And a welcome back to the working week from the sunny climes seen across the UK for yesterday’s bank holiday. UK temperatures reportedly soared above those seen in Rio and LA in what is thought to be the hottest May Day bank holiday on record, and, as my face nurses a curiously red hue on the return to work, I can’t say the early indications are wrong.
But whilst mulling over the weekend’s news in the sunshine, it struck me that an important story could be in the offing.
The Sunday Times revealed that the US online consumer supergiant Amazon had attempted to open talks with the John Lewis Partnership over a possible acquisition of the Waitrose supermarket chain late in 2017. According to the paper, one of Amazon’s senior UK executives had contacted a director at John Lewis for a formal meeting, a possibility which was reportedly “shut down” by the board.
Whilst big takeover deals are plentiful these days, this one bears some further thought should it be taken any further. Think about it; Amazon is everywhere. How many British families this weekend were sitting out on an Amazon-bought picnic blanket, kids playing with Amazon-bought toys, hollering at Alexa to skip the next track, while they plan what Prime video they’ll hunker down to that evening?
Once you throw grocery shopping into the mix, Amazon has every major consumer front covered (beyond planning a great barbecue), and very large headroom for growth in the UK indeed. This is Amazon’s so-called “ecosystem”, and what the company believes represents the future of western consumption.
Fresh from last week’s news of the proposed merger of J Sainsburys and Asda, Amazon’s entry into the market would certainly put the cat among the pigeons, and indeed, was mentioned as a motivator behind that takeover. The deal with Waitrose may be dead, as the Sunday Times reports, but I’d wager it won’t be long before Amazon is once again turning up the heat on Britain’s retailers.
President Trump is expected to withdraw the United States from a deal which limits Iran’s nuclear development capacity in return for withholding economic sanctions against Tehran. The president tweeted that he would make a statement at the White House at 1400 EST (1900 GMT), well ahead of a self-imposed deadline of Saturday. British foreign secretary Boris Johnson used an appearance on Fox and Friends, reportedly the president’s favourite television show in the US, to urge Mr Trump to rethink, arguing that the West could be forced to take military action against Iran. (£)
Britain’s rail companies are to launch a public consultation aimed at making ticketing fairer, in what has been touted as the biggest reform of rail pricing since privatisation two decades ago. The Rail Delivery Group (RDG), which represents UK rail firms, said the consultation was “overdue” and will address concerns that customers do not always receive the cheapest fare. Around 55 million different fares exist in the current system.
Italy faces new elections as early as June after talks between political parties following March’s election have broken down. President Mattarella called a halt to talks between parties yesterday and asked them to back a “neutral government” to pass the budget through parliament before stepping down at the end of the year. The populist Five Star Movement and anti-migrant Lega said they would not support a caretaker government and called for new elections on July 8. (£)
Business & Economy
Clydesdale and Yorkshire Bank has made an all-share takeover bid for Virgin Money, valuing the bank at over £1.6 billion. The move was described by CYBG as one which would “create the UK’s leading challenger bank with a powerful full-service banking offer for 6 million personal and business customers.” Shares in Virgin Money closed up 13% last week at 312.4p, whilst CYBG shares stood at 318p. (£)
Deloitte has announced a $580 million investment in its own cyber security defenses, in what is expected to be the first among the ‘big four’ accounting firms to secure client data against future cyber-attacks. The investment follows a breach of Deloitte’s systems in 2017, when it spent around $50 million a year on cyber security. Large institutions including Equifax, JPMorgan, Merck and DLP Piper are among other companies who have fallen victim to cyber-attacks. (£)
Chief executive of RBS, Ross McEwan, is due to give evidence today to the Scottish Affairs Committee at Westminster to explain his bank’s decision to close branches across Scotland. McEwan’s appearance follows lengthy negotiations to secure his testimony and will focus on RBS’ decision to close 62 branches, the announcement of a partial reprieve for 10 of those following heavy campaigning by politicians, and the future of local banking in Scotland.
The week ahead
An extra day of rest for the financial markets yesterday will have done little to quell investor anxiety ahead of a key meeting of the Bank of England monetary policy committee on Thursday. Despite long-held expectations that an interest rate rise this week was all but assured, analysts now expect the Bank to maintain the status quo following a string of weak economic data over the last few weeks.
The markets may also react negatively to news this morning that Theresa May has delayed another meeting of the cabinet until a week on Wednesday to discuss the issue of Britain’s customs relationship with the EU after Brexit. Although her preferred option of a “customs partnership” was overruled last week, the question for the PM now is whether she is willing to press ahead regardless and risk alienating certain Brexiteer sections of her cabinet, or - as seems to be her style – to kick the decision further down the road.
Corporate earnings reports to watch this week include Walt Disney later today, and Siemens, Toyota and 21st Century Fox on Wednesday. Investors will be also be particularly keen to see how supermarket WM Morrison fares in the wake of the J Sainsbury-Asda deal as it reports its first-quarter results on Thursday. If the merger goes ahead, Morrisons will be a much smaller operator, but could be well-placed to take on any stores which are shed in the consolidation.
International politics are back in the limelight by Saturday as President Trump reaches his self-imposed deadline to decide whether the US will leave a landmark multi-party deal with Iran than saw Tehran limit its nuclear programme in exchange for limited sanctions. Neighboring Iraq will also go to the polls, in what is shaping up as a three-way contest between Prime Minister Haider Al-Abadi, a transport minister and former prime minister.
Faron Pharmaceuticals Oy (DI)
Horizon Discovery Group
IDE Group Holdings
Hiscox Limited (DI)
Int. Economic Announcements
(07.00) Balance of Trade (GER)
(07.00) Current Account (GER)
(07.00) Industrial Production (GER)
Blue Capital Alternative Income Fund Ltd (DI)
EKF Diagnostics Holdings
Global Ports Holding
Randgold Resources Ltd.
Columns of Note
Kevin Pringle uses his Sunday Times column to lament last week’s spat over the Scottish government’s ‘baby box’ initiative, which he argues has crowded out discussion of more substantive issues such as the economy. Pringle points out that baby boxes cost only about 0.02% of the Scottish government’s boxes and suggests it might be better looked at by a parliamentary committee than provide the centerpiece of confrontation at FMQs. To do so, he concludes, might signal that Scotland’s political discourse has grown-up. (£)
Writing in the FT, Janan Ganesh suggests that last week’s close-run, and largely lackluster, local election results may be the new norm in British politics. He points out that the post-crash British are indeed ravenous for change – until they are forced to define it. As Ganesh concludes, “it is unclear what voters want these days, other than their rulers on the shortest of leashes”. (£)
Did you know?
In 1923, jockey Frank Hayes won a race at Belmont Park in New York despite being dead. He suffered a heart attack mid-race, but his body stayed in the saddle until his horse crossed the line for a 20-1 outsider victory.
House of Commons
Oral questions: Health and Social Care (including Topical Questions)
Ten Minute Rule Motion: Protection of Pollinators – Ben Bradley
Legislation: Secure Tenancies (Victims of Domestic Abuse) Bill [Lords] – remaining stages
Consideration of Lords amendments: Nuclear Safeguards Bill
Motion: Statutory Instrument on Criminal Legal Aid
Adjournment: Homeopathy in veterinary medicine – David Tredinnick
House of Lords
UK’s ability to take advantage of the Digital Single Market and of country of origin principles for e-commerce once the UK leaves the EU - Lord Clement-Jones
Confidentiality agreements in respect of negotiations concerning the UK’s withdrawal from the EU - Lord BradshawStrengthening legal safety requirements for fridges and freezers sold in the UK - Baroness Donaghy
Legislation: European Union (Withdrawal) Bill – Report (day 6) - Lord Callanan
Scottish Government Debate: Scottish National Investment Bank
Finance and Constitution Committee Debate: Revised Written Agreement with the Scottish Government on the Budget Process
Standards, Procedures and Public Appointments Committee: Changes to Standing Orders on the Budget Process
Legislative Consent Motion: Holocaust (Return of Cultural Objects) (Amendment) Bill – UK Legislation
Members’ Business: Dog Attack Figures – Alex Neil
House of Commons
Oral questions: Northern Ireland
Prime Minister’s Question Time
Ten Minute Rule Motion: European Union Withdrawal Agreement (Public Vote) – Gareth Thomas
Legislation: Data Protection Bill [Lords] – remaining stages
Motion: Relating to a Statutory Instrument on Education (Student Support)
Adjournment: Universal credit and terminal illness – Drew Hendry
House of Lords
Impact of Brexit on the economy of the North East of England - Baroness Quin
Recommendations in the 'Manifesto to Strengthen Families' - Lord Farmer
How many young asylum seekers have been required to cease studying as a condition of immigration bail - Baroness Hamwee
Legislation: Automated and Electric Vehicles Bill – Committee stage (day 1) – Baroness Sugg
Orders and regulations: Higher Education and Research Act 2017 (Consequential, Transitional, Transitory and Saving Provisions) Regulations 2018 – regret motion - Lord Hunt of Kings Heath
Members’ Business: Eliminating Hepatitis C in Scotland: A Call to Action – Tom Arthur
Portfolio Questions: Health and Sport
Scottish Labour Party Debate: Waiting Times - NHS Tayside Public Inquiry
Members’ Business: The Condition of Scotland’s Roads – Rachael Hamilton