Wednesday 24/11/21

1. In MACRO, MARKETS & OIL NEWS, Turkey’s Erdogan remains defiant, the Bank of England’s Bailey pouts, New Zealand raises interest rates again, London attracts its first SPAC and big countries try to push the oil price down
2. In RETAIL NEWS, Best Buy and Dick’s Sporting Goods show slowing online sales, Gap suffers supply chain-itis, Dollar Tree has to raise prices, AO World has another profit warning, M&S buys into Nobody’s Child and Asda gets Rose
3. In POST-CORONATRENDS NEWS, HP benefits from office return, Compass does dark kitchens, M&C Saatchi gains confidence and Pret returns to pre-Covid levels
4. In MISCELLANEOUS NEWS, we look at e-trucks, car charging and Getir buying Weezy
5. AND FINALLY, I bring you a life hack and some interesting tech…

Erdogan digs his heels in, Andrew Bailey pouts, New Zealand lifts interest rates again, London has its first SPAC and big economies band together for oil…

📢 Hello everyone! I just wanted to alert you to the fact that I will be doing a monthly roundup NEXT MONDAY of the business and financial markets news of the month of November! As always, I will be doing this in conjunction with the fantastic Jake Schogger of Commercial Law Academy. I will be doing the roundup and Jake will be overlaying this with his legal insight. You will need to sign up HERE to attend, so hopefully see you there for our final roundup this year! Also, just to let you know, I will be doing a 2021 review and 2022 preview with predictions for the upcoming year sometime in January, exact details TBC 👍

Lira sinks to fresh low after Erdogan insists on interest rate cuts (The Guardian, Phillip Inman) shows that Turkey’s president remains defiant in his desire to cut interest rates to tame rising inflation and said that he wouldn’t be averse to continuing to do so in the future. Investors voted with their money, sending the lira to a new low. The conventional view is to do the exact opposite and raise interest rates to achieve this outcome – something that we see in New Zealand raises rates to 0.75% as house prices surge (Financial Times, Sophia Rodrigues), which shows that the country has now increased its interest rates twice in two months in order to take the edge off its surging economy and to calm house prices. It added that it would not be averse to raising them in future as well. Meanwhile Forward guidance could go, says Bailey after rate rise comments (The Times, Louisa Clarence-Smith) shows that the Bank of England governor Andrew Bailey is having a hissy fit because he has been roundly criticised for his laughable recent handling of interest rate guidance. * SO WHAT? * Bailey’s now threatening to stop giving policy guidance ahead of central bank meetings. Oooh. I think that he needs to own it, stop whingeing and put his big boy pants on. I believe that effective communication to the market of how the Bank is thinking is an important tool that can help to smooth markets, which helps investors. Rather than mouthing off in speeches at swanky dinners and then joking about his role in the whole debacle he needs to wind his neck in and do his job properly. At least his US counterpart Jerome Powell seems to have got that bit right!

Meanwhile, in markets, London attracts first Spac after rule change (Financial Times, Daniel Thomas) shows that the London stock market has attracted its first Special Purpose Acquisition Company (SPAC) since the government relaxed the rules in a somewhat belated attempt to attract potential deals over here. * SO WHAT? * Although I think that this late rule change is like someone turning up at a frat party with pizza at 6am wondering why everyone is comatose on the floor and asleep on the couch (who doesn’t like pizza for breakfast?!?), it’s possible that there are some deals to be had. Venture capital firm Hambro Perks has the honour of being the first SPAC to list in London as it aims to raise up to £150m that will help it merge with a fast-growing private European tech business within 15 months. OK, it sounds good in theory, but SPACs are not as attractive as they were this time last year or even the beginning of this – and there is far more competition now for funding companies, particularly from private equity. I do wonder whether SPACs are now going to get the dregs that the others won’t touch…

Then in Britain joins global bid to lower oil prices (Daily Telegraph, Rachel Millard) we see that the UK is going to release up to 1.5m barrels of oil from its strategic reserves as part of a bigger move with the US, China, India, Japan and South Korea to challenge OPEC and its seeming reluctance to open the taps and put more oil onto the market. This reluctance is keeping the oil price high (the Brent crude price has risen by almost 60% this year so far), hence the desire to counter that by releasing stocks. The “anti-OPEC” consortium is to release 70m barrels in total, the bulk of which (50m) will be made by the US. Oil prices/Biden: Americans should have reservations on reserve release (Financial Times, Lex) makes a couple of very valid points on this – that this action is not going to have much effect in the short term because the overall amount being released is tiny (Americans consume 50m barrels in 2.5 days and is equivalent to increasing supply by 137,000 barrels per day for a year, whereas OPEC+ countries produce about 40m barrels per day) and that this move could backfire badly if OPEC+, which has already agreed to release an extra 400,000 barrels per day starting in December, decides to retaliate against this. Strategic reserves really are for emergencies such as natural disasters or major oilfield accidents and they have only been used on three occasions so far: two in wars and the third in response to Hurricane Katrina. * SO WHAT? * Biden is being absolutely battered in the opinion polls at the moment, so it looks like he is doing this to make him look like a man of action. Will OPEC+ call his bluff?

US retailers face varied challenges, AO World warns of shortages, M&S buys into a partner and Asda gets a serious hitter…

Best Buy’s, Dick’s e-commerce growth slows after pandemic-fueled surge (Wall Street Journal, Sarah Nassauer) shows that although consumers are spending on kitchen appliances and sporting goods respectively, both Best Buy and Dick’s Sporting Goods saw flat online sales over the quarter after having doubled in the same period a year earlier. Having said that, they both reported improved overall sales versus last year and they both sound pretty upbeat going into the end of the year due to continued strong demand. Gap’s Sales suffer from supply chain problems before holidays (Wall Street Journal, Charity L. Scott) highlighted a common problem among retailers that they can’t get the stock in fast enough and are losing out as a result, so investors punished them by sending the stock price down by 17% in after-hours trading. The company said that supply chain disruptions over the quarter cost them $300m in lost sales and $100m in air freight 😱. Victoria’s Secret, Abercrombie & Fitch and Nordstrom also reported supply chain disruptions. It was also interesting to see Dollar Tree raises most prices to $1.25 as inflation sweeps retail sector (Financial Times, Matthew Rocco) because it seems to embody the overall environment of rising prices at the moment! The retailer, which sells household items, announced yesterday that it would raise prices of most products on its shelves to $1.25 as supply chain issues have boosted the cost of manufacturing and shipping goods in the US. Surely a rebrand with a name-change is in order – or will the company just keep the name for continuity/history’s sake?? * SO WHAT? * Supply chain problems continue, but I think that as long as underlying demand continues its momentum, the damage won’t be TOO bad. It is clearly frustrating for the companies concerned, however, that they

are losing sales – but the real uncertainty here is whether strong demand will still be there when the logjams ease. As for slowing online sales, I would imagine that a lot of this is due to people venturing out in higher numbers to actual shops, so it may not be TOO bad.

Meanwhile, in the UK, AO World forced into second profit alert (The Times, James Hurley and Ben Martin) shows that the FTSE250 online electrical goods retailer’s share price fell by 14.4% after the company announced its second profit warning in less than two months yesterday! The company has suffered from a combination of slowing demand, rising input costs, shortage of product, more competition and supply chain problems. In other interesting news on retailers, Nobody likes brand more than M&S (The Times, Dominic Walsh) shows that M&S has now taken a 25% stake in the Nobody’s Child brand, which it has been working with over the last year. It’s all part of the ongoing revamp of M&S’s apparel offering. Then Asda appoints former M&S boss Stuart Rose as chair (The Guardian, Sarah Butler) highlights a new appointment at Asda – the former boss of M&S who will become the company’s first chairman in over 20 years. This comes nine months after the supermarket was bought by private equity firm TDR Capital and the Issa brothers’ EG Group. Rather poetically, the last chairman of Asda was Archie Norman – and he’s now chairman of M&S! Lord Rose’s main priority now is to hire a chief exec. * SO WHAT? * Again, I wonder whether AO World is also suffering from more people shopping at physical stores under lighter movement restrictions a) because they can and b) because delivery now is more uncertain due to supply chain problems. I did also wonder whether the company would see a spike in white goods’ sales (particularly chest freezers, for instance) as consumers stocked up on frozen goods for Christmas, but it certainly doesn’t seem to be the case at AO World at the moment. The M&S news is good as it continues to make progress in its turnaround in apparel and Lord Rose’s appointment at Asda is bound to be popular among investors as he has a very strong reputation.

HP benefits from people going back to the office and Compass adapts while M&C Saatchi and Pret recover…

In HP sees office reopenings lifting PC demand ahead of promising holiday season (Wall Street Journal, Meghan Bobrowsky) we see that the company reported strong earnings and a positive outlook thanks to employees returning to offices and strong demand going into the end of the year although it was also interesting to see Compass sets up ‘dark kitchens’ for offices (Daily Telegraph, Giulia Bottaro) as an example of a company pivoting because employees aren’t yet coming in sufficient numbers to justify full-service full canteens of the pre-pandemic era. The company has now set up 12 remote kitchens in the UK and Ireland, mainly in London and Dublin, to cook and deliver meals to clients who are mainly businesses who aren’t yet big enough to have their own canteens. Investors were cheered by news that the world’s biggest catering company was confident enough to resume dividend payments and sent the shares 5.7% higher. * SO WHAT? * Employee movement is clearly resulting in more activity,

which is generally positive for businesses after a very lean period. Companies have been reminded of the need to update their equipment to cope with remote working and feeding the workforce is an important morale booster (and incentive, in some cases!). Remote kitchens are a good idea for many as they won’t suffer from supply chain issues and high labour costs at a time when they are concentrating on building up. I would have thought that this will also actually act as a nice introduction to many businesses who use Compass’s remote services and may therefore be more inclined to “upgrade” to the full service option further down the road.

Then there’s more evidence of businesses recovering in M&C Saatchi hikes profit forecasts (Daily Telegraph) as the advertising company outlined upbeat forecasts for the full year with big new clients and the extension of existing relationships and Pret sales reach pre-pandemic levels, feeding recovery hopes (Daily Telegraph, Russell Lynch and Tim Wallace), which shows that its sales were higher last week than they were in January 2020 – and that overall they are now back to pre-pandemic levels. * SO WHAT? * Advertising was an absolute disaster last year and Pret got an absolute hammering as offices shut down, so it’s good to see that they are recovering. Let’s hope for their sakes that the momentum continues!

Daimler aims for a new future, e-trucks face issues, car charging remains challenging and Getir buys Weezy…

In a quick scoot around some of today’s other interesting stories, World’s biggest truckmaker steps out of the shadow of Mercedes (Financial Times, Joe Miller) reminds us that Daimler is going to spin off its trucks business on December 10th, floating 65% of it on the Frankfurt Stock Exchange and leave Mercedes-Benz behind. Both businesses are likely to be in the DAX. The trucks business faces an uphill task to achieve the heady valuations of companies like Rivian, but increased focus should benefit both companies IMO. In the meantime, Truck electric drive held back by lack of chargers, says Iveco boss (Financial Times, Peter Campbell) contends that success of non-polluting trucks will largely depend on the successful roll-out of charging networks.

Charging networks continue to be a bone of contention in car-charging as well in Plan for car chargers in all new UK homes will make access ‘exclusive’ (The Guardian, Fiona Harvey and Jillian Ambrose) as critics say that the PM’s plan to make EV chargers mandatory for all new homes will just make EVs even more exclusive than they are now. * SO WHAT? * I think that this is complete 🐂💩 as it comes from the chief operating officer of Scottish Power’s energy network business – so I think he’s just looking for excuses

not to have to provide this (presumably unless he gets a fat load of cash from the government to subsidise it). As things stand at the moment, the prices of the cars themselves is prohibitive for those on tighter budgets and has precisely zero to do with new developments being “exclusive”. They are calling for more car chargers being made available in poorer areas to make things more equal but – news flash – if you are on, say, £15-20k a year, how are you going to even buy an EV in the first place?!? Putting chargers in somewhere new is presumably way easier than trying to dig up a council estate to provide a service that no-one can use anyway?? Over time, I would agree that more of these chargers SHOULD be made available in more areas but I think it would be a waste of money until car prices come down.

Then in Getir shows its appetite for growth with Weezy deal (The Guardian, Joanna Partridge) we see that fast-grocery-deliverer Getir is buying rival Weezy as the sector starts to consolidate. Turkey’s Getir has been expanding agressively since the start of the year into eight other countries, including the UK and US. Other rivals include Gorillas, Dija, Zapp and Jiffy – and I said last week that American company GoPuff was coming to the UK specifically with a view to act as a consolidator in a fragmented market. As I said previously, scale is vital in this business, so I would expect a lot more consolidation to come…

…in other news…

I’m all about practicality and so although this looks boring I actually think this looks quite useful: Woman shares simple and cheap cleaning trick to leave your walls mould-free (The Mirror, John Bett). Also, I thought that this new monitor was a genius idea Revolutionary technology: Japanese company’s new vertical monitor for social media browsing (SoraNews24, Casey Baseel). Makes sense, no?