Monday 13/05/19

  1. In POLITICAL AND EMPLOYMENT NEWS, Trump-Xi talks continue – as does the current UK jobs boom
  2. In CAR-RELATED NEWS, we look at Uber and Lyft’s woes as VW heads for a problematic AGM
  3. In INDIVIDUAL COMPANY NEWS, Metro Bank tries to climb out of the hole it’s dug itself and chillaxing-Dave’s fund attracts a big investor
  4. In OTHER NEWS, I bring you a numeracy test. For more details, read on…



So the Trump/Xi talks are likely to continue and the UK jobs boom rolls on…

In Trump-Xi trade talks likely at G20 summit, says US (Financial Times, James Politi, Aime Williams, Christian Sheperd and Tom Mitchell) we see that Donny T’s top economic adviser, director of the National Economic Council Larry Kudlow, said that there was a “strong possibility” that the two presidents would meet at the G20 summit in Japan next month. This comes shortly after Trump imposed more tariffs on Chinese goods on Friday (a tax hike from 10% to 25% on $200bn worth of Chinese goods) and before further tariffs that he’s expected to announce today (25% taxes to be levied on an additional $300bn of Chinese goods). Chinese retaliations are obviously expected. No talks have been scheduled between the two sides before the Japan summit. * SO WHAT? * Tariffs are damaging both sides and this will get worse the

longer negotiations drag on. This is an epic game of chicken that neither side looks like wanting to back down on any time soon. Trump is painting this as Americans reaping loads of money from the Chinese, but it’s the US importers who are going to be paying the higher prices and those higher costs are surely going to be passed on to the consumer. It’s surely in Trump’s interest to get this done before the next presidential election otherwise the country could potentially slip into recession.

Jobs boom shows little sign of fading out (The Times, Louisa Clarence-Smith) cites the quarterly Chartered Institute of Personnel and Development (CIPD) survey of over 2,000 employers which shows that the number of respondents who said that they planned to increase staff levels was greater than in the previous quarter. The survey also said that 40% of employers found it harder to keep staff in the last 12 months, particularly in the public sector. Over 50% said that they had increased starting salaries for at least a minority of vacancies while 20% said that they had increased salaries for the majority of vacancies given that unemployment is now at its lowest level since 1975. * SO WHAT? * This is good news for employees right now, but Brexit uncertainty reigns still and is no doubt stifling further investment that could keep the party going longer.



Uber and Lyft have a tough time while VW faces a tricky AGM…

Uber’s spluttering IPO: where might the blame lie (Financial Times, Shannon Bond and Nicole Bullock) takes in the immediate aftermath of the Uber IPO as the share price closed down by almost 8% from its $45 flotation price. This is particularly disappointing given that Uber priced itself at the bottom end of its previously flagged price range and Uber and Lyft face hurdle of finding and keeping drivers (Wall Street Journal, Eliot Brown) piles on the pessimism as it highlights employee unrest at both companies concerning low wages. * SO WHAT? * Although I’m not a fan of Uber as a company myself (I think they treat their employees shockingly and their stated aim is to do away with their drivers altogether with the advent of driverless taxis – thus wiping out the very people that grew their business in the first place!), I think it’s too early to be writing obituaries at this stage. There seems to be an ongoing thirst for big-talking massive-loss-making companies at the moment and so no doubt this will continue as long as investors feel pretty confident about the economic backdrop. In short, if you had to invest in a ride-hailer, you might invest in Uber because of its diverse

business interests and geographical footprint, in Lyft if you want to focus on the US (and don’t mind years of losses) and Gett if you want exposure to something that has a bit of geographic diversity (Russia, the US, the UK and Israel) but that also has a decent chance of becoming profitable by the end of this year.

Volkswagen gears up for AGM showdown with investors (Financial Times, Patrick McGee) heralds what is shaping up to be an eventful upcoming AGM tomorrow as three major advisory groups (Glass Lewis, Institutional Shareholder Services and Deminor) have urged shareholders to vote against the approval of all execs and members of the supervisory board apart from one bloke, Stefan Sommer, who joined in July. * SO WHAT? * This kind of advice shows just how frustrated investors are with the slow progress on corporate governance at the German carmaking giant four years after the diesel emissions scandal first broke – but they will probably stay that way as 90% of the company’s voting rights are held by shareholders with seats on the board. One insider said that the company’s lack of transparency is due to numerous lawsuits spanning more than 50 countries “ranging from competition law to illegal advertising, from falsifying documents to pollution” and says that they need to be resolved before VW can be more open. This sounds like a cop-out to me, but the situation is unlikely to change if the top bods can’t be removed.



Metro Bank’s problems continue and David Cameron’s current employer gets a boost…

Metro Bank explores sale of loans hit by accounting error (Financial Times, Nicholas Megaw and Madison Marriage) shows that the aftershocks of its accounting error that came to light at the beginning of this year are continuing and it is now considering plans to sell over £1bn worth of the troubled loans to get it out of its current rut in a significant U-turn. * SO WHAT? * These loans make up over 10% of its total loan book and a sale would serve to mitigate some of these losses, but would also be quite embarrassing for the challenger bank that was once a stock market darling. I would have thought that it will only be able to get a cr*p price as well given that everyone and

their dog knows that Metro is a distressed seller. And to add insult to injury, Advisors issue amber warning on Metro over high bonuses (Daily Telegraph, Lucy Burton) puts even more pressure on the embattled bank with the Investment Group, a powerful lobby group, putting its second-highest warning rating on Metro Bank for excessive pay following the scandal where it had mis-categorised loans. It never rains but it pours, eh?

There may be some amongst you who wonder what David “I-wish-I’d-take-Brexit-more-seriously” Cameron is up to these days. Well Cameron-linked fund could become biggest fintech firm (Daily Telegraph, Natasha Bernal) shows that the mighty SoftBank is on the verge of investing £500m of its Vision Fund money into Greensill Capital, a provider of supply chain finance and employer of Dave C as adviser. * SO WHAT? * If this injection went ahead, it would almost double the company’s valuation to about £3bn and give the Vision Fund a 15-20% stake.



And finally, in other news…

I thought I’d leave you today with a maths test to while away any quiet time you may have in Can you pass this test for seven-year-olds – half the population will struggle (The Mirror, Courtney Pochin

Some of today’s market, commodity & currency moves (as at 0831hrs 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 **
7,203 (-0.06%)25,942 (+0.44%)2,881 (+0.37%)7,91712,060 (+0.72%)5,327 (+0.27%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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