30 Aug 2018

Stuart Taylor

30 Aug 2018

Good morning, 

The name’s Palmer. Andy Palmer.
 
Ok, so the line might not have quite the same ring to it, but Aston Martin’s boss yesterday showed the kind of audacity and boldness its most celebrated fictional customer is known for.
 
His announcement that the iconic British car marker was to float on the London Stock Exchange following record sales and profits signals an ambitious plan to dominate the luxury market and represents another remarkable step on what has been a supercharged turnaround for the company since the former Nissan executive took over the helm in 2014.
 
Its debut on the London Stock Exchange is expected to value the company at a blockbuster £5bn at the initial public offering, giving investors the chance to own a piece of a British car company for the first time since 1990, when Jaguar left the stock exchange after being bought by Ford.
 
Those in charge at Aston Martin will view the IPO as an opportunity to replicate the success of Ferrari’s listing in New York in 2015, where shares in the Fiat affiliate have doubled in the subsequent three years. The injection of cash that will come with going public is going to be essential if Palmer is to realise his grand vision, which does not stop at cars. The CEO is aiming to race ahead and make Aston Martin the ultimate luxury brand, pushing into new markets ranging from clothing to apartments and even personal submarines, something that even 007 doesn't have in the garage.
 
However, some commentators have been left shaken and not stirred by the lofty valuation. The danger they find is that, despite our affection for the homegrown brand, Aston Martin loses out to its Italian competitor Ferrari on virtually all benchmarks, from global appeal to pricing power and re-sale values.
 
To fend off these concerns, Aston Martin aims to increase production by around 55% to almost 10,000 cars in 2020. However, making the cars is one thing. Getting them shifted from the showroom is a very different task.
 
Whatever its success, this bold new adventure offers a new optimistic chapter for a business that has had its fair share of failures – including seven bankruptcies – since the 1960’s and gives us all a front seat view of investor appetite for companies from these shores ahead of Brexit.
 
Buckle up and enjoy the ride.

News

The sale of energy drinks to those under the age of 18 could soon be banned in England, the prime minister has said. Theresa May described childhood obesity as “one of the greatest health challenges this country faces” and said that significant action must be taken as her government announced a public consultation on its plans.
 
Alex Salmond has quit the SNP, a party he led for 20 years, to fight sexual misconduct allegations. The former first minister wrote to the party’s national secretary to resign his membership, saying he took the action to avoid the party becoming the subject of potentially damaging divisions. Nicola Sturgeon said she was “saddened” but that she understood her predecessor’s decision.
  
French president Emmanuel Macron is expected to tell fellow EU leaders next month to agree to a close relationship with the UK following Brexit, throwing Theresa May a welcome lifeline. Macron is expected to use the summit in Austria to set out a new structure for European alliances based on “concentric circles”, with the EU and the euro at its core and Britain in a second ring. The PM will likely cite this intervention as evidence that the EU is softening its attitude to her Chequers plan.

Business & Economy 

The Competitions and Markets Authority has provisionally cleared the proposed merger between the retail arm of energy group SSE and Npower, having concluded that it would not raise competition concerns. The watchdog said that the two companies do not compete closely on standard variable tariffs (SVTs) – the most common and expensive energy tariff – and therefore any deal would not affect how these rates were set. The £3bn merger would create an energy giant with 11.5m customers and reduce the 'Big Six' suppliers to the 'Big Five'. (£)

Troubled payday lender Wonga has held crisis talks with the Financial Conduct Authority as concerns intensify that the company is close to collapse. The City watchdog is concerned that Wonga’s closure will have significant impact on customers who use its short-term, high-interest loans and the regulator is keen to better understand what administration will mean for the business. (£)
 
Justin Trudeau, Canada’s prime minister, and US president Donald Trump have said that a deal on revamping the Nafta trade deal was still possible, as tomorrow’s deadline looms. The Canadian government is said to be prepared to make key concessions concerning the dairy market as it scrambles to ensure it reaches agreement on a new North American Free Trade Agreement. The White House has said it will continue with its own bilateral deal with Mexico if a deal is not agreed. (£)

Markets  

What happened yesterday? 
Sterling broke $1.30 for the first time since the start of August yesterday after the EU’s chief negotiator hinted that he was prepared to offer the UK a deal which would deliver a partnership “such as there has never been with any other third country”. The comments by Michel Barnier saw sterling rise by more than one per cent, while government bonds dropped back slightly, further highlighting that traders considered the intervention as good news for the country’s economy.
 
As sterling pushed on, the FTSE 100 saw a drop at the end of trading, closing 0.7% lower. It was better news for markets across Europe with the pan-regional Stoxx 600 index closing 0.3% higher and the Xetra Dax in Frankfurt rising by the same margin.
 
Rising hopes that Canada and the US would strike a trade agreement on the heels of Monday’s US-Mexico deal caused the S&P 500 and Nasdaq Composite equity indices to hit all-time intraday record highs. It was technology stocks, namely Amazon and Alphabet, that led the rally, rising 2.7% and 1.5%, respectively.

Interims
AFI Development
Arrow Global Group
ASA International Group
Churchill China
Chesnara
Eddie Stobart Logistics
Hunting
Irish Continental Group Units
IFG Group
Total Produce

Finals
Hays

Trading Announcements
WH Smith

UK Economic Announcements
(09:30) Consumer Credit
(09:30) M4 Money Supply
(09:30) Mortgage Approvals

Int. Economic Announcements
(09:00) Unemployment Rate (GER)
(10:00) Business Climate Indicator (EU)
(10:00) Consumer Confidence (EU)
(10:00) Economic Sentiment Indicator (EU)
(10:00) Industrial Confidence (EU)
(10:00) Services Confidence (EU)
(13:30) Continuing Claims (US)
(13:30) Initial Jobless Claims (US)
(13:30) Personal Consumption Expenditures (US)
(13:30) Personal Income (US)
(13:30) Personal Spending (US)

Columns of Note 

Writing in the Financial Times, Janan Ganesh goes against the grain somewhat and suggests that the rise of populism in the US was not a direct consequence of the global financial crisis that began a decade ago next month. Instead, Ganesh says public trust in government has never recovered to anywhere near the level of the early 1960s and cites the country’s involvement in Vietnam as a much more influential factor on this than the fall of Lehman Brothers in 2008. (£)
 
Examining the rise in Conservative membership, Iain Martin says the party can’t afford to be fussy about ‘entryism’ by former Ukip members if it is to stop Jeremy Corbyn becoming prime minister. Writing in The Times, Martin says that the Conservatives’ system for leadership elections is sensible enough to safeguard the party from suffering the same fate that swept Corbyn to Labour’s top role.

Did you know? 

Back in the early days of the game of golf, and even into the 20th century, golf clubs in a set were not identified by number but by name. Instead of five-irons and two-woods there were mashies and niblicks (and mashie-niblicks), cleeks and jiggers, and baffies and spoons, among others.

Parliamentary highlights 

House of Commons
In recess until 4 September 2018
 
House of Lords
In recess until 4 September 2018
 
Scottish Parliament
In recess until 4 September 2018