Wednesday 08/05/19

1. In MACRO, MARKETS AND COMMODITIES NEWS, markets get nervy on trade talks, China continues to engage, iron ore prices are set for new highs, battery metal prices rise and UK consumer spending increases
2. In CAR NEWS, UK new car sales fall, plug-in hybrids suffer and BMW’s profits fall
3. In RIDE-HAILING NEWS, Lyft sees higher revenues and Gett raises $200m
4. In INDIVIDUAL COMPANY NEWS, Facebook chooses London and Purplebricks announces changes
5. In OTHER NEWS, I bring you a dog that sings and plays the piano. For more details, read on…

So markets get nervy, China is still engaged, metal prices rise and UK consumers spend…

Markets fall worsens as trade fears grow (The Times, Callum Jones) highlights global market jitters following Trump’s tweets on the trade talks with China. They dented confidence that an agreement would be struck between the two sides imminently as Trump threatened to raise tariffs again. China agrees to resume US trade negotiations (Wall Street Journal, Chao Deng and Lingling Wei) shows that China is still going ahead with meetings in Washington, just a day later than the original schedule. The drama continues…

Metals prices to shock electric car industry (The Times, Miles Costello) looks at the potential shortage of metals and minerals used for rechargeable batteries – including copper, graphite, cobalt, lithium and nickel – due to years of underinvestment in the mining industry. There are worries

that rising demand for electric vehicles – of which China accounts for half – will lead to supply problems and higher prices. Actually, prices have already been rising as a tonne of nickel, for example, has gone from being $8,000 two years ago to over $12,333. * SO WHAT? * Any new facilities take a long time to develop, so it certainly looks like there could be a shortage before more supply comes online. Mind you, it all depends on what the take-up of electric cars will actually be – and I suspect that it will be slower than many expect because the charging network isn’t good enough. Yes, demand growth is impressive – but it’s from a VERY low base.

Outlook brightens as households and investors defy Brexit turmoil (Daily Telegraph, Tim Wallace) cites the latest figures from Barclaycard which show the rather interesting fact that, despite everything, consumer spending, profits and confidence are all rising. Spending at pubs, restaurants and supermarkets were up, consumers are feeling more confident about the economy and revenues at listed UK firms also increased, according to the Share Centre, which helped profits rise for the 10th quarter in a row. Interesting, no?

UK car sales drop, plug-in hybrid sales suffer on grant cuts and BMW’s profits plunge…

Consumers apply the brakes to UK new car sales (The Guardian, Gwyn Topham) shows that new car sales fell by over 4% in the UK last month – the second weakest April since 2012 – with consumer reluctance to splash out on big ticket items thought to be to blame. Diesel sales continue to fall and now make up only 29% of new cars versus 50% in the year prior to the breaking of the VW emissions scandal in 2015. Plug-in hybrid car sales fall after UK government cuts grants (Financial Times, Peter Campbell) shows that sales of this category of car fell by a third as the government cut buyer incentives from £4,500 to £3,500 last year – and the effects of that are now coming through. On the other hand, demand for all-electric or hybrid cars rose by 12%. * SO WHAT? * None of this is particularly surprising and it just gives us evidence of what we already know – that diesels will continue to dwindle in

popularity (mind you, the drop is not quite as sharp as it was last year), that people don’t buy cars when the economy is looking a bit uncertain and that sales of electric/hybrid vehicles drop as soon as incentives are taken away.

BMW profits plunge as €1.4bn set aside for possible EU fine (Financial Times, Patrick McGee) highlights a 78% drop in profits for the first quarter as the company set aside €1.4bn to cover an expected fine from EU antitrust authorities for colluding with other carmakers to delay the introduction of clean emissions technology. BMW issued a profit warning last month as it learned of the EU antitrust authorities’ preliminary view following a two-year investigation, so markets were expecting something bad. However, the company said that its earnings were otherwise on track. Interestingly, its flagship electric vehicle, the i3, had its best ever quarter, with sales up by 16.2%. * SO WHAT? * BMW flagged this last month, so although it’s bad, at least the company can draw a line under it all now. There are other reasons to be positive for the outlook, though – sales in the US were “robust” and those in China were up by 10%.

Lyft lifts revenues and Gett gets $200m…

Lyft reports strong revenue growth, $1.1bn loss (Wall Street Journal, Eliot Brown) shows that the ride-hailer posted strong growth in its first ever quarterly results as a public company, with revenue almost doubling from the previous year amid rising losses. It also announced an extended partnership with Alphabet’s self-driving car unit Waymo, which will said it will let people hail robo taxis via Lyft’s app. * SO WHAT? * The company still has massive

losses, but I guess that rival Uber will be relieved that Lyft’s results weren’t a complete disaster as it would be bad for sentiment when Uber comes to market later this week. 

Elsewhere, Ride-hailing firm Gett raises $200m with eye on listing (Daily Telegraph, Matthew Field) managed to raise a chunky $200m in debt and equity from current investors including VW, valuing the company at $1.5bn and the amount it has raised so far to $800m. * SO WHAT? * Gett is known for working with London’s black cab drivers and operates in the Israel, the US, the UK and Russia. It is thought to be targeting a flotation in 2020 either in London or New York and differs with the likes of Lyft and Uber in that its losses are way smaller (“only” $3.5m in 2018) and it aims to make a profit at the end of 2019. 

Facebook chooses London and Purplebricks makes some changes…

There’s good news for wannabe Facebook employees in Facebook picks London as base for WhatsApp push into payments (Financial Times, Madhumita Murgia) as the social media giant announced that London will be at the centre of an important area for future growth due to its multicultural workforce. * SO WHAT? * The app will boost its workforce by a quarter, hiring around 100 people. Senior

engineers from WhatsApp were sent to London late last year to recruit people in London and Dublin. Payments is going to be a big area for the company and this move will burnish London’s reputation as a proper fintech hub.

Purplebricks boss exits as online estate agent scales back expansion (The Guardian, Julia Kollewe) heralds some changes at the online estate agent as it kicked out its chief exec and announced that it will pull out of Australia and scale down its US business, admitting that it had expanded too quickly. The company said that it was outperforming the wider market in the UK despite tricky conditions and saw opportunity for profitable growth.

And finally, in other news…

I thought I’d leave you with this today: Dog plays the piano and howls along (Inside edition, https://tinyurl.com/y5692gya). Am loving his bow-tie!