Wednesday 10/07/19

  1. In MANUFACTURING-RELATED NEWS, Airbus is on track to overtake Boeing, Switch production goes to Vietnam and BMW pulls some engine production from the UK
  2. In STREAMING NEWS, China’s DouYou aims to raise almost $1bn in a US IPO and live event streaming hots up
  3. In UK HIGH STREET NEWS, M&S warns of more store closures, as does Patisserie Valerie’s owner
  4. In OTHER NEWS, I bring you a solution to excess baggage…



So Airbus is on track to beat Boeing, Nintendo Switch production goes to Vietnam and BMW pulls some engine production from the UK…

Airbus poised to overtake Boeing as biggest plane maker (Wall Street Journal, Doug Cameron and Robert Wall) shows how the whole 737 MAX disaster is denting Boeing as Airbus looks set to replace it as the world’s biggest plane manufacturer after seven years of being the bridesmaid. Boeing said yesterday – for the third consecutive month – that it had no new orders for the MAX. As things stand, most analysts think that the aircraft won’t fly again until at least the end of September as Boeing fixes the aircraft’s flight control systems. Boeing’s second quarter earnings are due out on July 24th, so more detail will be available on the cost of the MAX’s grounding. * SO WHAT? * Whoever gets to be the world’s biggest aircraft manufacturer, they are both facing a slowdown in orders as tensions continue between the US and China – the biggest markets – so a resolution between both sides would surely help widen the current order bottleneck.

Nintendo Switch to be made in Vietnam (Financial Times, Kana Inagaki) shows another consequence of the US-China trade wars as Switch consoles will be made in Vietnam for the first time as Nintendo moves away from reliance on China. * SO WHAT? * Apparently, Nintendo had been talking about diversifying some of its production away from China  anyway (where it currently makes virtually all of its consoles via contract manufacturers including Foxconn), but I’m sure that the escalation of tensions gave this chat a kick up the backside. Although this is just one company, given who it is, you would have thought it would give cause to others such as Sony and Microsoft to at least consider something similar as all sorts of companies face the same difficulties. Vietnam continues to benefit from the ongoing trade dispute…

BMW moves some engine production out of UK over Brexit fears (The Guardian, Jasper Jolly) shows ongoing consequences of Brexit uncertainty as the carmaker said that it had moved manufacturing of engines destined for South Africa from the Hams Hall factory in the West Midlands to Germany. * SO WHAT? * This is just more evidence of how Brexit uncertainties are continuing to hit UK manufacturing – especially in automotive.



China’s DouYu aims to raise money in the US and live event music streaming looks like The Next Big Thing…

Chinese streaming site DouYu seeks up to $944 in US IPO (Financial Times, Hudson Lockett) shows that the Tencent-backed game-streaming start-up – which streams esports matches and other game-related content – is trying to raise a chunky slug of money on the Nasdaq despite ongoing US-China trade tensions, especially in the field of technology. It is rumoured that DouYu is trying to raise money to build a warchest to take on competitors like Huya as well as giving an early angel investor an exit route. * SO WHAT? * It’s particularly interesting that a Chinese tech company still wants to list in the US despite all the trade shenanigans going on at the moment. SenseTime and Megvii, two Alibaba-backed rival facial recognition companies, have already reconsidered and other expected

listings of ByteDance and Didi Chuxing have also failed to come forward this year. After the listing, Tencent will have about 37% of the outstanding shares via its wholly-owned subsidiary Nectarine.

Music-streaming services tap live events (Wall Street Journal, Anne Steele) highlights ongoing trends in streaming and music as both come together to build massive audiences for fans. Apple and Spotify have been trying out various types of live events (concerts, album-listening parties and fan Q&A sessions) to keep subsribers happy – and Taylor Swift’s concert tonight in New York City will be live streamed via Amazon’s Prime Day promotion. * SO WHAT? * I think this is a great new revenue stream for all concerned. The streamers get great content that justifies the subscription without having to pay the stars (they get massive exposure instead and promotion on the websites concerned) and fans get more access more often to their idols. I think that the Marshmello concert hosted on Fortnite back in February was a real landmark and this area is only going to grow. Just think – if you could add VR into it as well, it will be buzzing!



Both M&S and Patisserie Valerie warn of more store closures…

M&S warns even more stores at risk as £350m savings ‘on track’ (Daily Telegraph, LaToya Harding) cites chief exec Steve Rowe as saying that the company is now suffering because of “not shutting stores 10 or 20 years ago” and that the original plan to shut down 110 shops could increase. The company has a £350m savings target as part of its current bid to overhaul the business but was also keen to highlight the future potential of its tie-up with Ocado. * SO WHAT? * What a load of BS. M&S has had all sorts of highs and lows over the years – and to say now that they should have shut a load of stores 10 or 20 years ago is just a useless thing to say. It seems to me that M&S does quite well for a bit, then slides as it gets more boring, someone new comes in to revamp formats etc. and then it

happens all over again (I’ve seen this happen over the last 20 years or so!). M&S is currently in “consolidation mode” – but the difference this time around is that consumer behaviour undergoing a seismic shift. At least the chief exec can kitchen sink everything and blame predecessors for now, but he’s got to come up with the goods sooner or later. The Ocado deal is a step in the right direction, but he’s going to have to do more than that.

Patisserie trims fat with another 14 closures (The Times, Dominic Walsh) shows that Patisserie Valerie’s “new” owner, Irish private equity firm Causeway Capital, will be closing 14 cafes in addition to the 71 that were closed by KPMG when the company went into administration. Causeway Capital said “Patisserie Valerie has today confirmed it has closed 14 of its smaller patisseries. The difficult decision was reached following a detailed review of the size, trading performance and location of each store over the past five months”. Sad news, but hopefully good for the future of the firm.



And finally, in other news…

I thought I’d leave you today with Man puts on 15 layers of clothing rather than pay airline’s excess baggage fee (Newsweek, Daniel Avery This reminds me of something that happened to me back when I went to Tokyo to study for a couple of years at uni. Unfortunately, my baggage allowance was still 25kg even though I was going there for a year (initially), so I was wearing all my heavy clothing (hiking socks, Timberland boots, trackie bottoms, jeans, polo shirt, cricket jumper, leather jacket) to save on weight. Unfortunately, it was August and when the plane touched down at Narita at about 7.30am it was already about 30 degrees C with 100% humidity. This was made worse because the airline had left my luggage at a connecting airport – so I ended up having to wear the clothes I was standing in for three days 😱😱😱. Tough (and sweaty) times 😜

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Some of today’s market, commodity & currency moves (as at 0829hrs 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 **
7,536 (-0.17%)26,783 (-0.08%)2,980 (+0.12%)8,10912,437 (-0.85%)5,572 (-0.31%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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