Wednesday 17/07/19

  1. In TECH NEWS, Congress puts Big Tech under pressure and Amazon’s faces the European Competition treatment
  2. In PLANT-BASED PROTEIN NEWS, cheese and yoghurt substitutes rise in popularity and Blue Apron gets a Beyond Meat Boost
  3. In INDIVIDUAL COMPANY NEWS, AG Barr’s profits lose their fizz, Ryanair cuts flights, Vornado puts a spanner in the works for Arcadia and Burberry checks out OK
  4. In UK CONSUMER NEWS, wage growth continues to climb but James Reed warns of tricky times ahead
  5. In OTHER NEWS, I bring you a doughnut (well, sort of)…



So senators put Big Tech under pressure in Congress and Amazon faces a European investigation…

Tech giants draw fire in Congress (Wall Street Journal, Ryan Tracy) shows that politicians from all sides were demanding more regulatory oversight of Big Tech’s sprawling businesses and asking about future expansion plans. The House Trust Subcommittee Chairman, David Cicilline said that the result of the businesses being largely self-regulated thus far was that “the internet has become increasingly concentrated, less open and growingly hostile to innovation and entrepreneurship”. The companies, on their side, argued that there was still competition and that their platforms enabled the growth of many smaller companies. Facebook questioned on cryptocurrency, but battle looms with global regulators (Wall Street Journal, Dave Michaels and Paul Vigna) shows that Facebook played down its cryptocurrency ambitions by saying that it has no intention to act like a central bank and that it won’t be an investment vehicle – but it still faced a lot of heat from sceptical politicians who don’t trust the social media giant to operate a cryptocurrency on a global scale. Facebook’s Libra hits bitcoin (The Times, Tom Knowles) shows that all this Libra chat had knock-on effects to bitcoin, which fell below the $10,000 mark for the first time in a fortnight as fears of increased scrutiny prompted weakness.

Trump takes aim at Google’s China ties, citing billionaire investor Peter Thiel (Wall Street Journal, Sarah E.Needleman and Rob Copeland) shows that Google will be put under the microscope after Peter Thiel, who is also on rival Facebook’s board, called for the FBI and CIA to investigate the company, which he said was working with China’s government instead of the US military. Obviously,

Trump didn’t like that and tweeted “Billionaire tech investor Peter Thiel believes Google should be investigated for treason. The Trump Administration will take a look!”. As an interesting aside, Google confirmed for the first time that its plans for a censored search engine in China, codenamed “Dragonfly” have been pulled.

Meanwhile, over in Europe, European watchdog set to launch inquiry into Amazon (Daily Telegraph, Natasha Bernal and James Titcomb) shows that another FAANG (you know, the group of Facebook, Apple, Amazon, Netflix and Google) is about to get bitten as Margrethe Vestager, the European competition commissioner, is planning on a formal inquiry into Amazon’s use of data from third party sellers. When she did a preliminary investigation into the company last year she said “If you, as Amazon, get the data from smaller merchants that you host…do you then also use this data to do your own calculations as to what is the new big thing, what is it that people want, what kind of offers do they like to receive, what makes them buy things?”. Vestager is the woman who slapped Google with €8.2bn in fines, investigated Apple on taxes and Facebook on data – so it’s perfectly possible that she could push for restricting Amazon’s operations in some way.

* SO WHAT? * I would say that, while all of these things are absolutely valid criticisms, it will end up being mostly noise because too many people are making too much money out of the FAANGs. Vestager may well be able to drum up some funds by giving Amazon big fines, but I would doubt we’re going to see much in the fundamental way in which Amazon does business. Overall, I think that the companies under scrutiny will pay expensive lawyers fat fees to drag the proceedings out at long as possible. The companies could well address some of the biggest areas of criticism in the meantime so that by the time any investigation comes to any conclusion, the sting will be lost and any momentum will just peter out.



Cheese and yoghurt substitutes ride the “alternatives” wave while Blue Apron benefits from a Beyond Meat boost…

Plant-based food demand transcends meat substitutes (Financial Times, Emiko Terazono) cites research from Spins and the Good Food Institute (GFI) which shows that yoghurt and cheese substitutes are growing in popularity faster than plant-based meat as consumers look for alternatives to dairy. Plant-based meat sales were up by 10% in the 12 months to April 2019 whereas cheese substitutes were up by 20% and yoghurt substitute sales by 39%. Plant-based milk like soy and almond milk is the biggest plant-based food category and GFI’s Caroline Bushnell points out that “Forty per cent of US households now buy plant-based milk, and other products such as cheese are following in its footsteps”. * SO WHAT? * So it’s not just “meat” that is feeling the love – other dairy substitutes are getting a boost from a major “alternatives”

boom. Product is getting better all the time – and the more it gains in popularity, the more money is going to be poured into R&D to improve production efficiency and making the product even better. If this area continues its pace of growth, it could change the face of the whole agricultural industry.

Blue Apron’s bombed-out shares surge on Beyond Meat tie-up (Financial Times, Alistair Gray) shows that Beyond Meat is sprinkling its pea-protein-based magic on troubled meal kit delivery service Blue Apron as the latter announced it will be selling Beyond’s vegan burgers. Blue Apron has been among the worst IPOs in the last ten years as subscriber numbers fell shortly after its flotation in June 2017. However, its shares shot up by 70% on news of the Beyond Meat partnership. Blue Apron will offer Beyond’s vegan sausages and meatballs later on. * SO WHAT? * It’s really interesting to see this halo effect happening with Beyond Meat, whose shares have gone from $25 to $172 a pop. This will be great for Beyond, because I suspect this will result in loads of other companies vying for partnership to get a similar boost – and Beyond will be able to pick and choose the best of the bunch as a result. Mind you, Beyond’s rivals will obviously be keen to make their own partnerships as well.



Irn-Bru’s maker warns, Ryanair cuts flights, Vornado sticks its oar in Arcadia’s CVA and Burberry checks out…

In a quick scoot around other individual stories in the broadsheets today, AG Barr steels itself for a slide in profits (The Times, Dominic Walsh) highlights the Irn-Bru maker’s profit warning as it suffered from poor early summer weather and consumers increasingly opting for healthier drinks and Ryanair to cut 30,000 flights owing to Boeing 737 Max crisis (The Guardian, Gwyn Topham and Julia Kollewe) shows that the discount flier has had to

make tough choices following the delayed deliveries of their Boeing 737 Max aircraft, with the future of some jobs and airport bases hanging in the balance.

US property group Vornado challenges Arcadia CVA (Financial Times, Alice Hancock) highlights a potential spanner in the works for Philip Green’s Arcadia Group as it will now have to fend off a legal challenge from US property firm Vornado, which didn’t like the terms of its recently-agreed CVA and Tisci is the toast of the town for Burberry (Daily Telegraph, Laura Onita) shows a turnaround of sorts for Burberry as demand for new designer Riccardo Tisci’s accessories and clothes have proved to be very popular. The shares were up by 14% in trading yesterday – their best one-day performance since they floated 17 years ago. Let’s hope that the momentum continues!



UK wages continue to grow but Reed warns on jobs…

Wages rising now at fastest rate since the 2008 crash (Daily Telegraph, Tom Rees and Tim Wallace)  cites the latest data from the Office for National Statistics which show that average pay growth is now 3.6%, with public

sector pay growth seeing its highest growth rate since 2010. * SO WHAT? * This is all part and parcel of tight current employment  conditions but Britain ‘facing the end of its employment miracle’ (Daily Telegraph, Tom Rees) highlights employment agency Reed’s chairman’s warning that this wage growth won’t last as the UK is “heading for a recession”. Sobering words, but hardly surprising. It will all depend on how Brexit goes (or doesn’t).



And finally, in other news…

I thought I’d leave you today with this: Can you spot the doughnut among these pool floats? (Insider, Gili Malinsky Yum. Doughnuuuuuuuts….

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Some of today’s market, commodity & currency moves (as at 0906hrs 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 **
7,577 (+0.60%)27,336 (-0.09%)3,004 (-0.34%)12,431 (+0.35%)5,614 (+0.65%)21,469 (-0.31%)2,932 (-0.20%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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