Thursday 05/09/19

  1. In TECH NEWS, Google and YouTube get fined, Google is accused of dodgy dealings in data, Slack takes a hit, Apple talks about a cheaper iPhone and Amazon experiments with hand recognition
  2. In MACRO NEWS, Hong Kong markets get a relief rally after Lam relents, Spain sees a rise in household spending, BoJo takes a beating, the chancellor ushers out the “age of austerity” while the UK teeters on recession
  3. In INDIVIDUAL COMPANY NEWS, RBS warns of a big dent from PPI, Porsche brings out an electric car and Halfords warns on a poor summer
  4. In OTHER NEWS, I bring you the currywurst’s birthday…



So Google and YouTube get fined, Google is accused of dodgy dealings in data, Slack falls, Apple mulls a cheaper iPhone and Amazon studies hand recognition…

In Google and YouTube pay $170m to settle child privacy claims (Financial Times, Kiran Stacey) we see that YouTube and its parent have agreed to pay a fine to the Federal Trade Commission (FTC) after being accused of illegally harvesting personal information from kids without parental consent. It was accused of using cookies on channels aimed at children without first seeking parents’ permission which enabled the platform to earn millions from letting companies target advertising. FTC chair Joe Simons stated that “YouTube touted its popularity with children to prospective corporate clients. Yet when it came to complying with COPPA [the Children’s Online Privacy Protection Act], the company refused to acknowledge that portions of its platform were clearly directed to kids. There’s no excuse for YouTube’s violations of the law”. * SO WHAT? * This is the biggest ever fine handed down by the FTC for a COPPA case and follows the record $5bn fine it negotiated with Facebook following accusations of the latter’s violation of user privacy. Interestingly, part of yesterday’s settlement states that YouTube MUST make video creators identify when their videos are targeted at kids – and if they are, the company will automatically disable cookies. About time! Mind you, the two Democratic commissioners at the FTC did not support the settlement because they didn’t think it went far enough and that parties could still circumvent these new procedures. I suspect that we shall see more in the way of data privacy-related cases as time goes on…

Talking of which, Google is secretly sharing personal data, watchdog told (Daily Telegraph, Natasha Bernal) highlights new evidence submitted to Ireland’s data watchdog, the Irish Data Protection Commissioner, which appears to demonstrate that Google is secretly sharing users’ personal information with advertisers – a breach of GDPR. It was submitted by a small search engine called Brave which alleges that Google is enabling ad-tech companies to compile and share users’ personal data from 8.4m websites. Google/GDPR: not as advertised (Financial Times, Lex) says that privacy regulators in Europe have been looking into how companies sell advertising space on line and whether the methods they use comply with GDPR. As things stand, Google argues that owners of advertising-funded websites should be the ones to get user consent in Europe, but regulators are unlikely to let Google off the hook that lightly. * SO WHAT? * Regulators are serious about slapping fines on those who breach GDPR, which can go up to 4% of a company’s annual turnover. That would

equate to about $5.5bn for Google’s parent Alphabet based on last year’s revenue – chunky, but not enough to hold them back considering they have $121bn sat around in cash. The market continues to grow and Google and Facebook look set to continue to take the lion’s share – fine or no fine.

Slack shares plunge despite raising full-year outlook (Wall Street Journal, Sarah E. Needleman) highlights the 13% fall in Slack’s share price in after-hours trading despite the fact that it said that its revenues had increased and that it had raised its outlook. It was sold off because it said that growth was slowing and losses were greater than market consensus. Slack says that it has over 100,000 paying customers but the majority of organisations it works with are still on free subscription plans. * SO WHAT? * Following its much hyped flotation, which was via the unconventional direct listing mechanism (and which cuts out many of the advisors who are traditionally part of an IPO), Slack has continued to struggle with two elephants in the room – the fact that people may be reluctant to move away from “traditional” e-mail and that it has a big dangerous competitor in Microsoft which has a similar product called Teams. Maybe I’ll be proved wrong, but I think that this company is all style and no substance – and given Microsoft’s grip on enterprise software and knowledge of its user base, Slack will continue to face increasingly higher hurdles to stellar percentage growth rates. I just wonder whether Microsoft will be to Slack what Facebook’s Instagram has been to Snapchat as the bigger player just copies the smaller player’s best ideas and blasts them out to its bigger user base to negate any reason to try something new.

Then in Apple to sell ‘low-cost iPhone’ next year to talk rivals’ success (Daily Telegraph, James Cook) we see that the company is looking at releasing a cheaper iPhone next year, similar in size to the iPhone 8, that will have the same internal components as this year’s iPhones but with a lower quality LCD display rather than the more expensive OLED screen. * SO WHAT? * It would be the first “low-cost” iPhone (you don’t see those words next to each other, do you!) since it launched the iPhone SE in 2016 for a starting price of £379 and is aimed at taking some market share from the likes of Huawei and Samsung, who have been rampant at the lower end of the market.

Amazon device lets you pay for shopping with your hand (Daily Telegraph, James Cook) says that the company is apparently testing a tool that will let supermarket shoppers pay for food by scanning their hands! It is expected to release the system in its Whole Foods grocery stores over the next few months, according to the New York Post and uses cameras to measure the size and shape of hands to check ID and approve payment. Interestingly enough, Amazon got a patent back in 2015 for a scanning system that used people’s ears to identify them. Pretty amazing, eh!



Hong Kong gets a respite, Spanish shoppers open their wallets, BoJo gets another kicking and the new chancellor announces the end of austerity while the UK edges towards the brink of recession…

Hong Kong shares rally as tension eases (The Times, Ben Martin, Tanya Zhekova) highlights the announcement yesterday from Hong Kong chief executive Carrie Lam that she would withdraw the extradition bill that sparked of months of protests. The bill would have enabled the extradition of criminal suspects to mainland China for trial, which raised concerns that China was trying to tighten its grip on the territory and resulted in violent protests. The Hang Seng Index closed up by almost 4% – its strongest rise for ten months. HK stocks/extradition bill: derailed (Financial Times, Lex) said that this was a small victory for the protesters and gave some relief to stocks that were hit by association like MTR Corp whose subway stations were attacked by protesters because they thought that its suspension of the Airport Express line was tantamount to supporting China and Cathay Pacific, which was the target for protester ire after discouraging staff from taking part in the protest. * SO WHAT? * Property developers and retailers were also hit by the protests and had a bit of a relief rally but it is unlikely that this will be sustained given the Hong Kongers still have more demands (investigate police abuse, the detainment of protesters and the resignation of Carrie Lam etc.). Maybe China is hoping that this climbdown will take the sting out of things for now – but political risk in the markets will remain as the mainland is unlikely to take this kind of insubordination lying down.

Meanwhile, back in Europe, Household spending helps Spain to buck eurozone growth trend (Financial Times, Daniel Dombey) highlights the relative success of Spain as the eurozone’s fourth biggest economy continues to enjoy a run of growth powered most recently by household spending. This has been due in part to the government’s decision to raise the minimum wage by a considerable 22% this year – its biggest increase in forty years! What a pity that it seems to have cr@p politicians!

Talking of which, Boris Johnson defeated in Brexit and election votes (Financial Times, George Parker, Jim Pickard and Mehreen Khan) shows that the British PM is licking his wounds after suffering a double defeat as MPs blocked his bid to go to Brussels with a no-deal option as well as his attempt to call a general election under the terms of the Fixed Term Parliaments Act, where he needed two-thirds of MPs to back the motion. However, Conservative peers battle to stop rebel anti-no-deal bill (Financial Times, James Blitz) shows that the anti-no-deal Brexit bill may still be delayed in the House of Lords due to 100 amendments needing to be debated. Conservatives are in the minority in the upper house, so dragging things out may prove to be too difficult. The drama continues…

UK chancellor signals an end to the ‘age of austerity’ (Financial Times, Chris Giles, Delphine Strauss and George Parker) heralds a new direction for the government in the midst of all the Brexit shenanigans as the UK finance minister has reversed a decade of austerity following the financial crisis by announcing some big public spending plans on the NHS, schools and the police. * SO WHAT? * Sounds lovely and maybe it’ll persuade some voters to but an ‘X’ in the box for the blues at a general election, but it could all be academic as the political situation remains unstable. The Conservatives are obviously being accused of giving away freebies just before an election (but hey, all parties do this – so this is no great surprise) and other critics will obviously say it isn’t enough and will bang the drum for their own causes. Still, I would take this all with a very big pinch of salt. Brexit is still the main thing on everyone’s mind…

It seems that we might need a bit of boost given UK slips closer to recession as service sector slows (The Guardian, Richard Partington) which cites the latest survey from IHS Markit/CIPS which shows that sluggish growth in the service sector has not been sufficient to make up for big declines in manufacturing output. * SO WHAT? * Given that the services sector accounts for 80% of Britain’s GDP, this is obviously a big deal. Mind you, although manufacturing has been weak of late I wonder whether it will actually pick up again as firms start to run low on product they stored-up in the run-up to the previous Brexit deadine and look to building up stockpiles once more ahead of October 31st.



RBS gets a PPI punch in the face, Porsche unveils a new electric car and Halfords has another profit warning…

Following on from last week’s deadline, RBS warns of further £900m hit from deluge of late PPI claims (The Guardian, Rupert Jones) as it seemed to get caught out by the sheer volume of last-minute claims. Rival banking group CYBG – which includes the likes of Clydsedale and Yorkshire banks as well as Virgin Money – says it also faces a big bill for the same reason.

Then Porsche unveils $150,000 all-electric sports car to challenge Tesla (Financial Times, Peter Campbell) heralds a rival for Tesla – albeit at the rather expensive end of the scale. The new Taycan will be part of Porsche-owner parent Volkswagen’s pledge to have 25% of its vehicles to

run on battery power by 2025. The new car was launched simultaneously at a Chinese windfarm, a German solar panel farm and Niagara Falls seemingly to emphasise the company’s commitment to renewable energy. Porsche is the first performance car manufacturer to take the electric plunge – but it is unlikely to be the last. The “cheaper” version will start at $150,000 while the higher spec Turbo S will set you back $185,000. Oh go on then, I’ll have two…

Meanwhile, Halfords issues another profit warning as poor summer takes toll (The Guardian, Mark Sweney) shows that the embattled bike retailer pointed to poor summer weather and weakening consumer confidence as being behind the latest fall in sales. Both bike and car-related sales suffered in comparison to stellar growth in last year’s particularly hot summer although online sales continued to grow strongly. * SO WHAT? * As long as consumers are nervous, they are unlikely to buy big ticket items like bikes – plus it seems that the 2012/Bradley Wiggins effect on cycling has appeared to calm down somewhat in what has been a huge growth area. Its store portfolio remains under review so I would expect more closures.



And finally, in other news…

You know I’ve always got your back when it comes to really interesting things to say in conversations/at parties/at the water-cooler at work. Well how about Germany celebrates 70 years of saucy currywurst sausage (Reuters, Well I never!

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Some of today’s market, commodity & currency moves (as at 0916hrs 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 **
7,311 (+0.59%)26,355 (+0.91%)2,938 (+1.08%)7,97712,025 (+0.96%)5,532 (+1.21%)21,086 (+2.12%)2,986 (+0.96%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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