26 April 2019

Scott Reid

26 April 2019

Good morning,

Having avoided the good stuff for eight weeks over Lent, and promptly lost myself into a mountain of hard-won chocolate come last Sunday morning, the inevitable post-Easter sugar crash has been particularly unkind to me this year.
 
But chocolate hangovers aside – and if the Easter weekend didn’t find you lost up Snowdonia on an aborted egg hunt - then you might have noticed a sorry sight in our nation’s supermarkets. No, not Morrison’s guaranteed offer of a carton of doubled yolked eggs (though that was pretty weird). Instead, hidden behind a sea of yellow discount tickets are the ones that didn’t make it; rows upon rows of this year’s abandoned chocolate Easter eggs.
 
Don’t get me wrong; some of the deals are cracking (if you’ll pardon the pun). Trailblazing investigative journalism by the Mirror reveals that an Oreo easter egg will now set you back a mere 25p, for example. A veritable bargain, I think you’ll agree.
 
But look further and you’ll see where the bulk of these might end up. For once on my way out the store, I spied an overflowing food bank bin, filled to the brim in the gold and purple hues of Galaxy and Dairy Milk wrappers.
 
The story behind this casual observation, of course, is rather more tragic. New research from the Trussell Trust yesterday showed food bank use at its highest-ever level in March, surpassing 1.5 million food parcels donated in the last 12 months and posting a 19% increase on last year’s figures. What’s worse is that more than half a million packages are estimated to have gone to children, and the number of children living in absolute poverty has risen by 200,000 in a year.
 
All of which begs the question where the UK’s cost of food crisis is hitting hardest and whether our sweet tooth-induced seasonal giving is really enough. Some quick googling on my part showed that that same 25p spent on an Oreo egg would barely get you a couple of actual chicken eggs in some supermarkets, or roughly half a red pepper. The message being that in modern Britain eating plentifully and healthily isn’t yet an option for all.
 
So as I wade through my next working day of a sugar comedown, I make a shameless plea with my Friday morning briefing. Pop something extra in the food bank basket when you’re next at the supermarket. Clearly – and sadly - there’s still a need for it. Just less for that 50p six-pack of Creme Eggs perhaps.

News

Joe Biden has formally announced his candidacy for the Democratic nomination in next year’s US presidential election. The former vice-president, 76, is the 20th candidate to announce, and suggested he was responding to a plea from global leaders to “save the world” from Donald Trump. The president responded on Twitter; “Welcome to the race Sleepy Joe. I only hope you have the intelligence, long in doubt, to wage a successful primary campaign. It will be nasty”.
 
Cabinet secretary Sir Mark Sedwill has demanded ministers co-operate with an inquiry into a leak from a recent meeting of the National Security. According to the Daily Telegraph, a meeting of the council on Tuesday agreed to allow Huawei limited access to Britain’s 5G infrastructure developments, amid warnings about possible risks to national security. Culture secretary Jeremy Wright has said the government cannot rule out the possibility of a criminal investigation.
 
Transport for London have confirmed that Crossrail will not be complete until  March 2021. The new £17.6 billion highspeed Elizabeth Line had been originally scheduled to open in December 2018, running across ten new stations between Abbey Wood and Reading. One of the line flagship stations at Bond Street is not expected to be completed within this window.

Business & Economy

Amazon has posted first quarter profits of $3.6 billion, marking a fourth successive quarter of record profit and more than doubling last year’s figure. Sales growth rose by 17% to $59.7 billion in the three month period to March, with growth  of between 13% and 20% expected during the next quarter. Sales for Amazon Web Services, which is responsible for the internet giant’s cloud computing division, rose 41% to $7.7 billion.
 
The chief executive of RBS, Ross McEwan, yesterday announced his resignation after five and a half years in post. Pointing to the bank’s most recent annual profits of £1.62 billion, McEwan said he had “delivered the strategy”, winding down operations in 18 countries. He will remain in role until a successor has been appointed.
 
The chief executive of Sainsbury’s, Mike Coupe, has criticised a regulatory block to its proposed merger with Asda. Despite an offer to sell up to 150 of their combined stores, the CMA said Sainsburys and Asda could offer no “effective” remedies that wouldn’t lead to increased prices, reduced quality and choice. Coupe responded that the merger was intended to reduce prices by up to 10%, and the decision of the Competition and Markets Authority had “effectively [taken] £1 billion out of customers’ pockets”.

Markets

What happened yesterday?

Disappointing results for both Barclays and Sainsburys, and a slump in the housebuilding sector led the London market down yesterday, finishing down 0.5% at 7,434.13 points. Meanwhile, the pound was flat against the dollar at $1.29 and up by 0.2% on the euro at €1.16.
 
Taylor Wimpey (down 5.35%) led the falls among housebuilders after the construction company hailed a “good” start to the year despite wider macroeconomic uncertainty and caveating that 2018 margins would be lower as a result of greater build cost inflation. The sector was also hit by downgrades for Barratt Developments (down 2.37%), Bellway, Bovis, Persimmon (down 2.62%) and Redrow by the broker Shore Capital.
 
Stocks were further dented by news that the CMA would block the proposed merger of Sainsbury’s (down 4.68% )and Asda on the ground that it would leave shoppers worse off. Despite initial comments rebuking the block, investors are now keen to hear more on future strategy from Sainsbury’s CEO Mike Coupe whose position is now thought to be in the firing line.
 
In wider corporate news, Barclays (down 3.59%) was also in the red after posting a 10% drop in first-quarter profits amid challenges for the bank’s corporate and investment bank divisions, suggesting it may have to cut costs in order to meet return targets.
 
It was joined by RBS (down 2.62%) whose stock fell on news that its chief executive Ross McEwan had resigned after five and a half years in position.

Finals  
Allied Minds
EU Supply
 
Trading Announcements
Georgia Capital
WPP

GMs
O’Key Group GDR
Porta Communications

Intl. Economic Announcements
(13.30) GDP (Preliminary) (US)
(15.00) U. of Michigan Confidence (US)

AGMs   
Co-operative Group Ltd
ROS Agro GDR REG S
Alfa Financial Software Holdings
AstraZeneca
Capital Drilling Ltd. (DI)
Pearson           
Rotork
Senior
Public Joint Stock Company Severstal GDR (Reg S)         
Greencoat UK Wind
 
UK Economic Announcements
(09.30) BBA Mortgage Lending Figures
(11.00) CBI Distributive Trades Surveys

Columns of Note

Philip Stephens writes in the FT that chasing a Brexit agreement at any costs risks forgetting the reasons why we are leaving. He suggests that the urge to rush something through to meet continually changing arbitrary deadlines has been the principal dereliction of duty for this government, and reinforces the case why it should be put back to the people. (£)
 
In The Times, Sathnam Sanghera urges company boards to look beyond established networks to fill their ranks if they are serious about effecting change. Recounting his experiences during an aborted application to become a non-executive director of a mental health body, Sanghera suggests we might start with greater female representation which research suggests improves board behaviour. (£)

Did you know?

A worker honey bee produces the equivalent of 1/12th of a single teaspoon of honey in its lifetime.

TODAY
 
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