- In MACROECONOMIC NEWS, Macron cancels his proposed fuel tax, Italy offers to “tweak” its budget and UK services has a disappointing month
- In TECH NEWS, BT strips out Huawei equipment, Huawei’s CFO gets arrested and Waymo’s driverless taxis start charging punters
- In RETAIL-RELATED NEWS, Thomas Cook stages a dramatic comeback and Joules unveils strong figures
- In OTHER NEWS, I take you on a journey. For more details, read on…
So Macron abandons his fuel tax, Italy offers to backpedal and UK services have a poor month…
Macron cancels fuel tax increase in wake of ‘gilets jaunes’ protests (Financial Times, Ben Hall, Harriet Agnew and David Keohane) shows that Macron’s government has caved to protester demands and moved from postponing the fuel tax cuts by six months to saying that they are “cancelled for the year 2019”. Interestingly, the government sounded like it would be open to the possibility of reinstating the country’s controversial wealth tax which was replaced last year with a much narrower tax based just on property in an effort to boost investment and entice French entrepreneurs back home. * SO WHAT? * This is indeed a sticky situation for the youthful president as the riots have forced him to listen to the masses. Unfortunately for him, the “gilets jaunes” seems to be an amorphous mass born on social media with no real leader atop a ragbag of supporters from across the political spectrum making varied demands. This means that it will be far more difficult to quell the uprising because there’s no-one to really negotiate with. Macron has opened a massive can of worms here and caving in is going to embolden anyone with a gripe. Given that he was/is about to embark on an even trickier reform programme of pensions and the public sector he has made his job MUCH harder (although obviously he had to do something to stop the civil unrest). The unions must be loving this.
Italian PM willing to ‘tweak’ budget plan to avoid EU sanctions (Financial Times, Miles Johnson) highlights
conciliatory noises emanating from Italy over its rejected budget. Italian PM Giuseppe Conte said that he would be willing to amend his government’s proposed budget as long as its expensive welfare policies remain unchanged. On the other hand, Pierre Moscovici, the European commissioner for economic affairs, is adopting an I’ll-believe-it-when-I-see-it approach in waiting for “credible” details from Rome about exactly how it is going to make the necessary adjustments that will help it to avoid formal sanctions from Brussels. * SO WHAT? * If a compromise isn’t reached, the European Commission will put Italy into an “excessive deficit procedure”, a disciplinary process that could lead to fines starting at 0.2% of Italy’s GDP, which will be painful, especially as Italy’s GDP is currently shrinking.
Worst month for services since 2016 drags growth to near zero (The Guardian, Richard Partington) cites data from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) which shows that the biggest sector of our economy – services (which includes things like banks, hotels and restaurants) – had its weakest level of growth since the immediate aftermath of Brexit in July 2016. The services sector accounts for about 80% of the UK’s GDP, so this is not great. * SO WHAT? * Bad though this is, anything else would have been a surprise given the uncertainty we are facing. That is not to say that it should be left to fester – it’s just that we’re in limbo right now heading into Brexit. Mind you, things could hot up quite considerably at a time of year where everyone tends to start winding down as we have the parliamentary vote on Brexit next week which could then be followed by all sorts of shenanigans (including a second referendum). Strap in, people – this could be one hell of a (sleigh)ride!
Huawei continues to hit obstacles and Waymo starts charging passengers…
Following all the recent hoo-ha surrounding Huawei, BT to strip Huawei equipment from its core 4G network (Financial Times, Nic Fildes) sounds like security threats are being taken seriously as BT announced that it will take Huawei equipment out of its core 4G network within two years as part of its overall policy to keep the Chinese company’s equipment away from the heart of our telecoms infrastructure. The US, Australia and New Zealand have all moved to block the use of Huawei’s 5G equipment for security reasons and there has been heightening sensitivity elsewhere about the trustworthiness of Huawei’s equipment. Removing all the Huawei equipment in the 4G network is expected to take between 18 months and two years. * SO WHAT? * This comes at a crucial point as auctions are about to start for 5G, a superfast service that will usher in a new era of products and services. Shutting Huawei out of things like this is going to be a real headache for the company – especially if more governments around the world get antsy and jump on the “no-to-Huawei” bandwagon.
Canadian Authorities arrest CFO of Huawei Technologies at US request (Wall Street Journal, Kate O’Keeffe and Stu Woo) shows that it doesn’t rain but it pours for the embattled telecoms equipment firm as Meng Wanzhou, CFO and daughter of Huawei’s founder, was actually arrested on the weekend and scheduled for extradition by the US, with a bail hearing tentatively scheduled for Friday. Details on why she has been arrested remain sketchy, but the US has been doing a bit of a number on Huawei recently in encouraging other countries not to use its equipment due to perceived national security
threats. Huawei is the world’s biggest maker of cellular tower equipment, internet equipment and related telecoms infrastructure and is the world’s second biggest mobile phone brand. * SO WHAT? * Basically, Washington has said for years that the Chinese government could force Huawei to tap in to the hardware its sells worldwide in order to spy on or disrupt communications. China denies it (obviously) and the US is doing its best to spread its concerns. No doubt the Huawei situation will be used as a bargaining chip in the ongoing US-China trade negotiations. This is just speculation, but I guess if China threatens Apple’s progress in the country, the US could throw a massive spanner in the works for Huawei – look what happened with Huawei’s smaller rival ZTE. The US all but put it out of business – and it could threaten the same for Huawei.
Waymo starts charging autonomous car riders in Arizona (Financial Times, Shannon Bond) heralds the latest developments for driverless cars as Waymo (whose parent company is Alphabet) launched its commercial self-driving car service – called Waymo One – in Arizona yesterday. This means that chief exec John Krafcik has met his goal of bringing robo-taxis to market before the end of the year as competition from the likes of Uber, General Motors’ Cruise and start-ups Zoox and Voyage intensifies. Don’t get hysterical yet, though, as the service is restricted to a very small amount of users (ones who have been part of the development programme thus far) and only in a limited number of areas. All rides will initially have a safety driver to “supervise” the vehicles, but they will gradually be phased out. Pricing details are yet to be released but the service is to be available 24/7. * SO WHAT? * This sounds like an interesting development but they are right to take baby steps – all they need now is another fatality like Uber had and the project gets booted into the long grass. Everyone is going to be watching this with interest.
Thomas Cook makes a comeback and Joules unveils strong figures…
Thomas Cook flies thanks to shift in outlook (The Times, Dominic Walsh) highlights the MASSIVE 51% share price hike for Thomas Cook in trading yesterday as its biggest holder – Invesco, with 15.2% of the shares – said that last week’s sell-off was an overreaction. The company’s chairman also threw his weight behind the shares by buying £80,400 of stock as other brokers started to turn positive. Having said that, Moody’s downgraded its corporate debt rating from B1 to B2 and its outlook from “stable” to “negative”, saying that Brexit uncertainty may lead to later bookings. * SO WHAT? * If you were being cynical about this, you could say that Invesco is just talking its own book, the chairman could find 80 grand down the
back of his sofa and Moody’s is just telling everyone what they already know (“What? You mean a travel operator that sells flights and holidays to Europe might be affected by Brexit uncertainty? Wow! I never knew that” etc.). The company is going to need to do more to turn things around on a sustained basis IMHO.
Joules sales rise as fashion brand braces for hard Brexit (Daily Telegraph, Ashley Armstrong) shows a positive outlook for the company as chief exec Colin Porter said that “I am delighted to update on what has been another period of strong performance for Joules despite challenging trading conditions. We have an outstanding brand, good momentum and a growing customer base, and we look forward to the second half of the financial year with confidence”. Even so, the company has joined the list of companies – including the likes of AstraZeneca and Majestic Wine – in stockpiling product ahead of Brexit to lessen any impact of Brexit disruption.
And finally, in other news…
I thought I’d take you on a journey for a change today in Gorgeous funicular route in China is so beautiful, it looks like somethin out of a movie (SoraNews24, Koh Ruide https://tinyurl.com/y8jdomqb). It is pretty stunning, I have to say!