Wednesday 31/07/19

  1. In MARKETS & CURRENCY NEWS, markets wobble as Trump chastises China and the pound hits record lows
  2. In TECH-RELATED NEWS, Huawei sales defy the US ban, Apple sees strong revenues, Samsung’s nightmare continues and the Grindr IPO gets back on track
  3. In INDIVIDUAL COMPANY NEWS, Centrica’s chief resigns, P&G triumphs, Reckitt Benckiser disappoints and Greggs powers ahead
  4. In OTHER NEWS, I bring you a man vs dog noodle eating race…



So Trump’s tweets spook markets and the pound weakens even more…

Markets fall sharply as Donald Trump attacks China over trade talks (The Guardian, Sean Farrell) cites Trump’s latest tweet outburst, which says that China’s economy was “doing very badly” and that its negotiators “just don’t come through”. He went on to suggest that China might be holding out for a delay in a trade agreement until after the 2020 US election to get an easier ride from the next president. Given that Trump had only recently said that talks were back on track last month, this latest Twitter salvo appeared to pull the rug from under any hopes of an imminent breakthrough. * SO WHAT? * All markets fell as a result, with Germany’s falling most sharply given its particularly heavy exposure to exports – and the resulting tariffs involved. You just can’t predict what Trump will do

next! The only certainty with him is that he will definitely stir things up…

The pound at record low against world’s top currencies (Daily Telegraph, Louis Ashworth) highlights the effect of the looming prospect of a no-deal Brexit on the pound as it fell to its lowest level ever against a basket of major global currencies. If that depresses you, then Run for money: the currencies suffering more than the pound (Daily Telegraph, Tom Rees) might make you feel slightly better because it highlights other currencies that have fallen through the floor over the last year. While the pound has fallen by 7% versus the dollar over the last 12 months, Argentina’s peso has fallen by 38%, Pakistan’s rupee by 22%, Iceland’s krona by 14% , Turkey’s lira by 12%, Sweden’s krona by 8% and even the Aussie dollar by 7% as fears over the prospect of Australia’s first recession for 28 years take hold. Overseas summer holidays are going to be a bit more expensive than usual this year…



Huawei powers through, Apple sees higher revenues, Samsung’s profits crater and the Grindr gets back on the IPO track…

Huawei’s sales rise 23% despite US blacklisting (Financial Times, Yuan Yang) highlights the company’s 23% sales increase in the first half of the year despite US efforts to cut it off at the knees by blocking it from buying components from US suppliers. It managed to achieve this mainly because domestic smartphone sales over the period were up by 24%. Having said that, it is worth treating these figures with some caution as Huawei is a private company and the numbers are unaudited so there is, in theory, room for massage. * SO WHAT? * Huawei’s smartphone and smart device sales to overseas markets are obviously most vulnerable to the ban, but Huawei is currently waiting on a decision by the US government to issue licences to some US companies that will allow them to continue doing business with it as long as these exports do not threaten national security. The danger here is that the Huawei ban could well backfire in a few years. OK, so the company is damaged in the beginning, but Chinese will undoubtedly want to support Huawei against American aggression and will probably have enough purchasing power to tide the company over until it has the capability to operate independently of US (and other) suppliers. In the end, the likes of Intel, Micron, Qualcomm, Xilinx, Flex and Nvidia could be among those to suffer more long term.

Apple’s revenue rises despite continued iPhone slump (Wall Street Journal, Tripp Mickle) shows that although iPhone sales fell for the third consecutive quarter, revenues rose in every other area of the business. Interestingly, it was the first time since 2013 that iPhones didn’t represent the majority of Apple’s quarterly revenues. * SO WHAT? * Apple is in transition at the moment. There have been some top management changes (including design chief Jony Ive’s recent departure) as the company tries to move away from relying on hardware to relying more on software and

services. The only other “cloud” on the horizon is the recent launch of the Justice Department’s antitrust review on whether Big Tech companies are unlawfully stifling competition. Apple has probably not taken quite as much flak as its peers so far, but there is still time!

Samsung suffers hit from softening smartphone demand (Wall Street Journal, Timothy W. Martin) highlights continued problems at Samsung as its net profit fell by a chunky 53% over the second quarter due to general smartphone and device fatigue among consumers. It, like others, has been suffering from the fallout of the US-China trade war – but most recently, it has been experiencing collateral damage from worsening relations with Japan. The good news is that the decline wasn’t as steep as analysts had been expecting and the company is about to unveil the Galaxy Note 10 and “re-unveil” its foldable screen device, the Galaxy Fold, after making much-needed modifications. * SO WHAT? * The company has been making about 75% of its operating profits via memory chip sales but demand has fallen sharply since the end of last year as orders from smartphone makers and data server companies have dried up. Samsung said in April that it would invest $116bn in areas outside semiconductors to diversify into other growth drivers, but obviously that is more of a slow burner. Having said that, the company says that it expects overall chip demand to turn upward after it has been running down inventories for DRAM and NAND Flash memory chips over the second quarter, meaning that supply and demand will be more balanced going forward. In short, the core business should trend better from now – but it’s also putting some serious money into diversifying future income streams.

Meanwhile, in Grindr owner revives listing plan after US backs down (Daily Telegraph, Natasha Bernal) we see that the Chinese parent company of gay dating app Grindr, Kunlun Tech, has revived its plans for a public listing after the US government abandoned its opposition. The government had deemed it to be a national security risk, but the LGBTQ-focused app with 27m users worldwide now appears to be free to follow the likes of Match Group (which owns, Tinder and PlentyOfFish) onto the stock market.



Centrica loses its chief, P&G and Reckitt Benckiser have contrasting fortunes and Greggs is on a (vegan sausage) roll…

Centrica boss to quit after shares slump (The Times, Emily Gosden) highlights a share price fall of almost 20% in trading yesterday as investors reacted to the drastic dividend cut, a 49% fall in first half adjusted operating profits and the departure of Centrica’s chief exec Iain Conn, who will leave after next year’s AGM. * SO WHAT? * Centrica just appears to be in freefall at the moment and I guess that the clouds will not clear until “Conn-man’s” successor is found. Conn even announced yesterday that he’d be scaling back Connected Home, which sells smart technology to households, in North America and Italy. It’s tough to see much upside from here given that Conn is now a dead man walking…

In the competitive world of consumer goods, P&G sales rise by most in 13 years as turnaround takes hold (Financial Times, Alistair Gray) shows success across all of the company’s five main divisions as recent price rises seemed to be absorbed with no adverse effect but things were a bit different at one of its main competitors as Reckitt Benckiser cuts full-year revenue growth target (Financial Times, Jonathan Eley) highlights the cutting of the company’s full year growth target after a slow start to the year.

There was good news for pastry fans in Changes mean healthy profits at Greggs (The Times, Ashley Armstrong)  as Britain’s biggest baker unveiled an impressive 14.7% hike in sales for the half year. The vegan sausage role hype helped get punters through the door and the company has benefited over the years from broadening its product range. The share price actually fell, however, as the company failed to increase its full year guidance due to taking a cautious approach on Brexit and investment in its sites.



And finally, in other news…

I thought I’d leave you today with an absolutely brilliant video that shows man vs dog in a noodle eating competition: I am not ashamed to admit I have been watching this over and over since it came up on my Twitter feed this morning. Go on – have a watch! It will brighten up your day! 👍

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Some of today’s market, commodity & currency moves (as at 0835hrs 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 **
7,647 (-0.52%)27,198 (-0.09%)3,013 (-0.26%)8,27512,147 (-2.18%)5,511 (-1.61%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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