Tuesday 22/01/19

  1. In MACROECONOMIC NEWS, the IMF frets about growth and China slows down
  2. In TECH NEWS, a SoftBank and Virgin satellite nears take-off and Google gets a GDPR fine
  3. In RETAIL NEWS, we see that British Land changes its retail strategy and how the fortunes of Mountain Warehouse contrast with William Hill
  4. In OTHER NEWS, I bring you an amazing skateboarder. For more details, read on…



So the IMF shows concern and China slows down…

In Britain’s growth to beat Europe’s big players (The Times, Philip Aldrick and Gurpreet Narwan) we see that the latest forecasts from the International Monetary Fund (IMF) show that Britain will grow at least as fast as its continental neighbours in the next two years due to a slowdown in the EU that will hold back global growth. It downgraded growth forecasts for Germany and Italy and the only countries of the G7 that it thinks will grow faster than the UK are the US and Canada. The major caveat here is that the central assumption is that the UK will be able to thrash out an exit from the EU. The IMF identified three risk “triggers” that would damage world economic prospects (I said the same thing in Watson’s Yearly HERE): Brexit, escalating US-China trade tensions and a Chinese slowdown.

Talking of which, China’s annual economic growth rate is slowest since 1990 (Wall Street Journal, Lingling Wei) turns up the gloom as the 6.6% growth rate for 2018

reported Monday was the worst for almost 30 years as the economy slowed down considerably in the final quarter. Tariff uncertainty is putting the mockers on investment and hiring to the extent that jobs are now getting cut – the official unemployment rate rose to 4.9% in December from 4.8% in November. Recent data released by the National Bureau of Statistics has shown weakening property sales, industrial output and retail sales – so things aren’t looking too bright for 2019. * SO WHAT? * China growth has been dented by the US-China trade conflict most recently, but the economy has also decelerated at least in part because President Xi Jinping has been clamping down on debt and financial risk over the last three years. This has resulted in reduced borrowing by local governments and businesses as well as a sharp drop-off in spending on things like new subway lines and factories. So far, Beijing has yet to unveil a major all-encompassing growth package and is just chipping away here and there with individual measures and injections of liquidity. It is expected to bring in more tax cuts for businesses and individuals especially in the tech sector, for instance. If trade talks worsen, however, Xi Jinping may have to come to the rescue with a joined-up growth strategy to at least arrest the slide.



A satellite start-up prepares for take-off and Google gets fined…

SoftBank and Virgin-backed satellite group finally nears take-off (Financial Times, Tim Bradshaw) highlights the latest developments at OneWeb, a start-up that has raised over $2bn from SoftBank and Virgin Group, which has edged closer to its ambitions of bringing wireless broadband to the whole world with a launch date for its first satellites of February 19th. The company continues to raise money and will need many billions more in order to complete its global satellite network. * SO WHAT? * This is one hell of a company – its stated mission is to “connect everyone, everywhere” and it signed a deal a year ago with Airbus, Delta, Sprint and Bharti Airtel to form the Seamless Air Alliance which enables airline passengers to use their existing mobile connections in the air. The main difficulty here, though, is not the satellites but the receiving devices 

on the ground as flat panel receiver tech has not kept pace. This is very much a “jam tomorrow” company, but it has indisputably admirable ambitions.

French data watchdog fines Google record €50m (The Guardian, Alex Hern) looks at how France’s data protection watchdog, CNIL, has slapped Google with a record fine for failing to provide users with transparent and understandable information on its data use policies under the terms of the “new” (well it’s actually a year old) European GDPR framework. The maximum fine for breaching GDPR is 4% of annual turnover which, in Google’s case, could be almost €4bn. In addition to the data protection gobbledygook, the CNIL said that even when user consent was collected it was not “specific” and “unambiguous” as per GDPR guidelines. * SO WHAT? * This is the world’s biggest data protection fine so far – and comes one month after Italy’s competition regulator fined Facebook €10m for misleading users over data practices. It’ll be interesting to see what these giants do next and how effectively individual regulators show their teeth. I suspect there will be more and more fines rolling in for GDPR breaches as time goes on.



So we see British Land changing its strategy and the contrasting fortunes between Mountain Warehouse and William Hill

Two bosses to leave as British Land makes a retail retreat (Daily Telegraph, Jack Torrance) sounds like a real estate story, but it has direct implications for the retail sector because two of its most senior bosses – one who is the head of offices and the other, who is head of the FTSE 100 landlord’s retail, leisure and residential arm – will stand down at the end of March as one person, Darren Richards, will lead the combined two divisions to become head of real estate. The idea is that a combination of the divisions will be part of its focus on mixed-use “campuses” that combine shops, homes and office space. * SO WHAT? * British Land has been cutting down its exposure to stand-alone retail property as competition has been intensifying and costs have been increasing over the last few years. I really do think that this is the way forward for malls and shopping “zones” in general because a more concerted effort to combine an offering of retail, office and residential space can create its own “buzz” with a built-in customer base that then attracts outsiders as well. I have mentioned it from time to time, but I think that Mike Ashley will 

increasingly be able to do something like this given the acquisitions he has been making of late. With House of Fraser already in the bag, an HMV acquisition looking increasingly likely and the potential for snapping up Debenhams in the near future, Ashley will have brand power and real estate square footage to make this sort of development trend a reality without having the same baggage as long-time landlord like British Land.

Retailer thriving in the great outdoors (The Times, Deirdre Hipwell) shows that Mountain Warehouse had its best Christmas sales ever and that it was on track for another year of record profits. Total sales were boosted by 12% in the 13 weeks to January 6th and online sales shot up by 24.6% in the same period. As if that wasn’t enough, it also said that it had its best ever Black Friday – up 20%. Nice!

On the other hand, William Hill to close hundreds of high street betting shops (Daily Telegraph, Oliver Gill) paints a rather more downbeat picture for the bookmaker as it counts the cost of a government crackdown on fixed-odds betting terminals (FOBTs). William Hill, like many of its competitors, is trying to concentrate on overseas business following the relaxation of US sports gambling rules. The company currently has a bigger footprint across the Atlantic but is expected to be overtaken by GVC, which has a joint venture with MGM Resorts and could nab 25% of US sports betting.



And finally, in other news…

I thought I’d leave you with an AMAZING video of a skateboarder steaming down Alpine roads in Incredible video shows teenager skating down the hill through French Alps at 68mph (Daily Motion, https://tinyurl.com/y93m2juc). Wow!

Some of today’s market, commodity & currency moves (as at 0823rs 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 **
6,971 (+0.03%)11,136 (-0.62%)4,868 (-0.17%)20,623 (-0.47%)2,591 (-0.73%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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