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25 July 2017 | Issue 26
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Market corner

by Ghillie Little
Head of Corporate Consulting, SBC London
Outperformer
Big Mac bounce back – McDonald's announced earnings on Tuesday that have beaten analysts’ expectations. Thanks to Maccy D's $1 dollar drinks promotion and a new line of burgers, the sales slump in its US business has seen a major turn around. The reversal comes after McDonald's found that most of the consumers it was losing did not defect to higher-priced fast casual restaurants with "healthier items", but were losing them to rival fast-food chains serving cheaper food. Bye bye salads and snack wraps, hello "Signature Crafted" burgers, add cheese, extra pickles, extra everything! Change has been underway since Steve Easterbrook took over as CEO in 2015, and his efforts to overhaul the company's business, from strategy to operations, appear to be taking hold.

Neutral
Kors strides further into luxury market Sex and the City fans aren't the only ones to fall for London-based luxury goods brand Jimmy Choo. US brand Michael Kors announced it has made a £896m offer to buy Jimmy Choo, which put itself up for sale in April. Michael Kors has been suffering a slowdown of its own handbag and accessories division in recent quarters and closed several of its doors this year. Michael Kors sees Jimmy Choo as a new avenue for international growth and a foothold in the luxury shoe market. With the luxury market sensitive to over exposure, it will be interesting to see how the acquisition will fare amid continued competition from online shopping and discount, fast-fashion stores that lead to Kors' diminished luxury image in the first place.
 
Underperformer
Banco not-so-Popular The use of credit derivatives has seen a decline since the financial crisis, but the market still gets a lot of action from those smart enough to actually understand it, and believe it is a space that needs to be kept alive. Enter Banco Popular, who recently caused a stir by its out-of-the-box legal interpretation on whether owners of contracts designed to insure against default 'deserved' their payments in full. 

FinTerest
All things earnings! – Alphabet took to the mic yesterday, Facebook is up on Wednesday and Amazon Thursday. With some of the world's most valuable company's hailing from Silicon Valley, they're a big reason the US stock market has good and not so good days, so what happens to them matters. To be continued...

Notable headline


Italian bank robbers wear Trump masks during heist

...someone watched "Point Break" a few too many times. Sad.

Corridors of power


by Louis Rynsard
Director, Reputation & Strategy, SBC London

Chick, chick, chicken

Westminster may have broken up for summer and a much-needed rest, but that won’t stop a little political storm. Enter chlorinated chicken! With food standards in America allowing for chicken to be chlorine-washed, EU standards focus on a “from field to fork” approach. While this may seem like a relatively small issue (studies show no health difference between the two approaches), it goes to the heart of post-Brexit trade. Will the UK be a rule maker or a rule taker? [Editor's note: chlorine-washed chicken sounds absolutely disgusting].
 
As part of the world’s largest economy and trading bloc, the UK was able to set standards and rules the world over through the EU. Outside, this is now in question. There is a real potential that in an effort to replace trade lost by leaving the EU the UK will strike quick trade deals. Can this be avoided? Perhaps, but only if our political leaders ground their thinking in reality and work with business to get what the private sector actually needs.

Rexit, Priexit and the end of the establishment

Moves appear to be underway to reshape the Trump administration after a less than stellar first six months. White House Chief of Staff, Reince Priebbus and Secretary of State, Rex Tillerson and Attorney General, Jeff Sessions  are all apparently on their way out. With Anthony Scaramucci a leading candidate to replace the former.
 
It looks as though, in common with a certain Brexit campaign leader, Trump has had enough of "experts" and will be looking to bring in more political outsiders like himself. Or to put it another way, more people who go on TV to say that they “love him”.

Problems in Poland
Polish political leader Jaroslaw Kaczynski has spent the past few weeks facing protests, EU threats to remove voting powers and international condemnation after announcing plans to increase government control of the judiciary. Now it appears, the President he thought was reliant on him has taken a stand. President Duda is set to veto all the laws required to make Kaczynski’s plans a reality.
 
A victory for democracy and the rule of law, but it has thrown Polish politics into a state of flux. Who knows where the dice will land after this.

Who's having a good week?


Sean Spicer

...because he's finally free.
Silicon passage

by Louis Rynsard
Director, Reputation & Strategy, SBC London

Zucks v Musk

The Elon Musk watchers out there (you know who you are) [Editor's note: Hiding in plain sight, huh? We see you, Rynsard, praying at your secret desktop Musk-shrine] will have followed his consistent warnings of the threat artificial intelligence poses to the human race.  Well one person is not amused. Facebook founder and the man definitely not considering a run at President, Mark Zuckerberg has warned Musk’s comments are ‘pretty irresponsible’.

Well, our dear Elon is refusing the take that lying down, saying today “I've talked to Mark about this. His understanding of the subject is limited.” All we have the say is: Fight! Fight! Fight! Well that, and to listen to technologists AI is either going to destroy us all or lead us to untold wonders. It’s a debate we cannot let just be conducted by tech leaders, time for us all to get in the game.


Hold the front page: Gates and Bezos agree on something

Not known for being the best of friends, Bill Gates and Jeff Bezos have finally found something to agree on. They are both investing in an Uber competitor Convoy Inc.

This Seattle-based start-up (where both Gates and Bezos are based, hey start-ups maybe open an office there?) makes software that matches nearby truckers to jobs, is in direct competition with Uber’s new freight service. With Uber still rudderless and beset by issues, will this Bezos/Gates team up be another nail in the coffin? TBC, but one to watch – these two don’t tend to fail.

 

Tech firm beta tests dystopia

After Google and Facebook started beta-testing feudalism by providing houses for employees, US tech company Three Square Market has decided not to be outdone and is launching a scheme to microchip all employees. Aiming to be the first company in the world to fulfil the dreams of autocrats and fulfil predictions of dystopian sci-fi writers, the company will ask employees to volunteer to have an RFID-enabled microchip installed, inside them.

Inside them.

CEO Todd Westby said it would be used to “drive everything” from purchases, opening doors, using copy machines, logging into computers, unlocking phones and storing health information. Not creepy at all, Todd. This does raise a serious point, how far is too far? I suspect we have found the line.

Heroes of the week


England's Women Cricket team for showing the world (and the boys) how it's done!

C-suite comment

 
by Lief Anya Schneider
CEO, SBC London
Warning: Alice is waking up
 
The day before it happened, I was against what I saw as the horribly humiliating revelation of BBC salaries. In a very British way, I thought it was unseemly to talk about money like that. People were bound to rally forward with unrealistic complaints about the levels of pay given to those working for what is undoubtedly one of, if not the, best news organisations in the world. 
 
But when the salaries were revealed, I was appalled. Not by the numbers (which are market appropriate) but at the disparity between the amounts paid to men and women of equal stature and ability.
 
And what was shocking was that women broadcasters we see all the time were, themselves, unaware of the gap. How did that even happen? Was Britishness the reason that these women never discussed the matter with their colleagues? Never checked to see if there was parity? If so, who benefitted from that Britishness?
 
Come on, boys. You know this can’t last.
 
Alice has been living in Wonderland. But things are getting curiouser and curiouser and Alice is growing up and growing wise. Don’t be the slimy little reptile she will ultimately crush.
 
A word to the wise: If your organisation is currently saving a penny or two by hiring women on the cheap, it could cost you more in the long run in reputational fallout or staff upheaval - the loss of staff to those grown-up men and women who do ‘get it’. As Clare Balding said yesterday, women shouldn’t be treated as “discount items”.
 
So, sod Britishness, ladies. Next time someone gives you a price, ask what the last guy was paid, to do the same damn job.

Poem of the week


The Light Gatherer by Carol Ann Duffy


 

 
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The SPIT is produced weekly by SBC London.
SBC London is a corporate reputation and communications advisory firm based in the City of London. 

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