Thursday 20/01/22

  1. In MACRO & CRYPTO NEWS, Boris Johnson survives another day, businesses like his lifting of restrictions, the tourism industry industry wants more, UK inflation hits a near-30 year high and the FCA continues its crypto-crackdown
  2. In TECH NEWS, Sony craters on the Microsoft/Activision news and ByteDance disbands its investment team
  3. In RETAIL/CONSUMER GOODS NEWS, Burberry puts in a strong performance, P&G says prices will continue to rise and Brompton launches a UK-made titanium fold-up
  4. In MISCELLANEOUS NEWS, Wetherspoons’s glass is half full, Pearson pins hopes on digital and private jet demand rises in Hong Kong
  5. AND FINALLY, I bring you a very cute dog…



So BoJo clings on, businesses are relieved about the lifting of restrictions, the travel industry wants more, UK inflation hits a new high and the FCA wants to tighten the screws on crypto…

📢 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 in addition to providing the opportunity for Q&A and discussion. The ZOOM call will start at 5.30pm and run until 6.30pm. See you there!

Boris Johnson buys time as Tories rally behind embattled leader (Financial Times, Sebastian Payne, George Parker and Jim Pickard) shows that BoJo isn’t giving up without a fight as one MP defected to Labour and former front-bencher David Davies made blunt calls for him to resign yesterday. Results of the inquiry on “partygate” are set to be published next week, but more revelations are expected in the coming days. 54 Conservative MPs have to send letters to the chair of the 1922 committee of Conservative backbenchers to trigger a vote of no confidence and it is thought that about 30 letters have been sent so far. The drama continues…

In the meantime, Businesses hail lifting of most coronavirus restrictions in England (Financial Times, Oliver Barnes, Daniel Thomas, Jasmine Cameron-Chileshe and John Burn-Murdoch) shows that businesses sighed a collective sigh of relief following the government’s announcement yesterday of the lifting of most of the current coronavirus restrictions in England from January 26th. Health secretary Sajid Javid added that the government would outline a roadmap of how we are going to live with Covid going forward by spring. This was particularly welcomed by the hospitality and retail sector, as you can imagine, but PM urged to drop travel restrictions to boost tourism (Daily Telegraph, Oliver Gill and Charles Hymas) shows that the travel and tourism industry is also pushing for more relaxation of the rules in a bid to make London attractive as a destination once more.

Following on from what I said yesterday about the FCA getting involved with overseeing crypto ads, FCA proposes crackdown on crypto market ‘incentives’ (Daily Telegraph, Giulia Bottaro) shows that the regulator is considering a ban on incentives to encourage investment like refer-a-friend and new joiner bonuses. It is also looking at new warnings to replace the current boring-sounding “capital at risk” with the somewhat racier things like “Don’t invest unless you’re prepared to lose all your money invested”. The FCA is considering a number of proposals at the moment, with a deadline for feedback of March 23rd, final rules to be confirmed in the summer.



Sony suffers from Microsoft’s Activision Blizzard move and ByteDance changes direction…

Sony shares fall 13% after Microsoft’s Activision Blizzard deal (Financial Times, Leo Lewis and Antoni Slodkowski) shows the impact of yesterday’s massive acquisition news as Sony took a big hit while other gaming companies such as Square Enix, Capcom, Nintendo and Konami rose on speculation that they could be next on someone’s corporate shopping list or merge to defend against hostile takeovers. Sony suffered because some investors were thinking that the acquisition could really enhance the Xbox Game Pass, the game subscription service, and because of fears of the impact a potential move (pure speculation) for the Call of Duty franchise to go exclusive on the console might have. It could be that Sony sticks to its usual strategy of making smaller acquisitions to build good quality franchises rather than panic and make a big acquisition. * SO WHAT? * Like I said in the podcast yesterday, Sony has traditionally been quite an arrogant company and suffered from its silo mentality despite having some great businesses that would do well to work more together. I don’t think that its position in console gaming is in jeopardy, but it just may have to work a bit harder to stay ahead than it has been doing – particularly in mobile gaming – which is something that Sony/Microsoft: Activision deal will activate copycat M&A wave (Financial Times, Lex) mentions. As things stand, mobile gaming accounted for 60% of all gaming in 2020, so it is something that Sony should not be ignoring. Microsoft’s Activision Blizzard deal to power its Netflix-of-gaming aspirations (Wall Street Journal, Aaron Tilley and Sarah E. Needleman) does a great potted history so far of Microsoft’s foray into gaming and goes into more detail about playing games on

the cloud, something I think will be increasingly compelling as 5G is rolled out, given the superior processing speeds that the new network enables. Still, there is that little doubt at the back of my mind when you consider The ‘Call of Duty’ billionaire forced to sell up by a sexual harassment scandal (Daily Telegraph, James Titcomb and Matt Oliver) which I interpret as showing that there could be danger ahead in the form of potentially painful litigation costs. I wonder whether it would be possible for claims to increase because potential litigants see the possibility for a nice payout given the deep pockets of the new sugar-daddy. It just makes me think about the time when Bayer bought Monsanto for a chunky amount and then a few years later had to pay MASSIVE legal costs and damages due to Monsanto’s weed killer Roundup being found to cause cancer.

Then in ByteDance disbands investment team amid China’s Big Tech clampdown (Financial Times, Ryan McMorrow, Eleanor Olcott and Tabby Kinder) we see that TikTok’s owner is disbanding its investment team as part of ongoing efforts to appease Chinese regulators who are cracking down on tech companies. * SO WHAT? * ByteDance said that it had conducted a review of the business (remember last year that it did a big restructuring and split itself into different divisions) and concluded that it wanted to cut down on investing – interesting because this is the division that helped to grow the company into what it is today as its c. $1bn 2017 purchase of Shanghai based start-up formed the backbone of what became TikTok! However, it may well have been inevitable since the cyberspace administration is rumoured to have imposed new directives that would compel tech companies to get approval before making investments (this was something that Chinese media reported initially and then retracted). It remains to be seen as to whether this makes it more likely for ByteDance to be able to do an IPO early this year, which has been speculated on.



Burberry does well, P&G manages expectations and Brompton launches a new bike…

Burberry predicts 35% rise in annual profits backed by Asia sales (The Guardian, Sarah Butler) shows that the company is feeling pretty confident about the future as it forecast a boost in profits thanks to younger customers approving of designer Riccardo Tisci with their wallets. It saw particular strength in Asia, but sales in the US and Canada were also strong. Other luxury brands, including Richemont and Prada also unveiled strong numbers. * SO WHAT? * Luxury continues to go from strength to strength! I think that this trend is going to continue for a while yet as

moneyed consumers increased their spending power under lockdown because they weren’t travelling – but I’m sure their spending will pick up even more as travel restrictions fall over time and they can go on shopping trips abroad.

Elsewhere, Proctor & Gamble says prices will keep going up (Wall Street Journal, Sharon Terlep) highlights bad news for consumers as P&G announced strong quarterly numbers whilst adding that price rises weren’t over yet. Not great for inflation, eh? Then in Brompton launches first titanium fold-up bicycle made in UK (Financial Times, Harry Dempsey) we see that the British folding bike manufacture has managed, after years of trying, to launch a UK-made titanium bike which it will sell for a rather chunky £3,750-£3,950. The company has benefitted from the upswing in commuters travelling by bike and they believe that people will pay these high prices for something that is 37% lighter than their other bikes. Hmmm.



Wetherspoons is positive about the second half, Pearson shifts focus and rich Hong Kongers take to private jets…

In Wetherspoons aims to serve up a stronger performance (The Times, Dominic Walsh) we see that the boss of the pub chain reckons that the second half will be good, but not the first half as Plan B restrictions take their toll followed by a bounce-back.

Pearson’s pivot to digital is bolstered by students stuck at home (Daily Telegraph, Ben Woods) shows that education

group Pearson was confident to hike its profit targets at its quarterly results announcement yesterday, citing the rising demand in home learning from locked-down students. Its new Pearson+ app now has 133,000 paying subscribers and 2.75m registered users. It sounds like the company still has a lot to do in order to overhaul its company structure, but it seems to be going in the right direction.

Then in Departing Hong Kong residents turn to private jets to get pets out of city (Financial Times, Thomas Hale and Primrose Riordan) we see the increased exodus of people from Hong Kong is leading to a rise in demand for private jets to transport pets out of the territory as well as their owners. Demand on commercial flights is full, so people are having to resort to paying through the nose to transport their furry friends.



…in other news…

Ah I’m feeling a bit sentimental today for some reason. Just love the dog in this: Dog owner leaves people in stitches over pooch’s adorable bedtime routine (The Mirror, Zahna Eklund). What a face!

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Some of today’s market, commodity & currency moves (as at 0749hrs 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 **
7,590 (+0.35%)35,028.65 (-0.96%)4,532.76 (-0.97%)14,340.25 (-1.15%)15,810 (+0.24%)7,173 (+0.55%)27,773 (+1.11%)3,234 (+1.46%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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