25 April 2017 | Issue 13
Market corner

by Ghillie Little
Head of Corporate Consulting
Steaming ahead
CSX, one of America’s biggest railway operators, which controls most of the railroads in the eastern United States, beat Wall Street’s expectations when it reported that its revenues jumped almost 10% this quarter versus last year. This is good news for the US and, to some extent, good news for the global economy as well – typically, more railway activity is a sign of an improving economy. Combined with the recent executive order to roll back the Clean Power Plan in the US, railroads stand to benefit if Trump can successfully breathe life back into the coal industry.

A busy dance card
President Trump is having a busy week, and the possibility of a government shutdown on Friday (which, as always, won't actually happen) isn’t going to rain on his parade. Trump is expected to roll out a plan to cut the corporate tax rate from 35% to 15%, a plan he heavily campaigned on that he believes would be paid for through economic growth. Although good for US businesses, it does mean less cash on hand to decrease the deficit and less funding for social programs that rely heavily on government funding.

Costa cooling down
Premature to go full-throttle on underperform for this one, but Whitbread, the company behind Costa Coffee and Premier Inn, saw a 7.18% fall in its share price today. Chief executive Alison Brittain was busy doing the media rounds this morning, and confirmed that the company saw strong growth from its core coffee and hotel brands, which helped post a solid rise in full-year profit and revenue, in-line with market expectations. Although a good start to the year for Premier Inn and Costa, Brittain remains cautious and warned investors that the company expects a tougher consumer environment in the year ahead…cue share fall.

All oiled up and ready to float
Dubai-based oilfield group ADES International Holding Ltd. announced a plan to raise up to £133m when it floats on the LSE next month. ADES works with several large oil companies including Saudi Aramco which is currently being courted by the very same LSE.

Extraordinary weather report

Brits torn between thrill and panic at onslaught of white powder

We're British. And it's going to snow. Apparently. So at least we'll have something to talk about. That's not just weather - it's BIG weather. OK, we know it's not a blizzard. It's probably a few flakes if that. But come on, it is April. That is weird...(if you're not British, you've now tuned out. If you are, we know you wanted more on that one...)

View from Spain

by Catalina Chiavari Pazos

¿Pesca para un título al alza?
Tras cuatro años suspendida por discrepancias entre sus cuentas, Pescanova volverá a la bolsa de Madrid. La multinacional gallega volverá a cotizar “en menos de dos meses” como aseguró Sebastián Albella, Presidente de la Comisión Nacional del Mercado de Valores (CNMV). Pero mi pregunta es- ¿de verdad nos fiaremos del gigante del congelado después del bacalao, es decir el pollo que han montado?

Hero of the week

Matthew Rees way to get free entry into the 2018 London Marathon.

by Ghillie Little
Head of Corporate Consulting
Restoration of "serenity"
A few weeks ago we wrote about the pressure LafargeHolcim was under from the French Government over that infamous wall and the company's alleged "inappropriate dealings" in Syria, and suggested that it would need to take a long, hard internal-look at itself in the mirror. Yesterday LafargeHolcim confirmed its CEO Eric Olsen would be stepping down to bring back “serenity” to the company, an interesting word choice indeed. The company notes that Olsen became chief in 2015, after the alleged activities occurred. "Business partner of Isis" and "financier of terrorism" are just a few of the names LafargeHolcim has been given by certain media and politicians since the activities were exposed. Although a difficult decision to lose Olsen, the group's reputation has been so severely damaged that a strong response such as this was the only way forward. Shame.

The Bold Activist strikes again - but are they after a quick bonk or a relationship?
Elliott Management, an “activist” hedge fund, has quite a reputation and we can probably all agree we just can’t seem to get away from reading about the firm these days. Although it is important that managements of large companies are held to account, it can be difficult to know whether an activist investor is merely looking for a short term win that will satisfy immediate needs or actually trying to improve a company. Whatever the case may be for Elliott Management, Elliott Associates, Elliott Advisors or whichever affiliate we read about again tomorrow – the publicity and PR capabilities that Elliott uses to its advantage are quite impressive, and make it very hard to ignore.

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Corridors of power

by Louis Rynsard
Director, Reputation & Strategy
Macron on the move
So the votes are in, and it’s Macron v Le Pen for the soul of France. Polls (which for once got the result right) are predicting that Macron will be very soon standing on the steps of the Élysées Palace. When he first launched En Marche and his presidency bid, Macron was treated with barely disguised contempt from the French political classes – how could this guy who had never won office take on the might of the Socialist and mainstream right parties? How could a pro-European, free market supporting, liberal value holding, former banker with no political machine hope to stop the National Front and supplant the established parties of the fifth republic? Well he did (as a quick aside, SPIT readers, and anyone I’ve bored for the past few months, will know I have been predicting a Macron victory for a while now).
It is too early to tell the long-term impacts of Emmanuel Macron’s rapid rise, but one thing looks certain, there is life in the liberal centre yet – but, at least in France, this is coming from new political movements, not the established order. With the Dutch Socialist Party reaching historic lows in their election and UK Labour’s continuing implosion, the questions has to be asked - has social democracy in its current form reached the end of the road? And does Macron’s style of centrist, liberal, globalised new politics show the future for the centre-left? At the very least the markets are endorsing the march of Macron.

How low can it go?
Speaking of the Labour Party, a nightmare scenario for Labour strategists is being realised. UKIP voters across the country, and particularly in Wales, are moving in droves to the Conservatives. Even with this out of the equation things were looking bad for Corbs and his revolutionaries - but with the purple tide becoming true blue this could spell disaster for a party that was 20 years ago racking up 18 point leads in the polls.
The irony of this is that Labour, under different leadership, could be riding high once again. Facing a Conservative Party hell bent on a hard Brexit, with a leadership who either do not understand or do not care about the concerns of business [editor's note - steady on old chap, that's a bit harsh - not all of us totally agree with this subjective statement] (remember Liam Fox claiming business leaders are lazy and play too much golf?) the opportunity was there to once again grab the centre, win over business and seize power. Instead, one of the great parties of the western world is controlled by a pinko cult  who would rather shout “f*ck off and join the Tories, Blairite scum” than actually win elections. Shame that. [second editor's note: is it a cult? Are they forced to devote inordinate amounts of time to group-related activities? Required to cut off their families, pledge unthinking allegiance, and drink funny lemonade?]
Open letter to UK political leaders calling for a Department of Technology: Join us
SPIT readers will remember that last week SBC London called for a manifesto commitment from all major parties to create a Department for Technology to champion the UK’s tech sector, ensure every industry can benefit from tech innovation and begin to address, by marshalling tech’s best and brightest, some of the wide-ranging societal challenges it creates.
Agree with us that this is needed? Click here to email me and add your name to our open letter.

Notable headline

Democrats are falling apart on their "come together" tour

...not what they had in mind for "Come Together and Fight Back". 
Silicon passage

by Louis Rynsard
Director, Reputation & Strategy
Apple bites man
We can all remember the fear of being summoned to see the Head Master when we had broken the rules. Well over in Silicon Valley Travis Kalanick, the cool kid of the scene got the dressing down of a lifetime from the head teacher of tech, Tim Cook. After being caught out breaking Apple’s rules, Travis was faced with the ultimate threat – do what I say or you’re expelled from the App store.
While a reminder of who is really a top tech company and how far Uber has to go to reach the heights of Apple is welcome, there is something of a mafia boss about Tim Cook here: “nice company you got there, shame if anything… happened to it…” Uber may not yield to governments but it sure as hell yields to Apple. In a world where tech is everything, this is a reminder of where power is starting to lie. Tech CEOs are fast becoming (if they aren't already) some of the most powerful people alive. While they may deliver exactly what consumers want, that old adage of Lord Acton’s still applies: power tends to corrupt, and absolute power corrupts absolutely.
Fake news (Wikipedia)
One of the most popular new phrases of 2016 was without doubt ‘fake news’. It was thrown at politicians, journalists and political campaigns the world over. I even have journo friends at major outlets that are now taking it as a source of pride to be called fake news. Well now Jimmy Wales of Wikipedia fame is going to sort it all out… he hopes. Key hurdles have to be overcome, including the limits of a crowd funding model and the sheer scale of the task. However, as purveyors of truth and justice (and good corporate comms) we wish him all the best.
While some may see the mainstream media as an enemy.  It is, in reality, a key part of a healthy society and simply a channel which - which organisations can and should speak through because of the sheer reach and because of the healthy filter that are journalists. Companies, their leaders and their stakeholders are best served by an open, honest and truthful media, not a fake news machine.
Insurtech is hitting the big time
News today that the Warren Buffet backed AllLife is launching a life insurance product for diabetics here in the UK is the latest in a growing line of stories outlining the rise of insurance technology.
While fintech may get all the attention, and in many cases rightly so, insurtech is starting to become the next hottest thing in technology; expect this to only grow and grow. For the insurance industry, it is fast getting to the stage where firms will lead technological disruption or be disrupted by it. Make sure you are on the right side of this - and communicate the benefits to all.

Who's feeling over exposed this week?

This guy...or girl?!

Didn't see that coming.

C-suite steer

by Lief Anya Schneider
The Martians are coming. And they want an explanation
“If your firm didn’t exist – would someone invent it?” Asks the Martian in front of you. 
Imagine that instead of being bone dry and apparently devoid of amoebas or any other life, (let alone HG Wellsian beings with “intellects vast and cool and unsympathetic”) that Mars is inhabited. Or some other part of space (more likely). 
And somehow you meet an intelligent, curious alien. And they start asking questions.
“This customer you speak of, and these shareholders, and these employees of yours,” squawks the creature, “Why should they buy from you, invest in you, and obey you, not another firm or person? Why should I not destroy you now? What is the purpose of you and your firm?”
HG Wells got it about right. If you’re doing well, some bugger will regard your “earth with envious eyes, and slowly and surely draw their plans against you”.
Answering to aliens is a great exercise for focusing the mind and checking on the direction you are taking. 
This week we see Debenhams flailing. Last week Jaeger went belly up. Once, there was a Bradford & Bingley, a Washington Mutual, a Woolworths, a WorldCom, a Bear Stearns, an XFL and so on. If a Martian had forced their leaders to answer for themselves earlier in the game, they could all still be with us.
When working with clients on messaging sessions, they can be dismissive. “Oh, we’ve had this,” they say. “Five years ago. It was rubbish and we’ve done it, so we don’t need to do it again.”
If you had your last messaging session five years ago – start worrying. Now. Because if your company is so moribund that it has nothing new to say, it is under threat. 
I actually have huge sympathy with people who have these objections. Messaging sessions detract from the day to day. And they are especially challenging because self-examination (in this case, examination of one’s firm, one’s place of operation) is hard. 
If participants are initially sceptical about messaging sessions, part of the fault, dare I say it, lies with the last incumbent - the convener of the messaging session. Messaging sessions are about thinking things through aloud. They should not start with “what do we say to our stakeholders?”, but with “what is the truth?” “What is our purpose?” “What would we say to an alien?”. They should always be run by outside expert consultants who have no skin in the game, and can question from an alien perspective. Look inwards first. Then look out. If you can look yourself and an alien in the eye, you’ll be OK with your stakeholders.

Poem of the week

Still I Rise by Maya Angelou

Picked by Catalina Chiavari

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