Wednesday 01/05/19

  1. In MACROECONOMIC NEWS, the Eurozone economy surprises on the upside
  2. In FAANG NEWS, Apple disappoints and delights while Facebook has a revamp
  3. In BURGER NEWS, McDonald’s unveils a strong performance while Beyond Meat aims for a juicier IPO
  4. In TRANSPORT-RELATED NEWS, Airbus profits from Boeing’s woes while JLR decides to manufacture the new Defender in Slovakia
  5. In OTHER NEWS, I bring you some bizarre Tommy Lee Jones TV ads. For more details, read on…



So the Eurozone surprises on the upside…

Eurozone growth rate makes surprise rally after gloomy forecasts (The Guardian, Phillip Inman) heralds some good news for the bloc as a rapidly expanding Spanish economy and a turnaround of sorts in Italy has helped to boost the eurozone’s growth rate by 0.4% in the first quarter. This is double the rate of expansion from the final quarter of 2018, but observers remain cautious for the rest

of the year given political uncertainty and the slowing momentum of manufacturing. * SO WHAT? * This is good news for the bloc but, at the risk of sounding like a party-pooper, Spain’s 0.7% growth is from a very low base and the 0.2% growth in Italy is hardly earth-shattering (plus the leadership in Italy is all over the place – so it’s difficult to get too positive as things could change very quickly). There are still many fundamental problems within and Germany – usually the engine – continues to lag. I would get more excited if Germany was going from strength to strength – but it’s not.



Apple announces poor sales but splashes the cash on investors while Facebook has a big revamp…

In Apple defies record fall in iPhone sales (The Times, James Dean) we see that, on the one hand, the company announced its steepest ever drop in iPhone sales, but then on the other it pepped up investors by announcing an upbeat sales forecast, major $75bn share buyback programme and boosted the dividend. The shares were up by 5.1% in after-hours trading. * SO WHAT? * iPhones still make up almost 60% of revenues, so a 17.3% fall in sales in the second quarter is not good news. It’s good that Apple is going to use some of its vast cash pile to support the shares and give money to shareholders, but the fact is that its China sales are shrinking and, according to Morgan Stanley, mobile phone replacement cycles will stretch from the current three years up to four years by the time 2019 is out. The company continues to emphasise the growth of its services business (including Apple Music, Apple Pay and iTunes etc.) and is obviously switching its focus to monetising its existing installed base. There is plenty of upside for this and the provision of more services may even help to keep Apple users loyal – but the competition is intensifying all the time. Hopefully, the massive share buy back programme will help to ease that transition to earning more from services but this still doesn’t take away from the fact that Apple still needs to sort out its handset offering (maybe this could be addressed by the introduction of its own bendy phone!) and come up with a proper strategy on

how to crack India and China – two of the biggest markets with arguably the most potential. 

Facebook tries a new look as Zuckerberg proclaims a new era (Wall Street Journal, Jeff Horwitz) highlights a major revamp of the Facebook website and mobile app as Zuck tries to change the way users engage with the platform by placing more emphasis on private groups and visual stories and less on its News Feed which has been a hotbed of trolling and abuse in the last few years. This is the biggest revamp for five years and is part of a broader strategy of giving people more individual ways of communicating. There would be more emphasis on privacy, with increased use of encryption and ephemeral messaging across its Facebook, WhatsApp and Instagram platforms. The increasing emphasis on Groups will make self-policing easier and should go some way towards preventing harassment. * SO WHAT? * This sounds quite reasonable on a strategic basis and should help to shift responsibility for content policing towards the Groups and away from Facebook itself. However, on a more commercial note, Facebook’s challenge to Amazon (Daily Telegraph, Laurence Dodds) highlights the announcement of new shopping features for WhatsApp, Instagram and its online Marketplace which will enable its 2.4bn users to browse products, get recommendations, organise shipping and make payments WITHIN its apps. I have mentioned this before, but clearly its introduction is now imminent. This will be great news for influencers and could be a decent boon to Facebook’s revenue streams. I guess that we’ll have to see what the new-look site is like, but I think that the ideas are good. It went live yesterday but users will see the updates in the next few weeks.



So McDonald’s puts in a decent performance while Beyond Meat readies for flotation…

I thought I’d bring you stories from both sides of the meat divide today! Veggie Wrap and bacon help boost McDonald’s sales (Daily Telegraph, LaToya Harding) highlights the success of the new Veggie Wrap and Big Mac with bacon which helped power McDonald’s in the UK and Ireland to a “very strong” first quarter. Its McCafe range also did well and the company said that its investment in digital capability was also going well with its app and delivery service making up almost 10% of its first quarter sales. Stateside, Donut Sticks and bacon drove like-for-like sales up by 4.5% (yes, there was a “Bacon Event” in January which let customers add bacon to any order!) and global sales put in a 15th consecutive quarter of growth, although revenues were down by 4% due to changes in franchising. * SO WHAT? * A strong performance in tricky and competitive markets. Who knew bacon could be so powerful?!?

Beyond Meat looks to raise up to $240m in upsized IPO (Financial Times, Emiko Terazono and Nicole Bullock) heralds the flotation later this week of the plant-based meat substitute company Beyond Meat. The California-based group decided to increase both the size and the price range of its offering meaning that it will now sell 9.6m shares at $23-25, raising up to $240m. The original offering was for 8.75m shares at $19-21, raising $184m. Beyond Meat’s burger accounted for 70% of its revenue last year (you can see my “reaction” video here to me eating one!), is based on pea protein and uses beetroot juice to mimic the blood in a meat burger. The company also makes sausage and chicken substitutes. Beyond Meat says it’ll use the proceeds from the IPO on more manufacturing facilities as well as R&D. * SO WHAT? * As regular followers of Watson’s Daily will know, this is a subject that I find quite exciting (and for those of you who don’t know – I am very much a meat-eater). Naysayers will probably say that this whole vegan/veggie thing is just a fad, but I think that when the substitutes are this good and have so many health and environmental benefits they deserve to be taken seriously. 



Airbus benefits from Boeing’s troubles and the new Land Rover Defender won’t be built in the UK…

In transport-related news today, Boeing’s 737 Max problems hand no 1 spot back to Airbus (The Times, Robert Lea) just confirms what we probably already knew – that Airbus is on track to become the world’s biggest maker of commercial aircraft for the first time in a decade due to Boeing’s current woes regarding two recent crashes.

Then in land-based transport, New Land Rover Defender to be built in Slovakia, not the UK (The Guardian, Gwyn Topham) is a story doing the round in a lot of the broadsheets as this is yet another kick in the teeth for UK automotive production. The last Land Rover Defender was produced in Solihull almost continuously for 70 years.



And finally, in other news…

I thought I’d leave you with something a bit bizarre in Tommy Lee Jones cries, says sayonara to the Heisei era in epic new Boss coffee commercial (SoraNews24, Oona McGee Let’s hope he got paid a lot to do this stuff…