Thursday 18/11/21

  1. In MACRO & OIL NEWS, Japan is to launch a stimulus, UK inflation goes beserk and Biden questions oil companies
  2. In RETAIL & HIGH STREET NEWS, Target and TJX are upbeat about Christmas, Amazon gut punches Visa, House of Fraser gets notice from the landlord and Greggs experiences shortages
  3. In REAL ESTATE NEWS, British Land recovers and Evergrande’s boss sells off personal assets
  4. In MISCELLANEOUS NEWS, Apple allows repairs, Nvidia announces record revenues and younger investors get trade tips online
  5. AND FINALLY, I bring you some present wrapping tips…

1

MACRO & OIL NEWS

So Japan launches a stimulus, UK inflation hits new highs and Biden gets tetchy with oil…

📢 It’s Thursday – so it’s time for the one hour weekly ZOOM call for SILVER and GOLD subscribers where I will do a detailed review of the week as well as chance for Q&A and discussion 👍 The ZOOM call will start at 5.30pm and run until 6.30pm. See you there! I will also be doing another call straight afterwards aimed at university societies. If you want details for that, please ask your presidents to get in contact with me! The details are also on our socials.

In Japan to unleash $350bn stimulus as west unwinds state spending (Financial Times, Kana Inagaki) we see that Japan’s about to give ¥100,000 in cash ($872) to households with children under 18 and who fit the income criteria (which will actually cover about 90% of such households!) as part of a broader package to stimulate the economy. Critics say this cash distribution has questionable effect and isn’t even that popular with the Japanese public. Japan’s debt is currently 266% of its GDP

and inflation is expected to rise to about 1% by the middle of next year (which is clearly way lower than what we have over here!). The broader package is to include subsidies for SMEs and financial support for rising energy prices.

Meanwhile, in the UK, Pressure grows for interest rate rise as inflation hits 10-year high (The Guardian, Richard Partington) shows that the Bank of England is under even more pressure to raise interest rates now as the latest release from the Office for National Statistics shows that inflation hit 4.2% in October – up massively from 3.1% in September. This is the highest it’s been since November 2011 and was above market expectations. The Bank of England (whose forecasts are constantly being hiked up it seems!) reckons that inflation will peak at about 5% next year and then drop back to 2% over time. Workers need 7pc pay rise next year just to keep up as inflation spirals (Daily Telegraph, Tim Wallace) cites findings from the Institute of Fiscal Studies which is calling for a chunky pay rise so that workers can maintain their spending power as rampant inflation powered by energy prices and global supply shortages continue to take their toll. * SO WHAT? * The next Monetary Policy Committee (MPC) meeting will be in December and it is very much expected that they will raise interest rates (although most expected at the one they held a couple of weeks ago) in order to curb inflation. 

2

RETAIL & HIGH STREET NEWS

Target and TJX stay upbeat, Amazon rejects Visa credit cards, House of Fraser gets kicked out and Greggs has supply problems…

Following on from yesterday’s positive news from Walmart and Home Depot, Target, TJX post strong sales, say they have plenty in stock for Black Friday (Wall Street Journal, Sarah Nassauer and Charity L. Scott) shows that both Target and TJX (which is called T.K. Maxx over here) have managed to avoid too many supply chain problems and unveiled strong sales figures for the latest quarter ahead of Black Friday and the holiday season. Interestingly for Target, spending per transaction fell slightly by 0.2% over the quarter but traffic rose by 12.9% which indicates that shoppers are heading to stores more frequently but are buying less when they get there.

Amazon to stop accepting Visa credit cards in UK in battle over ‘high’ fees (Financial Times, Siddharth Venkataramakrishnan, Jonathan Eley, Imani Moise and Dave Lee) shows just what happens when the e-tailing giant throws a strop!  Amazon has now banned UK-issued Visa credit cards in protest at the high fees it charges retailers – a move that will come into force at the start of next year. It also wrote to some customers advising them to switch to different payment methods and is offering £20 off their next purchase for doing so. Payments companies managed to swerve EU caps on cross-border interchange fees when the UK left the EU last year and, since then, Visa decided only last month to start charging 1.5% of the transaction value for credit card payments online or over the phone between the UK and the EU. They had been 0.3% and 0.2% previously! * SO WHAT? * Given that we are buying more online these days – and that we are often advised to buy on credit cards to get our purchases better protected – it’s not surprising that Visa has tried to slip this one under the radar. However, Amazon has smashed that by making such a song and dance about it! There is debate as to the motivations behind this move as it is now pushing

Amazon-branded cards from Amex and Mastercard in addition to the Ocean credit card issued by Capital One – Visa currently does not have such an offering and says that it was “very disappointed that Amazon is threatening to restrict consumer choice”. Given that the ban isn’t due to come into force until the beginning of next year, you can imagine that there will be frenzied negotiations going on behind closed doors about a resolution! Amazon is currently experimenting with different payment methods, including Buy Now, Pay Later agreements via Affirm in the US and Barclaycard in Germany. It’ll be interesting to see whether Amazon just gets special dispensation on this because it is, well, Amazon, or whether Visa might lower its fees across the board, which will no doubt be warmly welcomed by everyone who uses them!

It’s all going on (or rather, not going on!) on Oxford Street at the moment as House of Fraser evicted from Oxford Street store (Daily Telegraph, Laura Onita) shows that House of Fraser is going to be forced out of its flagship store after 142 years to make way for £100m redevelopment from the landlords. Frasers Group will close the branch in January after serving notice but the new development will have a gym and pool, shops, office space and a top floor restaurant. * SO WHAT? * Big stores on that famous street seem to be dropping like flies what with Debenhams closing down and John Lewis opting to convert a number of floors of its own flagship store into offices. Traditional department stores continue their terminal decline…

If you thought that news was bad, Some Greggs stores missing vegan sausage rolls and melts (Daily Telegraph, Hannah Boland and Laura Onita) will render some Greggs fans distraught as the high street bakery chain said that supply chain issues are denting its ability to keep up with demand for vegan sausage rolls and bean and cheese melts 😱. A spokesman came out with words of doom for fans saying “Some shops may not have them or may not have them throughout the day. It varies”, but added that the company was doing its best to get them back in stock. Supply chain issues affect all of us!

3

REAL ESTATE NEWS

British Land recovers and Evergrande’s boss sells off assets…

Following on from what I said yesterday about Landsec recovering British Land to turn car parks into hubs for same-day delivery firms (The Guardian, Joanna Partridge) shows that British Land announced a major plan to buy and convert car parks and vacant retail centres into urban distribution centres for online shopping and grocery delivery services. It is aiming to buy more warehouses and add more floors to existing ones to continue servicing the ever-increasing need. The company managed to return to profit for the six months to 30th September as it collected almost all rent due from retail tenants and 100% of office rents. * SO WHAT? * It seems that the FTSE100 real estate firms are making a comeback and it really sounds like British Land is doing all it can to surf the latest trends. The thing is, everyone else will be doing so as well so buying new properties will surely be rather expensive.

Meanwhile, Boss’s fire sale to help keep Evergrande alive (Didi Tang) shows that the founder of the embattled and massively indebted Chinese real estate company Evergrande, Xu Jiayin, has managed to raise around £815m of his own money to go towards saving the company. This money is being used to pay salaries of his company’s employees, make interest payments on domestic and offshore bonds and to fuel construction projects around China. * SO WHAT? * This is a drop in the ocean for a company that has managed to build up over $300bn in debts and Xu himself is estimated to be worth “only” £8.4bn! I wonder whether he sold off these assets off his own bat or whether Beijing told him that he’d better make some personal sacrifices for the government to even consider bailing his company out (which doesn’t look likely at the moment).

4

MISCELLANEOUS NEWS

Apple does a U-turn, Nvidia announces record revenues and young investors look to social media for tips…

Apple performs U-turn on right to repair iPhones and Macs (Financial Times, Eleanor Olcott and Patrick McGee) highlights a change in stance for the tech giant as it launched a self-service repair programme yesterday which means that customers will be able to buy Apple-made components to replace knackered or broken parts. The service will start in the US next year for the iPhone 12 and 13 ranges and be rolled out to other markets thereafter. * SO WHAT? * Thus far, Apple has only allowed its engineers to repair its phones so this will at least give customers more freedom than they’ve had in the past as repair costs from Apple are generally eye-watering.

Elsewhere, Nvidia posts record revenue as videogaming sales soar (Wall Street Journal, Meghan Bobrowsky) shows that the under-fire graphics company announced another quarter of record sales thanks to strong ongoing demand for videogaming as well as data centres. This was

welcome news for the #1 chip manufacturer in the US, especially as the numbers exceeded market expectations.

I thought that Younger investors tap into TikTok and Reddit for their trading tips (The Times, Simon Duke) was interesting because the research from Opinium on behalf of Hargreaves Lansdown showed that 56% of 18-34 year-olds use social media to inform their trading choices versus only 4% in the 55-64 age group (but that’s hardly surprising!). * SO WHAT? * I thought this was worth highlighting given that so many people (mainly millennials) piled into stock trading under lockdown resulting in all that meme hype which sent dodgy stocks to extreme prices. The critics say that many people are going to get burned doing this because it isn’t a game, and I do wonder whether this particular corner of social media will see any kind of oversight. My main message to any of you is that you shouldn’t take anyone seriously in terms of advice who is a) pictured squatting in front of a Lambo/Ferrari/Bentley/Aston with a fistful of cash, b) saying that “trading is easy, the pro’s just don’t want you to know” and/or c) “how I’m living my best life by spending 30 secs a day trading and the rest of the time spending MAH-MONAAAAAAY”. 

5

...AND FINALLY...

…in other news…

So as we are now approaching the gift-giving season, I thought you might find this useful: Wrap awkwardly-shaped Christmas presents like a pro with these genius hacks (The Mirror, Paige Holland). I am terrible at wrapping presents, so I shall definitely be taking note!

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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 **
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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