Thursday 29/04/21

  1. In TECH NEWS, Apple’s earnings surge and Facebook ads drive sales
  2. In FINANCIALS NEWS, Deutsche Bank announces bumper profits, Lloyds profits soar and Mifid changes are considered
  3. In CAR-RELATED NEWS, Mini production suffers a chip hit, EV numbers will hit 145m by 2030 and Uber is about to launch a major UK recruitment drive
  4. In INDIVIDUAL COMPANY NEWS, Sainsbury’s has a shocker, Dixons closes airport outlets, WH Smith banks on travel, Mischon de Reya is set for an IPO, BT looks to sell Sport and Parkdean benefits from staycations
  5. AND FINALLY, I thought I’d leave you with a virtual bungee jump…

1

TECH NEWS

So Apple knocks it out of the park – as does Facebook

📢 It’s Thursday – so it’s time for my 30-minute Instagram Live At Five where I will run through the week’s key stories AND the one hour weekly ZOOM call for paying subscribers where I will do the same but in more detail and with much more interaction 👍 The ZOOM call will start at 5.30pm and run until 6.30pm. See you there!

Also, I WILL BE RELEASING A SPECIAL PODCAST TODAY in addition to the usual one. In it, I interview three headhunters about the current situation in the job market in their respective fields. I interview Mark Jukes of Elbrus Partners (investment banking specialist), Patrick McCubbin of Robert Half (Accountancy and Finance specialist) and Robert Hanna of KC Partners (legal specialist). Please give it a listen as they have some interesting stuff to say! We recorded this yesterday. You can listen to the Commercial Awareness with Watson’s Daily podcast on Apple Podcasts HERE and on Spotify HERE. It’s also available on loads of other channels 👍

Apple earnings, revenues soar (Wall Street Journal, Tim Higgins) highlights Apple’s continued success as its profits more than doubled in the first three months of the year with the iPhone 12, Macs and iPads all proving popular (although the iPhone 12 was a particularly stand-out performer). Analysts are now predicting a record year for profits and the company’s share price bumped up by 4% as revenues came in way above consensus estimates. * SO WHAT? * This is another stellar performance – and I would expect it to continue for a while longer yet. Microprocessor shortages could prove to be a headwind later in the year, though, particularly for Macs and iPads. It is going to be very interesting to see how things pan out with the new iOS rollout and the effect that increased privacy is going to have. Click here to see an interesting piece from the BBC website on why this rollout is ruffling feathers.

Facebook’s ad business drives surge in revenue, following Google’s act (Wall Street Journal, Sarah E. Needleman) shows that the ad business boosted company profits and revenues ahead of Apple releasing its new privacy-focused iOS update. The company said that its Q1 earnings reflected last year’s trend of spending a lot of time online but added that it expects revenue growth to slow year-on-year in the last two quarters due to higher earnings hurdles and the potentially negative effect of Apple’s new privacy rules.

2

FINANCIALS NEWS

Deutsche Bank and Lloyds Bank put in decent performances and changes are being considered for MiFID…

In what seems to be a rare bit of good news for the embattled bank, Deutsche Bank posts highest quarterly profit since 2014 (Financial Times, Olaf Storbeck) heralds Germany’s #1 lender’s best quarterly profit since 2014 on the back of bond trading, solid result in asset management and a trouble-free exit from its exposure to the Archegos Capital collapse. * SO WHAT? * These results beat analyst expectations by almost 60% and it seems that chief exec Christian Sewing’s cuts/reforms are having some effect. That’ll take the pressure off for a bit!

Then in Lloyds profits soar as Covid loan loss provisions released (The Guardian, Kalyeena Makortoff) we see that earnings have rebounded above market expectations for Q1 as it was able to release cash that had previously been held back for potential loan defaults due to the pandemic. In terms of the near future, the bank factored in a “modest third wave” of Covid-19 infections and a slowdown in the house-buying boom. * SO WHAT? * I think that it is encouraging to see this release of cash as it shows confidence in the future, but I must say that I think it might have been more prudent to wait until a few months after furlough ends – just in case defaults shoot up.

UK regulator proposes ‘quick fixes’ for Mifid rules (Financial Times, Chris Flood) is a headline that probably doesn’t grab you – but its implications could be pretty major if the FCA follows through. Basically, some European legislation (called “MiFID II” – Markets in Financial Instruments Directive) came into force in January 2018 to regulate financial markets in the EU, improve protections for investors and make service provisions more transparent. One side-effect of the imposition of this legislation was that research on smaller companies just disappeared because it was no longer financially viable for investment banks and research firms to offer the service because of new rules on charging for it. The FCA is talking about easing the rules to help independent research providers – something that is needed because about 80% of publicly traded companies with a market cap of £250m or under either have no research coverage or are only covered by one analyst. * SO WHAT? * This is part of the whole Brexit thing where we are supposed to have more freedom from Brussels in how we conduct business, but it’ll be interesting to see how far this goes. This could open up all sorts of opportunities for smaller independent research providers – and potentially give investors access to more better quality research. As always, the key is in the execution and it’s still being discussed. Mind you, the fact that it IS being considered is good news for affected companies.

3

CAR-RELATED NEWS

We look Mini’s chip woes, EV numbers and Uber’s recruitment drive…

Chip crisis causes Mini break in production (The Times, Robert Lea) shows that Mini has become the latest car manufacturer to suspend production due to the worldwide shortage of computer chips. Its Cowley plan in Oxford will not open again until next Thursday and comes after other manufacturers including Jaguar Land Rover, Ford, Nissan and Honda have all had the same issues. * SO WHAT? * A solution to this does not look likely for quite some time – the most optimistic seem to suggest this summer (unlikely IMO) but many are suggesting this will last until at least next year!

Electric vehicles on world’s roads expected to increase to 145m by 2030 (The Guardian, Jillian Ambrose) highlights a report by the International Energy Agency which suggests that an increase in the number of EVs worldwide could negate the need for over 2m barrels of diesel and petrol by 2030 and save something in the region of 120m tonnes of carbon dioxide! * SO WHAT? * Clearly this is all “calculated” guesswork, but it does put in black-and-white what could be the case in a few years’ time and may give ammo to those who want to improve prospects for mass-EV adoption. 

Then in Uber’s huge recruitment drive in UK (The Times, Tom Knowles) we see that the ride-hailing giant is planning on a massive recruitment drive in the UK to find another 20,000 drivers to add to its existing 70,000. It believes that there will be a boom in demand when lockdown lifts and will offer a minimum wage, paid holiday time based on 12% of their earnings and a pension plan. More good news on the job front!

4

INDIVIDUAL COMPANY NEWS

Retailers face challenges, Mischon de Reya aims for an IPO,  BT looks to sell Sport and Parkdean benefits from staycations…

In other news doing the rounds today, retailers continue to have mixed fortunes. Sainsbury’s to slash prices after $261m slump (Daily Telegraph, Laura Onita) shows that the UK’s #2 supermarket (Tesco is #1) announced a loss for the year to March 6th due to higher costs incurred by Argos shutdowns, job cuts and Covid-related costs (Tesco’s said it too had higher costs last year). The plan now is to boost profits by cutting prices, broadening its product range and improving food quality whilst also growing its online presence. Dixons to shut airport stores putting 400 jobs in jeopardy (Daily Telegraph, Laura Onita) highlights tough decisions at the electronics retailer as the move to shut all of its 35 travel shops came as a consequence of the Treasury axing tax-free shopping but WH Smith puts its money on travel taking off (The Times, Ashley Armstrong) shows WH Smith is taking the different approach of raising funds to develop its travel shops. The extra cash will be used to help the funding of 100 new travel shops (mainly in the US) as well as to pay down debt. * SO WHAT? * As far as these developments go, I think that Sainsbury’s has a bit of an identity crisis as it is somewhere between Tesco’s scale, Aldi and Lidl being the low-cost kings and Waitrose for the aspirational. I think that it needs to carve out a proper niche somehow and I think that price cuts and a bit of rejigging here and there just aren’t going to cut it. The Dixons thing is understandable as recovery in UK airports is likely to take some time, but I think that WH Smith’s plan sounds reasonable – especially as it targets the US, just as domestic travel over there is showing signs of picking up.

Elsewhere, Mischon de Reya set for £750m London listing (Financial Times, Daniel Thomas and Kate Beioley) shows that the well-known law firm looks like it will become the highest valued law firm on the London Stock market if it achieves a mooted valuation of £750m in a flotation thought to launch later this year. It has hired JP Morgan to look at the possibility of a Q4 flotation. It has a reputation for litigation and defamation but also has major practices in real estate and employment. The firm said it would use the funds to expand overseas and invest in growth opportunities in the tech sector and all employees will receive shares. * SO WHAT? * This is an interesting move as it is joining other law firms in going public in a bid to raise funds to power tech investment and global expansion. Rival Irwin Mitchell is also considering a flotation while others such as DWF, Keystone Law and Knights group are already there. Pressure has been growing for Mischon de Reya to expand overseas.

Then in BT in talks with rivals to sell Sport division (Daily Telegraph, Christopher Williams and Ben Woods) we see that the telecoms company is in talks with Amazon, Disney, Dazn and others to sell its TV arm as it wants to focus more on rolling out broadband. AND FINALLY, Staycation boost for Parkdean (The Times, Dominic Walsh) shows how the UK’s biggest caravan and camping park operator is very optimistic about this year due to the boom in staycations! Not surprising, really – but I hope that it will last longer than one year!

5

...AND FINALLY...

…in other news…

I thought I’d leave you with something that sounds like a lot of fun in New virtual reality attraction allows thrill-seekers to bungee jump off Tokyo Tower (SoraNews24, Ingrid Tsai). Nice 👍

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Some of today’s market, commodity & currency moves (as at 0745hrs 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 **
6,964 (+0.27%)33,981.57 (-0.18%)4,187.62 (+0.18%)14,138.78 (+0.87%)15,292 (+0.28%)6,307 (+0.53%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
$64.17$67.64$1,779.711.396311.21209108.781.1500354,359.49

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