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In MACROECONOMIC NEWS TODAY, Trump threatens auto tariffs but the industry is planning to push back and UK inflation remains unchanged.
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In TECH NEWS, Google’s record fine could herald a major shake-up and Samsung aims for a foldable phone launch next year.
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In RESTAURANTS NEWS, Wendy’s and Papa John’s chat highlights consolidation opportunities in the US, but in the UK, Gaucho looks like the next chain to go under.
- In RETAIL NEWS, Amazon has a Prime Day and Hotel Chocolat continues to look delicious.
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In OTHER NEWS, I bring you some ideas for coping with our current heatwave. For more details, read on…
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MACROECONOMICS
So Trump’s tariff threats get the auto makers riled whilst UK inflation remains unchanged…
Trump threatens auto tariffs despite widespread opposition (Wall Street Journal, Chester Dawson and Joshua Zumbrun) highlights growing industry opposition to Trump’s threats as a coalition of foreign and domestic auto companies, auto dealers and auto parts makers released a joint letter yesterday urging Trump to reconsider his tariff threats in addition to a bipartisan group of 149 House members who urged the same. Trump reiterated his threats for “tremendous retribution” against the EU if
it doesn’t play ball in meetings next week. * SO WHAT? * This could be a VERY big deal if the administration follows through with tariffs ranging between 20% and 25% as the US imported $176bn of passenger cars, $36bn of trucks and $147bn of auto components last year! Support for the tariffs has come from trade union groups such as the United Auto Workers union – which represents workers at GM, Ford and Fiat Chrysler – although the UAW was more in favour of a targeted – rather than blanket – approach, like focusing on investment in Mexican production, for instance.
Prospect of rise in interest rates wanes as inflation holds at 2.4% (The Guardian, Richard Partington) cites the latest figures from the Office for National Statistics which show that the consumer prices index has remained unchanged at 2.4% despite expectations that it would go up due to increased fuel prices. Rising prices for gas, electricity and petrol were offset by discounted summer clothing sales (which actually registered their biggest monthly drop since 2012) and the falling cost of computer games. * SO WHAT? * This is another stat that will put pressure on the Bank of England to keep interest rates on hold when they meet at the beginning of next month.
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TECH NEWS
In tech news, Google’s fine from the EU could be a game-changer and Samsung promises a folding phone…
Google hit with €4.3bn EU fine over Android dominance (Daily Telegraph, James Titcomb) is a story that’s across all of the broadsheets today as, let’s face it, €4.3bn is a proper fine isn’t it! None of this token couple of grand rubbish (like the “fine” Facebook got last week!). Anyway, Margrethe Vestager, the European competition chief, slapped Google with the €4.34bn fine following a three year investigation after finding it guilty of illegally tying smartphone manufacturers into deals that forced them to install Google apps and said that it used Android as a “vehicle to cement the dominance of its search engine”. This is the second time that the EU has given Google a chunky fine – the company had to pay out €2.4bn last year for using the dominance of its search engine to promote its online shopping service. Google is also facing another potential financial penalty related to its online advertising network. Vestager also gave Google 90 days to break the contracts that force phone manufacturers to install its apps otherwise she will continue to impose fines worth 5% of its daily turnover! * SO WHAT? * Google can easily pay this fine (it’s equivalent to about two months of profit – so it’s not surprising that parent company Alphabet’s shares were pretty much unmoved in trading yesterday) but what is more damaging, according to EU threatens to smash Google’s Android dominance (Daily Telegraph, James
Martin) heralds an interesting development in mobile phone technology as the company announced that it is planning on releasing a foldable screen not surprising that parent company Alphabet’s shares were pretty much unmoved in trading yesterday) but what is more damaging, according to EU threatens to smash Google’s Android dominance (Daily Telegraph, James Titcomb), is that the free distribution model that the company has used so well for so long now looks to be very much under threat. Android has an 80% global market share in smartphone software, due in no small part to the fact that its operating system is GIVEN to handset makers for free, meaning that manufacturers tend not to bother to make their own software. Google will now have to go back to the drawing board as rivals such as Microsoft could PAY manufacturers to carry its search engine, Bing. Samsung could also benefit as it has the resources to build its own system (it’s tried and failed in the past, but this ruling could be a big opportunity). Amazon could also gain from this decision as it has its own system called “fork” that it could offer manufacturers – something that until now has been explicitly banned by Google. BTW, if you’ve got a few moments, have a look at this re Google vs Bing – it’s hilarious IMO https://www.youtube.com/watch?v=B759dzymyoc&t=29s)
Samsung plans to launch foldable screen phone early next year (Wall Street Journal, Timothy W. Martin) heralds an interesting development in mobile phone technology as the company announced that it is planing on releasing a foldable screen smartphone early next year. The prototype, dubbed “winner” (no word of the follow-up that could be called “chicken dinner”), has a screen that measures 7 inches on the diagonal which is about the same size as a small tablet. The idea is that you have something that has massive screen is that you can fold and put in your pocket like a wallet. It’ll be different to an old-school flip-phone because when you open it, it will be all screen. * SO WHAT * There are a lot of manufacturers out there trying to make such phones, but if this proved to be successful, it could be one of the biggest innovations in smartphone devices that we’ve seen for years as it could pioneer an entirely new product category. With people hanging on to their handsets for longer and sales maturing, a successful new product could be just what the industry needs! We’ll have to wait for a while before we see whether this pans out; though…
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RESTAURANT NEWS
In restaurant news, there could be consolidation in the offing amongst American restaurant chains, but in the UK, Gaucho looks like it could be the latest one to go under…
Papa John’s founder recently held merger talks with Wendy’s (Wall Street Journal, Dana Mattioli, Julie Hargon and Cara Lombardo) highlights the deal that got away on the one hand (disgraced Papa John founder John Schnatter was having exploratory talks with Wendy’s until things cooled off following his well- publicised use of a racial slur during media training which in turn led to him resigning as chairman last week) but shows that there is a healthy appetite for restaurant consolidation in a competitive market on the other. * SO WHAT? * Papa John’s is the world’s #3 pizza delivery company after Domino’s and Pizza Hut and Wendy’s is the world’s #3 hamburger chain after McDonald’s and Burger
King – and the fact that the two were even considering a combo shows a broader trend of restaurants bulking up to benefit from scale in a fragmented market. I guess that such chains will be benefiting from the increasingly confident American consumer dining out more often and scale will enable them to maintain or improve margins – and could even be the springboard for overseas expansion should they decide to pursue this course (although to my mind this has been done before with varying degrees of success).
In contrast, Ailing Gaucho restaurant group faces closure with 1,500 jobs at risk (The Guardian, Sarah Butler) shows that high street restaurant chains continue to feel the pressure as the owner of the Gaucho and Cau brands is preparing to file for administration, putting 1,500 jobs on the line. There have been attempts at selling the group to various investors and private equity groups, but to no avail so far. The group had considered the now rather common Company Voluntary Agreement (CVA) under which it would have closed its 22 Cau outlets and continued with Gaucho, but then it got stung with a £1m tax bill. The company owes £50m to its banks. Gaucho will go into administration unless a buyer can be found within the next 10 days. * SO WHAT? * Although it IS possible for the Gaucho chain to survive it seems virtually certain that Cau will disappear as it has been particularly badly hit by tough competition and the squeeze on consumer spending. It seems that it will shortly be added to the list of restaurant casualties this year that include Jamie’s Italian, Byron, Barbecoa, Prezzo, Carluccio’s and Prescott & Conran.
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benefited from the online frenzy and Target said that its flash sale on Tuesday generated the highest single day of online traffic and sales this years as shoppers rushed to take advantage of deals on appliances, beauty products and Google devices. * SO WHAT? * Amazon’s manufactured shopping event continues to go from strength to strength, dragging other retailers in with it, but it has some way to go before it achieves the same success as Singles Day for Alibaba, which raked in a phenomenal $245.4bn in sales in 24 hours last year.
There’s good news on the UK high street in Chocolatier hits sweet spot with rising sales (The Times, James Hurley) as it enjoyed sales growth of 12% over the last year, benefitting from opening 15 stores over the period. Chief exec and founder, Angus Thirlwell, was understandably upbeat on the company’s performance and added “Our plan is that, we’ve learnt a raft of things, and now we’re going to apply them to a major market or major markets to become a global brand”. So, will they pay too much and flop to expand internationally, or is world domination on the cards??
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OTHER NEWS
… And finally, in other news…
Japan knows a thing or two about coping with heat (I remember when I lived there dealing regularly
with 40- plus degree heat and 100% humidity!) and so I thought it only appropriate to give you some ideas from over there in As heat wave grips Japan, demand spikes for
products aimed at staying cool (Japan Times, Chisato Tanaka). One of them involves drinking a beverage called Calpis. And yes, it does taste slightly salty…
As always, thank you for reading the WIFI!