- In BITCOIN & FINANCIALS NEWS, Bitcoin reaches new highs, Santander buys Wirecard’s European business and Co-Op Bank gets an approach
- In CONSUMER/RETAIL NEWS, we look at US and UK sales trends and Walmart’s slowing rise
- In INDIVIDUAL COMPANY NEWS, Amazon takes on pharmacies, Airbnb marches towards its IPO and Nio sales shoot up
- AND FINALLY, I bring you taekwondo vs judo…
BITCOIN & FINANCIALS NEWS
*** 📣 JUST A HEADS-UP FOR TOMORROW’S ZOOM CALL. THE TIME WILL CHANGE – FOR TOMORROW ONLY – FROM THE USUAL 5.30-6.30pm TIMESLOT TO 6.30-7.30pm. SEE YOU THERE! ***
Bitcoin closes in on record price after topping $17,000 (Daily Telegraph, Sam Benstead) highlights the fact that Bitcoin has now reached a three-year high (and I’m getting a sense of déjà-vu here as we approach Christmas!). Its value versus the dollar has skyrocketed by a whopping 70% since September and it is only now 10% off the historic $20,000 high it reached in December 2017. Apparently, investors have increasingly been betting that it will overcome a “credibility hump” and become more mainstream and that they are using it as a hedge against higher inflation and continued government stimulus. * SO WHAT? * I personally think that it really IS moving towards the mainstream, whereas back in 2017 people were just saying it. The fact that Paypal recently started to accept Bitcoin payments goes to show that it really seem to be knocking on the door of acceptability. That said, I think that it may well be increasingly on the radar of governments and central banks as a result of this and you saw how quickly they torpedoed Facebook’s Libra. If they see it as a threat (because it could effectively take away one tool that governments and banks use to control/calm economies – trading currencies), things could happen quite quickly I would imagine.
Meanwhile, Santander buys Wirecard’s core European business for €100m (Financial Times, Olaf Storbeck and Daniel Dombey) heralds an important step in the dismantling of the hero-to-zero German payments provider. Around 500 Wirecard employees will join Spain’s biggest bank, which is buying the company’s European tech platform that processes all the electronic payments.
Britain’s Lycamobile was the only other company in the running to buy, but it obviously lost out in the end. Santander was very clear that the acquisition did not include Wirecard companies or any legal liabilities related to Wirecard AG and Wirecard Bank. * SO WHAT? * This sounds like a decent enough acquisition for Santander on a strategic front, as it will help to expand its payment solutions in Europe and broaden their product development capacity. It sounds like they’ve got the good stuff without all the baggage.
Then in Co-op Bank reveals takeover talks with US private equity buyer (The Guardian, Kalyeena Makortoff) we see the beginnings of what could be a wave of M&A within the UK banking sector as the Co-op Bank said it had received an approach – and it turns out that this was from Cerberus Capital Management. The Co-op Bank is currently 85% owned by Invesco and a group of US hedge funds including Silver Point Capital, GoldenTree, Anchorage Capital, Blue Mountain and Cyrus Capital. * SO WHAT? * The Co-op Bank sounds like an absolute basket case as it has lurched from disaster to scandal (remember former chairman Paul Flowers, nicknamed “The crystal Methodist”?!?), has had six chief execs in nine years and hasn’t been profitable in at least six years. It sounds like it is ripe for a major shake-up and maybe Cerberus is the one to do it (although you wonder why the others have been so spectacularly unsuccessful). Maybe it’s just a coincidence, but the fact that this follows closely on the heels of another approach (Sainsbury’s Bank was approached by NatWest last week) could suggest that there is an imminent wave of M&A about to hit our shores. TSB, for instance, could be another target as merger talks between BBVA and Sabadell could result in non-core assets being put on the chopping block. Bank valuations have been weakened as investors shun them for fear of a potential tsunami of loan defaults that will undoubtedly result in the wake of the coronavirus. If you combine this with the fact that the larger lenders came into the outbreak as profitable and well-capitalised (even better capitalised at the moment as they have been banned by regulators from paying out dividends), you can see that there are buyers out there.
We look at sales trends in the US and UK, Walmart’s momentum and the immediate prospects for UK retailers…
US retail sales climbed at a slower pace in October (Wall Street Journal, Harriet Tory) cites the latest figures from the US Commerce Department which showed that retail sales rose by a seasonally adjusted 0.3% in October versus the previous month – way below the 1.6% growth seen in September and the smallest monthly rise since May. This slowdown in growth was echoed in Walmart’s sales gains slow as pandemic drags on (Wall Street Journal, Sarah Nassauer) as Walmart said that its quarterly sales are still rising but at a slower pace. Interestingly, footfall dropped by 14.2% but the value of the basket rose by 24% as online spend increased.
Talking about online, Lockdown and Black Friday set up ‘record-breaking month’ for UK online sales (The Guardian, Zoe Wood and Sarah Butler) cites a report by the internet
industry body IMRG (so it’s probably going to be a bit biased 😁) which predicts that a combination of Black Friday discounts and coronavirus movement restrictions will result in a bumper month for online spending in the UK just as online sales for the first week of November went up by a chunky 61%. Shoppers stock up early on Covid Christmas essentials (The Times, Ashley Armstrong) highlights strong sales at Asda of frozen turkeys, Christmas trees, Christmas puddings and mince pies as people prepare for a lockdown Christmas but Retailers ‘losing £2bn a week’ in lockdown (Daily Telegraph, Tim Wallace and Russell Lynch) paints an altogether gloomier picture as the Helen Dickinson, head of the British Retail Consortium, puts a figure on the losses retailers are currently suffering. Pressure is increasing on the Chancellor to review business rates relief and grants to mothballed companies. * SO WHAT? * I maintain my belief that we will see a final hurrah from the British consumer when the pre-Christmas lockdown eventually lifts because people will just want to get out and support shops if they can. If the lockdown is extended, I think that spending will still go up (but maybe not by quite as much) as consumers will just want to do what they can to have an enjoyable Christmas.
INDIVIDUAL COMPANY NEWS
It’s bad news for pharmacies in the US as Amazon prescription drugs launch is a bitter pill for pharmacists (The Times, James Dean) shows that the e-tailing giant announced yesterday that it will be launching Amazon Pharmacy, which will offer Americans swift delivery of prescription drugs and major discounts on generic and branded medicines. Pharmacists elsewhere will no doubt be praying that Amazon will stay firmly in its own backyard…
For those of you following the whole Airbnb thing, Five takeaways from Airbnb’s IPO filing (Financial Times, Dave Lee and Miles Kruppa) takes a look at Airbnb’s IPO filing and what it means. The IPO prospectus showed that revenue growth had been slowing down before the pandemic, that it had to make drastic cost cuts after years of spending money on staff and marketing, that its new
businesses (e.g. “Experiences”, that paired tourists up with local guides) may not be doing that well, that the number of hosts may decrease and that there is regulation risk (i.e. some big cities and hotel groups have been resisting Airbnb – and this resistance could well increase). Airbnb: room with a view (Financial Times, Lex) says that now may be a good time for Airbnb to have an IPO to surf a wave of optimism that things will return to “normal” but that there is a danger that a slowdown in revenues may be a reflection that the best years of Airbnb growth are behind it.
Then in Tesla rival Nio posts sharply higher sales (Wall Street Journal, Kimberly Chin) we see that the Chinese purveyor of super-cool electric cars has reported that sales have increased by 146% in the latest quarter. It seems that Nio’s brand is catching on in China and investors are increasingly hopeful that it will meet aggressive sales targets. * SO WHAT? * EV sales continue to account for just 2% of total car sales globally, but they are rising. Eco-friendly policies around the world are likely to increase the momentum, but ubiquity is going to take a lot of time as they are starting from a very low base.
…in other news…
I thought I’d leave you today with some impressive martial art videos. On the one hand, you have a feelgood taekwondo/dance mash-up (some of the moves are incredible!) but then on the other, I thought I’d show you some really impressive moves in judo. Some of you may know that I am a black belt in judo but you might not know that I got it at a prison in Tokyo 😁. Although I would like to say that I was dropped in and had to fight my way out (what a great story that would be), it just so happens that a lot of prisons have dojos and my grading just happened to be at Fuchuu prison!
Some of today’s market, commodity & currency moves (as at hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!
|FTSE 100 *
|Dow Jones *
|S&P 500 *
|Oil (WTI) p/b
|Oil (Brent) p/b
|Gold Per t/oz
(markets with an * are at yesterday’s close, ** are at today’s close)