an interesting-looking (albeit rather niche) sport in From comic book to the mat: chessboxing bout thrills French creator (AFP, and the INCREDIBLE knife skills on display in Japanese knife professional transforms vegetables into works of art (SoraNews24, Oona McGee This is just mesmerising!

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Some of today’s market, commodity & currency moves (as at hrs 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 **
7,359 (-0.64%)27,681 (+0.02%)3,093 (+0.26%)8,47513,229 (-0.46%)5,890 (-0.02%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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