Tuesday 17/09/19

  1. In MACRO & OIL NEWS, China’s industrial growth slows, BoJo annoys Luxembourgers and oil prices shoot up
  2. In VEHICLE-RELATED NEWS, Ineos announces car production in Bridgend and Arrival opens a new electric van factory
  3. In INDIVIDUAL COMPANY NEWS, WeWork’s IPO gets postponed and Aldi opens London stores
  4. In MEATLESS NEWS, US cattle states do their best to strangle meatless products
  5. In OTHER NEWS, I bring you curry milkshake and cool murals…



So China’s industrial growth slows right down, BoJo does a no-show and oil prices spike…

China’s industrial growth slumps to weakest rate in over 17 years (The Guardian, Phillip Inman) cites the latest figures on China’s economy which show that US import tariffs and weakening domestic demand are taking their toll, bringing industrial production down to levels not seen since February 2002. Retail sales figures also undershot expectations, as did capital investment and it is increasingly looking like interest rate cuts might be needed in addition to the central bank’s relaxation of lending restrictions to jolt the economy back into life. Clearly, a resolution of the current trade war would help as well! * SO WHAT? * If things continue in this way, the official year-end GDP growth target of 6-6.5% will look rather vulnerable, especially considering that Q2 growth fell to 6.2% – it’s weakest level in almost 30 years.

Boris Johnson frustrates EU with dearth of fresh Brexit detail (Financial Times, Sam Fleming, Jim Brunsden and George Parker) reflects what’s on the front pages of many broadsheets today as EU officials said that BoJo didn’t give them any details on new proposals for Brexit and then abandoned a press conference. * SO WHAT? * He was there to meet current European Commission president Jean-Claude Juncker and Luxembourg PM Xavier Bettel but, TBH, he was never going to get a good reception! J-C is strongly anti-Brexit (and he’s not about to change now), Bettel is “one of the most outspoken EU leaders in criticising Brexit” and is besties with French President

Macron, another staunch pro-European. TBH, I don’t know why BoJo even bothered going there in the first place. This all just sounds to me like noise that has been hyped up. I am expecting to see more of this kind of thing in the coming weeks as terms get debated behind closed doors…

Meanwhile, it’s all kicking off with oil as per Oil price spikes as fears mount over Saudi supply disruption (Financial Times, David Sheppard, Anjli Raval and Demetri Sevastopulo) where we see that oil prices suddenly shot up by as much as 20% on supply concerns following the weekend drone strike on the world’s biggest oil refinery (which Trump says originated in Iran) as trading volumes shot up. There is talk of the drawing down of oil inventories from both the US and Saudi Arabia to boost supplies, but that will only be a short-term solution. Attacks on Saudi oilfields have an effect far beyond just petrol prices (Daily Telegraph, Russell Lynch and Tim Wallace) takes a look at the immediate winners and losers (oil majors like BP/Royal Dutch Shell and airlines like British Airways owner IAG respectively) but also highlights that such jumps filter through to the real “economy” in the form of higher prices at the pump, which can then lead to higher inflation and less cash being available for consumers to spend on other things. * SO WHAT? * The timing of this isn’t great given that the global economy is looking pretty ropey at the moment and places that might be able to suddenly up production are unlikely to be able to just open the taps. Venezuela’s state oil producer is having a ‘mare, Libya is in civil war, Iran is “banned” under US sanctions and even US shale producers won’t be able to keep up with demand. It’s not great for the UK either as we are a net importer of oil – and we are, of course, in the middle of rather precarious-looking Brexit discussions. Still, it’s too early to say whether this panic will be short-lived or not.



Ineos has great news for Bridgend and Arrival electric vans spark interest…

Given that the automotive industry and Bridgend have had their fair share of bad news over the last few years, Jim Ratcliffe’s Ineos set to build new car in Wales (Financial Times, Peter Campbell and Michael Pooler) is a nice departure as Ratcliffe is close to signing a deal to make an SUV in the town where Ford is shutting down its factory. Ineos is believed to be putting £600m into the project (called “Projekt Grenadier”) that will be a welcome boost to a town that’s taken a real pasting over recent years. Ineos has zero experience in car-making, but it is a powerful conglomerate with interests in chemical works, refineries, North Sea oil and gasfields, shale and football clubs. No details have been made officially available as yet.

Then in Arrival time: how the white van went green (The Guardian, Jasper Jolly) we see that west-London headquartered Arrival has announced a new factory in Banbury Oxfordshire which will make electric commercial vehicles that are already being trialed by the likes of Royal

Mail, DHL, DPD and BT. Prototypes of the first full version will roll off its robotic assembly line in December. Vans are a very attractive area for electrification as mileages are often predictable, charging can be done in depots and diesel vehicles are becoming an increasing expense/liability. The company has already received potential orders for thousands of vehicles and it plans to boost production significantly over the next two years. Given that its production methods are completely different from the conventional production line methodology, Arrival (which used to be known as Charge Automotive) believes it can hit profitability at a far lower threshold – less than 10,000 vehicles per year – than established manufacturers. It has 600 staff across the US, Germany, Russia and Israel, with 250 of them being in the UK. * SO WHAT? * Arrival is not the only operator in this space as Tevva (which focuses on converting existing trucks to hybrids or full battery power) and Volta Trucks are also in the mix along with Ford, which is due to launch its plug-in hybrid electric Transit Custom at the end of the year. Incumbents have generally been slow to boost the electrification of urban vans because convention dictates that sales can only increase in a meaningful way when “green” vans become compelling on a cost basis – but given Arrival’s original production methods, that day may be coming soon. Good luck to ’em I say!



WeWork’s IPO gets postponed and Aldi expands in London…

WeWork postpones IPO after chilly response from investors (Financial Times, Eric Platt and James Fontanella-Khan) shows that sense has prevailed after WeWork decided to postpone its IPO last night after failing to muster up enough investor interest. It said that the plan now was to do it by the end of the year. * SO WHAT? * It seems that investors have decided to kick this money pit into the long grass for the moment because of

nervousness surrounding founder Adam Neumann’s outsize influence, hugely pumped-up valuations and lack of profitability. I think that the longer this drags on the more likely it is that WeWork will get found out. There are plenty of other companies out there in this space who are profitable and have a longer track record.

Aldi throws dozens more stores into its London trolley (The Times, Dominic Walsh) highlights the German discounter’s plan to double its store estate in the capital as part of broader expansion plans. The supermarket announced record sales last year in the UK and Ireland but said profits took a big hit due to price cuts and investment in new stores. Onward!



US cattle states try to stem the meatless revolution…

US cattle states seek to rein in substitute meat labelling (Financial Times, Gregory Meyer) shows that cattle and poultry farmers are fighting back against the burgeoning meatless revolution by getting Wyoming, Oklahomah and South Dakota to control labelling. Mark Gordon, Wyoming governor and cattle rancher (so no vested interest there then!) signed a bill into law earlier this year banning the word “meat” to be used if it doesn’t come from an animal.

Twelve states have passed similar laws with more to come. Oklahoma, Missouri, South Dakota, Montana, Kentucky and North Dakota have the highest beef cattle inventory while Alabama, Arkansas, Mississippi and South Carolina are  top for chickens. * SO WHAT? * Clearly, cattle and poultry farmers aren’t going to take things lying down and when you have a powerful agricultural lobby behind you you are going to use it. Labelling legislation is certainly going to slow things down for meatless, but I don’t think it’ll be enough to kill it (the same thing is going on over here). I personally think that meatless isn’t going to kill farming – it’s just going to change it. However, you can understand the objections of the people who make their livelihoods in this area.



And finally, in other news…

I thought I’d leave you with something that sounds very strange in We try a curry milkshake at Mos Burger Japan (SoraNews24, Oona McGee https://tinyurl.com/yxpvrkp5) – bleurrrrgh 🤢- and something that is deeply impressive in An artist uses spray paint to ‘carve’ through walls, and the see-through murals make for wild optical illusions (Insider, Darcy Schild https://tinyurl.com/y62j5krm). This is WILD 👍👍👍!

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Some of today’s market, commodity & currency moves (as at 0855hrs 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 **
7,321 (-0.63%)27,077 (-0.52%)2,998 (-0.31%)8,15412,380 (-0.71%)5,602 (-0.94%)22,001 (+0.06%)2,978 (-1.74%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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