Wednesday 21/11/18

  1. In MARKETS, OIL AND CRYPTO NEWS, the tech rout continues, oil goes weaker and crypto falls attract attention
  2. In RETAIL NEWS, US retailers weaken going into Black Friday, Gap eyes store closures and AO World suffers
  3. In INDIVIDUAL COMPANY NEWS, Samsung pushes Bixby, Ghosn continues to cause panic and the Wagamama deal continues to face opposition
  4. In OTHER NEWS, I bring you a startling invention that’ll stop you nodding off. For more details, read on…



So markets continue to crater, oil prices weaken further and crypto faces scrutiny…

Tech giants in $1trillion wipeout as rout widens (Daily Telegraph, James Titcomb) highlights the phenomenon of FAANGs losing their teeth, leaving the tech-heavy Nasdaq Composite at its lowest point for seven months. David Older, head of equities at fund management firm Carmignac, observed that “Software has been the most predictable growth story in the economy. [Now] you have this fear in the market of slowing growth trajectory. People are looking forward to 2019 and saying expectations are too high”. * SO WHAT? * When momentum stocks are going well, no-one really bothers to look too closely. However, when they start to show signs of a wobble, everyone starts wheeling out the negative arguments and saying things like “I told you so” (although they often fail to mention that their negative outlook has cost them a lot of upside). It’s true that global growth is slowing, trade wars are creating uncertainty, demand for some hardware products is maturing and that there are some serious issues to be address regarding data protection BUT these companies are supreme in their field, have fingers in many lucrative and potentially lucrative pies (e.g. cloud hosting, software services etc.) and are making money. Some of them also have very little in the way of comparable competition, so I think that ultimately, they remain fundamentally good companies despite the doomsayers. If you wanted to put a positive spin on this, the environment could change pretty quickly if global growth got back on track due to a trade agreement, new tech in mobile phones spurred an upswing in smartphone unit sales (already on the cards with that bendy phone I keep banging on about) and social media firms agreed to adopt GDPR or something similar to address privacy concerns. Until then, I suspect that there will be further volatility. Mind you, if someone 

like Warren Buffett waded in with his wads of cash saying that the FAANGs were oversold, this could also reverse their fortunes.

Oil prices fall further after Trump’s Saudi Arabia remarks (Wall Street Journal, Dan Molinski and Stephanie Yang) highlights US oil prices reaching their lowest levels for over a year following President Trump’s remarks supporting the Saudi Arabian government thus: “After the United States, Saudi Arabia is the largest oil-producing nation in the world. They have worked closely with us and have been very responsive to my requests to keeping oil prices at reasonable levels – so important for the world”. Some observers have interpreted this as being an attempt to dissuade Saudi Arabia from recommending production cuts at the next Opec meeting at the beginning of December.

Analysts warn of ‘bloodbath’ as value of cryptocurrencies falls (The Guardian, Julia Kollewe) highlights the 30% tumble in the value of Bitcoin over the past week to a level it hasn’t seen since October last year. This could be partly due to an overflow of negative sentiment following the US Securities and Exchange Commission’s imposition of civil penalties on two cryptocurrency startups (Airfox and Paragon Coin) for conducting unregistered cryptocurrency tokens last year. It was also said to be due, according to Pressure builds on regulators over cryptocurrency irregularities (Financial Times, Don Weinland, Emma Dunkley and Federica Cocco), to a change in protocols used by bitcoin cash last week that caused confusion and spread to the “original” bitcoin. * SO WHAT? * It’s quite interesting that this weakness should happen now because recent developments would suggest that cryptocurrencies are edging closer to the mainstream what with Fidelity Investments announcing last month that it was launching a new company for institutional clients to enable them to trade and store cryptocurrency assets and central banks increasingly talking about launching their own digital currencies as cash is being used less and less.



US retailers are having a wobble ahead of Black Friday, Gap considers store closures and AO World suffers…

We are used to seeing doom and gloom on our own high streets but US retailers shed $50bn in market value (Financial Times, Alistair Gray, Pan Kwan Yuk and Mamta Badkar) shows that it’s not all rosy stateside either as gloom from retailers such as Gap, L Brands (owner of Victoria’s Secret) and bookshop chain Barnes & Noble contributed to a 3.4% fall in the S&P Retail Index yesterday. Target, Kohl’s and Ross Stores also fell sharply despite being quite bullish about the upcoming holiday season. Only electronic retailer Best Buy managed a rise in its share price as it continues to compete successfully with Amazon. News of Gap looking to close hundreds of weaker stores (Wall Street Journal, Khadeeja Safdar) did not instil investors with much confidence. * SO WHAT? * Rising wages (because of a tight labour market), narrower 

margins (in an attempt to stay competitive with e-tailers such as Amazon) and higher freight costs are hitting the retail sector and there are worries that potentially rising inventories could be a precursor to retailers having to sell off too much stock at a discount in the coming months.

Meanwhile, back in the UK, AO World’s ‘challenges’ after six-month loss (The Times, Harry Wilson) heralds a disappointing time for the online electrical goods company in its main markets of the UK and Germany with analysts at Jefferies saying that “The pace of growth has slowed significantly in the second quarter, impacted by a tough macro environment that is unlikely to change whilst Brexit concerns dominate and competitors remain aggressive”. The shares fell by over 5% yesterday, but they are down by almost a third over the last six months. The company tried to find a positive needle in a negative haystack by pointing out that it has managed to maintain its market share – but keeping share of a shrinking market ain’t great is it?? * SO WHAT? * It seems that AO World is suffering like most of its competitors and that it, perhaps more than some of the others, really needs a good Black Friday and Christmas period to drag it out of its current rut.



Samsung promotes Bixby, Ghosn continues to create waves and the Wagamama deal continues to attract criticism…

In other news bits today, Samsung doubles down on virtual assistant in growth push (Financial Times, Song Jung-a) shows that the consumer electronics giant is going to roll out Bixby, its voice assistant that is currently only on its high end phones, to all of its products by 2020. * SO WHAT? * This is part of its continued push for supremacy in the Internet of Things. Bixby has been slow in terms of functionality versus the more seasoned Siri (Apple), Assistant (Google), Alexa (Amazon) and Cortana (Microsoft) but Samsung is keen to broaden its appeal by introducing more foreign languages as it is currently only available in US English, Mandarin and Korean. The company is also going to release a software developer kit to help app makers use Bixby as an interface for their services. Better late than never, I guess!

Fall of Carlos Ghosn marks end of an era (The Times, Richard Lloyd Parry) is just one of many such stories on the downfall of the man who rescued Nissan in the late 90s and held together Renault, Nissan and Mitsubishi. Carlos Ghosn was planning Nissan-Renault merger before arrest (Financial Times, Peter Campbell, Kana Inagaki and Leo Lewis) suggests elements of a stitch-up, but I guess this drama will continue to play out. * SO WHAT? * Ghosn has been such a key figure in the world of car manufacturing that everyone is still reeling in shock. This would be like the Queen suddenly announcing that she had an ongoing crack cocaine habit. Expect to see tons more comment on this for a while to come…

In Investors warn on Restaurant Group takeover of Wagamama (Financial Times, Jonathan Eley) we see that a number of major investors in Restaurant Group are thinking about voting against the company’s proposed purchase of Wagamama due to the toppy price and the rather tricky economic backdrop. * SO WHAT? * The vote will go ahead on November 28th and if the deal doesn’t pass the vote, Restaurant Group will have to pay a £5.98m break fee to Wagamama’s current owners.



And finally, in other news…

Do you ever find yourself falling asleep at inopportune moments? Well then maybe you need this in your life: Body part-shocking device is here to stop Japan from nodding off at the wheel, work or school (SoraNews24, Katy Kelly, There’s nothing quite like getting an electric shock through your earlobes to keep you alert!!! A practical stocking-filler for Christmas perhaps?

Some of today’s market, commodity & currency moves (as at 0813hrs 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 **
6,927 (-1.04%)24,420 (-2.38%)2,638 (-1.93%)6.90911,065 (-1.59%)4.915 (-1.37%)21,533 (-0.20%)2,651 (+0.19%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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