4 January 2019

Adam Shaw

4 January 2019

Good morning,

Hot pastry-based snacks have a habit of causing a furore in the UK. Remember when George Osborne was forced to perform a budget u-turn in 2012 after increasing VAT on hot takeaway food – a move dubbed the “pasty tax” by critics? Or when Gregg’s chose to stop selling macaroni pies in 2015? A decision I’m personally still sore at, I should add.
Well, we’re at it again. For some, Greggs’ new vegan sausage roll, unveiled to coincide the start of Veganuary – a growing movement that encourages people to embrace plant-based diets during January – is a change too far.
For rational people, it’s simply a company expanding their product range to cater for a wider customer base and offer more choice. After all, whilst veganism is a choice for many, these sausage rolls also allow those with dairy intolerances to experience all the greasy goodness one pound sterling can buy. 
Greggs already has a positive reputation with a broad demographic of eaters and with widespread media coverage – print, broadcast and social – of the announcement, the Greggs communications and marketing team can count yesterday’s launch as a job well done.
However, if they’re looking for just one more piece of publicity, they could always pitch an unbiased review of the vegan delicacy to The Telegraph’s new restaurant critic


Nancy Pelosi has been elected as speaker of the US House of Representatives, returning to the position she held between 2007 and 2011, as Democrats officially retook control of the lower chamber. Pelosi won 220 votes from the 430 members present. In the end, she suffered only a minor, 15-strong rebellion from her own party – mostly from new members who pledged to oppose her during their campaigns and from opponents who have long called for new leadership of the party. The first order of business was toapprove legislation that would end the partial shutdown of the government. However, the spending package contains no money for a wall on the Mexican border – a key demand of President Trump – meaning the stalemate is likely to continue.
There is growing evidence that members of organised criminal gangs are gaining employment in the prison service in order to smuggle banned items into jails, according to police. Assistant chief constable Jason Hogg, who leads on prison intelligence for the National Police Chiefs’ Council, told the BBC that he "strongly suspects" gangs are getting their associates or family members jobs in the prison service with the intention of smuggling contraband in, although it was difficult to prove. According to ministers, this can happen but better search techniques will help.
Conservative Party members would rather the UK left the EU with no deal than depart on the terms of the prime minister’s deal, according to a poll. The YouGov survey carried out on behalf Economic and Social Research Council found that, in the event of a three-way referendum between no deal, Theresa May’s deal and remaining in the EU, 57% of grassroots Tories would choose no deal, 23% would back the EU Withdrawal Agreement, and 15% would vote to remain.

Business & Economy

By 1pm today, the UK’s top company bosses will have earned the same amount in 2019 as the average worker will be paid for the entire year. The annual “Fat Cat Friday” research from the High Pay Centre think tank and the Chartered Institute of Personnel Development (CIPD) found that the average FTSE 100 chief executive now earns £3.9 million per annum – up 11% on last year and 133 times the salary of the average worker. According to this year’s report, excessive pay and the culture of "superstar" chief executives was increasingly being seen as a failure of corporate governance, negative impacting trust in business leadership.
The largest biopharma deal in history was announced yesterday when Bristol Myers-Squibb revealed it had reached an agreement to acquire rival Celgene in a cash and stock deal valued at $74 billion. The merger, which is still subject to various approvals, is due for completion in the second half of 2019. Under the agreement, Bristol shareholders will own 69% of the company, with Celgene shareholders holding the remainder.
Three former Credit Suisse bankers have been charged by US prosecutors over alleged fraud connected to Mozambique’s $2 billion hidden loans scandal. According to the US attorney’s office for the eastern district of New York, Andrew Pearse, Surjan Singh and Detelina Subeva were arrested in London yesterday and their extradition is being sought over money laundering and defrauding of US investors in the loans. Manuel Chang, Mozambique’s former finance minister, was also arrested in South Africa on Saturday in connection with the indictment.


What happened yesterday?

It was yet another turbulent day for the stock markets, with all major indices seeing losses, as fears about the global economic outlook mount.
Apple’s unexpected revenue warning on the back of weak Chinese sales – potentially a sign of broader economic trouble in the world’s second largest economy – was the day’s main news, wiping 9.96% off the company’s share price during yesterday’s trading. Back in October, the iPhone manufacturer was the world’s most valuable company, with a market capitalisation of close to $1.1 trillion. Since then, the stock has lost about approximately 40% of its value, or $450 billion. Analysts are predicting a tough road ahead, with those at Goldman Sachs comparing the slowdown in iPhone sales to Nokia’s position at the end of 2007, when the fallen Finnish giant began to fall into decline amid a saturated mobile phone market and an economic crisis.
As a result, chipmakers and other technology companies suffered, with the technology focussed Nasdaq down 3.04% to 6,463.50.
The S&P 500 also dropped 2.48% to 2,447.89, whilst the Dow Jones Industrial Average fell 2.83% to 22,686.22.
Here in the UK, the FTSE 100 was down 41.57, or 0.62%, at 6,692.66.
Next bucked the trend as well as delivering some much needed relief for the retail sector after reporting in a trading statement that online sales between 28 October and 29 December were up 15.2% when compared with the same period last year. However, sales at its stores fell and the company reduced its annual profit forecast from £727 million to £723 million.
Despite this, the Next’s shares rose 4.14% during yesterday’s session, recovering some of the near 20% drop it saw after the profit warning issued by fellow fashion retailer ASOS in December.
On the currency markets, the pound was up 0.19% against the dollar at $1.2631 but fell 0.29% against the euro to €1.1083.

Trading announcements
Johnson Service Group
Cambria Automobiles, Craven House Capital


UK Economic Announcements
(00:01) BRC Shop Price Index
(07:00) Nationwide House Price Index
(09:30) Consumer Credit
(09:30) M4 Money Supply
(09:30) Mortgage Approvals
(09:30) PMI Services

International Economic Announcements
(08:55) PMI Composite (GER)
(08:55) PMI Services (GER)
(08:55) Unemployment Rate (GER)
(09:00) PMI Composite (EU)
(09:00) PMI Services (EU)
(10:00) Producer Price Index (EU)
(13:30) Non-Farm Payrolls (US)
(13:30) Unemployment Rate (US)
(14:45) PMI Composite (US)
(14:45) PMI Services (US)

Columns of Note

Are the issues Apple faces in China a blip or the beginning of a wider downturn for the business? That is the question posed by Sky News’ Ian King. Yesterday was on track to be Apple’s worst day of trading for five years, however, the company has been facing issues for some time now: slower iPhone sales and the decision to stop reporting how many units it sells on a quarterly basis, changing consumer behaviour, and the continued emergence of competitors who are taking market share. King suggests that, as a result, we may see Apple using some of its $130 billion cash reserves to diversify and grow the proportion of its revenue stemming from services.
In the Financial Times, Blair Effron argues that House Democrats should take advantage of the fact that President Trump will likely wish to demonstrate he can pass legislation addressing real problems ahead of the 2020 presidential election. He sets out what he views as the three key priorities for the new Congress: infrastructure spending, improving the healthcare system, and a rational pro-growth approach to immigration – all areas Effron assets common ground can be found.

Did you know?

There are more than 6,000 people currently waiting for an organ transplant in the UK.

Parliamentary highlights

House of Commons
Business will resume from Monday 7 January 2019

House of Lords
Business will resume from Monday 7 January 2019
Scottish Parliament
Business will resume from Tuesday 8 January 2019