Wednesday 27/02/19

  1. In MACROECONOMIC NEWS, we look at the current options for Brexit and Trump’s wall
  2. In NEWS ON CARS, Peugeot relaunches in North America and Fiat Chrysler invests in Michigan Jeep plants
  3. In MOBILE PHONE NEWS, Xiaomi pledges to triple the number of European stores and there’s discussion about whether bendy phones are “a thing”
  4. In RETAIL NEWS, M&S confirms talks with Ocado, the outlook for retail workers looks cloudy, Hotel Choc continues to rock and Walmart tries to muscle in on advertising
  5. In OTHER NEWS, I give you an example of a Street View opportunist. For more details, read on…



So we’ve got to buckle up for more Brexit shenanigans and we look at the latest on Trump’s wall…

In May bows to MPs’ quit threats and signals Brexit delay (Financial Times, Jim Pickard) we see that Theresa May has made a U-turn and said that Brexit might be put on hold if MPs decide not to support a revised deal next month, bowing to pressure from pro-EU Conservative MPs who threatened to resign en masse. The current situation is such that MPs will be given a vote on a revised exit deal by March 12th but if they reject this, May would bring forward a second vote by March 13th where MPs would be asked if they wanted a no-deal Brexit (it is unlikely that this will be supported) and then there would be a third vote by March 14th on whether parliament would want a “short, limited extension” to the Article 50 exit process (May wants an extension to the end of June at the latest). The drama drags on…

House passes bill blocking Trump border emergency (Wall Street Journal, Joshua Jamerson and Kristina Peterson) gives us the latest on Trump’s border wall as the House of Representatives voted to stop the White House appropriating federal funds to build it. It is the first time since the 1976 National Emergencies Act came into force, giving Congress the power to stop an emergency declaration, that such a measure has passed the House (and it looks like the Senate is getting closer to the same conclusion). * SO WHAT? * Trump recently declared a state of emergency over the southern border that enabled him to appropriate $6.7bn from the military and other sources to secure the wall. He has already said that he will veto this move if it is passed by Congress after the Senate vote in the next few weeks and if THAT happened, it might be very difficult to overturn because to do so would require supermajorities in both the House of Representatives and the Senate with Republicans having to join up with their Democrat rivals. TBH, I think this is all so pointless! I think that they are chucking huge amounts of money and resource into something that is largely symbolic and that will ultimately be ripped down again by a future administration.



Peugeot relaunches in North America and Fiat Chrysler invests in Michigan…

Peugeot to relaunch in North America after 30-year absence (Financial Times, Peter Campbell) signals a return to the North American market as part of a broader plan by French owner PSA to diversify away from its European heartland. This news came as PSA announced a record set of results, which also saw Opel-Vauxhall’s first annual profit in 20 years after PSA bought the brands from General Motors in 2016. PSA wants to increase sales outside Europe by 50% by 2021 in the face of slowing sales in both Europe and China. The group will return to America with its Peugeot brand and will also launch Citroen in India and Opel in Russia. The company also raised its profit guidance following its strong performance. * SO WHAT? * It is interesting to note that PSA’s purchase of Opel-Vauxhall from GM gave them access to engineers in Germany who specialise in getting vehicles to meet US and Canadian regulations – which has clearly helped their cause. There are still worries about Brexit and PSA has said that it may have to close plants in Ellesmere Port and Luton, but the group’s chief exec Carlos Tavares added that it might become “the survivor of the auto industry in the UK” via its Vauxhall brand and pointed out that its other brands – Peugeot, Citroen and DS – have doubled profits in

the UK since the Brexit vote. While I think it’s great that PSA is trying to spread its wings, it is obviously going to be key to getting the offering right in each country – I think it’s less about the brand itself and more about the right vehicle line-up in the right place.

Fiat Chrysler to invest $4.5bn in Michigan Jeep plants (Financial Times, Peter Campbell) highlights a big investment in a new plant in Michigan and extending two existing ones to produce new Jeep models. In a move that will no doubt delight Trump, the carmaker said that its investment would create 6,500 new jobs and it would begin to produce new Jeep models – including hybrid and then electric models – at the three sites from next year. * SO WHAT? * This will no doubt be seen as vindication for Trump’s stance on supporting car manufacturing on American soil and is symptomatic of the current trend of customers “upgrading” from saloons to SUVs. Having said that, not all manufacturers are feeling quite so chirpy about the US market as General Motors last year mothballed four US plants and laid off 8,000 workers and Ford is moving some sites to just one production shift whilst cutting jobs. On the other hand, Toyota’s building a new site in Alabama with Mazda, Volvo began production this year at its new $1.1bn South Carolina plant and both BMW and VW have also pumped a lot of money into their US operations with a view to manufacturing electric vehicles in the US. FWIW, I think that any new plants have to have flexibility built into them as trends ebb and flow – SUVs are doing great right now, but if the oil price goes bananas again then smaller, more frugal cars will become de rigeur once more.



Xiaomi announces expansion in Europe and we look at whether bendy phones are here to stay or just a gimmick…

China’s Xiaomi set to triple its European smartphone stores (Daily Telegraph, James Cook) heralds the planned expansion of China’s Xiaomi into Europe as part of its overall strategy to take a larger slice of the global smartphone market. The company has 50 shops in Europe currently (including one in London’s Westfield shopping centre in White City) and plans to increase this to 150 by the end of this year. * SO WHAT? * This is an interesting move for the fast-moving Chinese electronics manufacturer, but it’s a competitive market with compatriots Huawei, Oppo and ZTE in addition to the likes of Samsung and Apple all fighting for consumer attention.

I think that smartphones either have to be cheaper – but keeping the same functionality that everyone wants – or more technologically innovative to get people buying once more. Bendy phones could be the answer, but the new crop just look far too expensive to garner any kind of widespread adoption at this moment.

Talking of which, Are foldable phones more than just a gimmick? (Financial Times, Tim Bradshaw) is a really interesting article that discusses the longer-term viability of this new technological advance as it appears to be the most radical recent innovation amongst a crop of new features on display at the current Mobile World Congress being held in Barcelona. * SO WHAT? * Although many believe that the $2,000 (and upwards) price tags of Samsung’s Galaxy Fold and Huawei’s Mate X will be too high for wider adoption, these innovative models are likely have a “halo effect” on each brand – and if the popularity of foldables catches on, it will leave other slower-adopter manufacturers like Apple behind.



Ocado and M&S confirm talks, prospects for workers in retail don’t look great but Hotel Chocolat and Walmart target growth…

M&S prepares for online fightback with Ocado tie-up (Daily Telegraph, Ashley Armstrong) confirms that the two companies are in talks to form a major joint venture that would give M&S a full online food delivery service after years of dragging its feet. Shares in M&S and Ocado rose by 3.2% and 11.7% respectively on the news which confirmed what everyone had sort of known anyway following recent rumours. Ocado/M&S tie-up spells bad news for Waitrose (Daily Telegraph, Ashley Armstrong) points out the downside of this potential deal for Waitrose, with overall theme being that Waitrose will suffer without Ocado because its own online offering is quite clunky in comparison and has less choice. * SO WHAT? * This sounds like a positive development for both M&S and Ocado and will enable Ocado to concentrate more on its fast-growing technology and solutions business while giving M&S much-needed (and much-delayed!) online capability. Clearly, we will need more detail, but the idea sounds pretty good at this stage.

In other retail “bits”, Retail workers facing high unemployment, thinktank finds (The Guardian, Richard Partington) cites findings by the Resolution Foundation thinktank which show that workers in the retail sector are more likely to face unemployment rather than finding another job as job losses continue to increase on the high street, but on a more positive note, Hotel Chocolat looks to prime sites as UK sales soar (Financial Times, Alice Hancock) shows that the purveyor of posh choc is seeing the current high street malaise as an opportunity to snap up prime sites. Chief exec Angus Thirlwell said he was “excited by the smell of blood in the water when we find conditions like this and prime spaces coming into our orbit” as his company continues to go from strength to strength following its latest results.

I thought that Walmart joins Amazon in chase for ad dollars (Wall Street Journal, Sarah Nassauer) was also worth mentioning as the retailing giant announced plans to tempt suppliers and other marketers with its own ad space and shopper data a la Amazon in order to boost ad revenues. * SO WHAT? * Thus far, Walmart has used an outside firm to sell space on its websites but it is now bringing this in-house. Clearly it sees an opportunity and has the heft to back up its efforts. I can’t see it realistically competing with Amazon, but even a small slice of the ad revenue action could be a nice little earner.



And finally, in other news…

I thought I’d leave you today with a story about someone who decided to take an opportunity when he saw it for global immortalisation in Google Maps users spot something very rude in background of Street View shot (The Mirror, Zoe Forsey There was certainly a bit of quick thinking involved there…

Some of today’s market, commodity & currency moves (as at 0826hrs 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 **
7,151 (-0.45%)26,058 (-0.13%)2,794 (-0.08%)7,54911,541 (+0.31%)5,239 (+0.13%)21,557 (+0.50%)2,954 (+0.42%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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