Major International Business Headlines Brief::: 15 July 2019

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Major International Business Headlines Brief::: 15 July 2019

 


 

 


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*  Tanzania's central bank sacks CEO of state-run bank

*  American Airlines extends Boeing 737 MAX cancellations for fourth time

*  Congo Republic IMF deal expected to unlock $2 bln in AfDB funds

*  Morocco’s budget deficit grows to 21.8 bln dirhams in first half

*  Tanzanian central bank fines lender for breaching rules

*  Scandal-hit Steinhoff reports $400 mln loss in first half

*  IMF approves Congo Republic bailout after China debt deal

*  South Africa's Eskom new funding bill expected July 23

*  South Africa's rand set for weekly gains, stocks flat

*  Facebook 'to be fined $5bn over Cambridge Analytica scandal'

*  Volkswagen and Ford team up on self-driving and electric cars

*  The pound's fall: a tale of two cities

*  Thomas Cook in £750m rescue deal talks

*  Heathrow strike threat to summer holiday travel

*  AOC is right: Inflation is solved. That's why central banks are doing the
unthinkable — cutting rates when we've got full employment and the Dow at
27,000.

 

 


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Tanzania's central bank sacks CEO of state-run bank

DAR ES SALAAM (Reuters) - Tanzania’s central bank has removed the chief
executive of the state-run TIB Corporate Bank with immediate effect, citing
poor performance of the financial institution.

 

 

    Tanzanian lenders are facing increased supervision after a surge in
non-performing loans eroded capital and dampened profits.

 

    “The Bank of Tanzania has decided to suspend the appointment of Frank
Nyabundege as managing director of TIB Corporate Bank ... following
unsatisfactory performance of the bank,” the central bank said in a
statement late on Saturday.

 

    “This measure has been taken to improve the oversight and performance of
banks owned by the government.”

 

    Nyabundege was not immediately available for comment.

 

    The central bank said it has appointed one of its officials to oversee
the affairs and daily business operations of TIB Corporate Bank in acting
capacity as managing director.

 

    “Bank of Tanzania would like to inform the public that TIB Corporate
will continue to provide all banking services, including payment of matured
obligations,” it said.

 

    Tanzania’s central bank has revoked the licenses of at least nine banks
since 2017 and has shut down dozens of foreign exchange bureaus, saying the
move was aimed at safeguarding the stability of the financial services
sector.

 

    This comes after President John Magufuli ordered the regulator to take
tough action against failing financial institutions.

 

    In December, the International Monetary Fund said nearly half of
Tanzania’s 45 banks were vulnerable to adverse shocks and risked insolvency
in the event of a global financial crisis.

 

 

 

 

 

 

 

 


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American Airlines extends Boeing 737 MAX cancellations for fourth time

(Reuters) - American Airlines Group Inc said on Sunday it is extending for a
fourth time cancellations of about 115 daily flights into early November due
to the ongoing grounding of the Boeing Co 737 MAX jets.

 

 

The airline’s decision was expected after the Federal Aviation
Administration, which must reapprove the jets for flight following two fatal
crashes, last month uncovered a new flaw that Boeing estimates will take
until at least September to fix.

 

“American Airlines remains confident that impending software updates to the
Boeing 737 MAX, along with the new training elements Boeing is developing in
coordination with our union partners, will lead to recertification of the
aircraft this year,” the airline said in a statement on Sunday.

 

American, the world’s largest airline and the second largest MAX operator in
the United States, most recently had planned to keep the MAX, which it used
on most flights between New York’s LaGuardia airport and Miami, off its
schedule through Sept. 3. It has been substituting other aircraft for its
busiest flights while canceling others and temporarily suspending direct
flights between Oakland, California, and Dallas-Fort Worth.

 

Some analysts have said they do not expect the MAX jets to fly again before
the end of the year.

 

American, with 24 737 MAX aircraft and dozens more on order, is scheduling
without the jets through Nov. 2.

 

Among other U.S. MAX carriers, Southwest Airlines Co has removed the
aircraft from its scheduling through Oct. 1, and United Airlines Holdings
until Nov. 3. Southwest is the world’s largest MAX operator.

 

The 737 MAX, which had been Boeing’s fastest-selling aircraft thanks to its
fuel-efficient engines and longer ranger, was grounded worldwide in March
after an Ethiopian Airlines plane plunged to the ground soon after take-off,
five months after a similar Lion Air fatal crash off the coast of Indonesia.

 

Boeing hopes a software upgrade and new pilot training will add layers of
protection to prevent erroneous data from triggering a system called MCAS,
which was activated in both the planes before they crashed.

 

American, which is also grappling with cancellations related to a labor
dispute with its mechanics, is due to report second-quarter results later
this month, with an expected rise in unit revenues as capacity constraints
mean its planes are flying fuller.

 

However, the airline cut its annual profit forecast in April, blaming an
estimated $350 million hit from the MAX groundings.

 

American’s chief executive, Doug Parker, has been among the most vocal
supporters of the MAX aircraft, saying on June 12 that it was “highly
likely” flights would resume by mid-August.

 

 

 

Congo Republic IMF deal expected to unlock $2 bln in AfDB funds

JOHANNESBURG (Reuters) - Approval of an International Monetary Fund (IMF)
bailout for Congo Republic this week is expected to unlock around $2 billion
in funding from the African Development Bank (AfDB), an official with the
Abidjan-based multilateral lender said on Friday.

 

Following two years of negotiations, the IMF’s executive board on Thursday
approved a 3-year programme worth nearly $449 million for Congo, an OPEC
member hit hard by a 2014 crash in crude prices.

 

The AfDB pledged the funds, which include a budget support operation, in the
event of an IMF-supported programme, Ousmane Dore, the AfDB’s Director
General of the Central Africa Regional Development and Business Delivery
Office, told Reuters.

 

“These are indicative programs which are set to be delivered over 2018-21,
once the projects are firmly prepared and disbursement conditions are met,”
he said.

 

By 2017, following the oil crash, Congo’s debt levels had ballooned to 118%
of GDP.

 

To qualify for a bailout, the IMF required that Congo ensure the long-term
sustainability of its debt as a precondition for a three-year extended
credit facility programme.

 

Congo reached an agreement to restructure a portion of its Chinese debt in
April. The IMF’s approval of a bailout was seen by many as a test case, amid
expectations that a number of African nations with large Chinese debts will
seek relief from the Fund.

 

 

Morocco’s budget deficit grows to 21.8 bln dirhams in first half

RABAT (Reuters) - Morocco’s budget deficit rose to 21.8 billion dirhams
($2.28 billion) in the first six months of 2019, up from 20.4 billion
dirhams in the same period the previous year, the treasury said on Friday.

 

Gross tax revenue rose 4.5% to 110 billion dirhams in the first half of the
year, up from 106 billion dirhams in the same period of 2018.

 

State spending stood at 182.5 billion dirhams in January to June 2019, up
15.4% year-on-year.

 

The budget deficit would stand at 4.5% in 2019 without counting
privatisation revenue, up from 3.7% last year. The deficit is seen narrowing
to 3.6% in 2019 counting privatisation revenue, according to the planning
agency.

 

The agency expects treasury debt to rise slightly to 65.3% of gross domestic
product in 2019 from 64.9% in 2018.

 

The economy is expected to grow 2.7% in 2019 after 3% in 2018.

 

 

 

Tanzanian central bank fines lender for breaching rules

DAR ES SALAAM (Reuters) - Tanzania’s central bank on Saturday said it had
fined Diamond Trust Bank Tanzania Limited 1 billion Tanzanian shillings
($435,000) for breaching regulatory rules on data and service availability. 

 

    “The Bank of Tanzania (BoT) has imposed a penalty charge of one billion
shillings to Diamond Trust Bank ... for failure to implement a directive to
establish a data centre in Tanzania,” the central bank said in a statement
e-mailed to Reuters.

 

    “BoT ... directed all banks and financial institutions operating in
Tanzania to establish either a primary or secondary data centre in Tanzania
with a view to ensure data and service availability at all times.”

 

    Diamond Trust Bank Tanzania did not immediately respond to a Reuters
request for comment.

 

    The central bank has tightened regulatory oversight over commercial
banks and other financial institutions in the East African nation over the
past few years.

 

    Tanzania’s financial services sector, which is dominated by lenders like
CRDB Bank and NMB Bank, has been hit by a spike in bad loans, which have
stifled the growth of credit to the private sector.

 

    In December, the International Monetary Fund said nearly half of
Tanzania’s 45 banks were vulnerable to adverse shocks and risked insolvency
in the event of a global financial crisis.

 

    Tanzania’s central bank has revoked the licences of at least nine banks
since 2017, saying the move was aimed at safeguarding the stability of the
sector.

 

    The closure of the banks comes after President John Magufuli ordered the
central bank to take action against failing financial institutions.

 

($1 = 2,295 Tanzanian shillings)

 

 

 

Scandal-hit Steinhoff reports $400 mln loss in first half

JOHANNESBURG (Reuters) - South African retailer Steinhoff reported a 356
million euros ($401 million) half-year loss from continuing operations on
Friday, as the damage from a massive accounting scandal drags on.

 

Steinhoff first flagged holes in its accounts in December 2017 — the warning
shot for an accounting fraud since put at over $7 billion — shocking
investors that had backed its transformation from a small South African
outfit to a discount furniture retailer spanning four continents.

 

The owner of Mattress Firm Inc in the United States, Fantastic chains in
Australia and Conforama in France said the loss from continuing operations
came in at 356 million euros in the six-months ended March compared with a
loss of 392 million euros a year earlier.

 

Excluding tax, the loss came in at 242 million euros.

 

“Although corporate and treasury services costs were much reduced, the
operational results for the period continued to reflect the knock-on impact
of the announcement of accounting irregularities in December 2017,” the
retailer said in its 97-page half-year unaudited report.

 

Advisory fees for the period amounted to 82 million euros, which included 11
million euros for forensic investigation and technical accounting support,
and 30 million euros for creditor adviser fees.

 

“While every effort is made to limit costs, we expect this to remain our
reality for some time,” Steinhoff added.

 

Steinhoff, which is also listed in Frankfurt, said net sales from continuing
operations increased by 3% to 6.8 billion euros from 6.6 billion euros, with
strong contributions from Pepkor Europe and Pepkor Africa.

 

Shares in Johannesburg-listed Steinhoff jumped more than 14% at 1254 GMT and
13.19% in Frankfurt as the market focused on the operating profit before
capital items from continuing operations figure, which more than doubled to
259 million euros from 101 million euros.

 

“Profits are up, turnover is up, they’ve still got the doors open, they’re
still surviving and I suppose that’s good news,” FNB Wealth and Investments
Portfolio Manager Wayne McCurrie said.

 

McCurrie also added that risk buyers were also pushing the volatile share
price up.

 

“If you’re a trader, you go in there, the share goes up 20% you’re out of
there. So I don’t think anyone is buying this for the long term, they’re
just buying it for the potential trade.”

 

This is the third time this year the retailer has published its results
following the publication of its delayed 2017 and 2018 annual reports in May
and June respectively.

 

The publication of the unaudited half-year report addresses the company’s
“disclosure backlog” and brings its financial reporting back up to date, it
said.

 

HARD WORK WILL ‘SHORTLY COME TO FRUITION’

South Africa’s biggest corporate scandal has all but wiped out shareholders’
equity and led to several resignations, including former Chief Executive
Markus Jooste, who was instrumental in putting Steinhoff on investors’ radar
screens.

 

It has negotiated and agreed the main terms of a restructuring deal, under
which all its debt would be reinstated at par and be given a common maturity
date of three years from the completion of the restructuring agreement.

 

Steinhoff, under new management, said the hard work to clean up its balance
sheet after the fraud “will, in all likelihood, shortly come to fruition,”
and stabilize the retailer which also has operations in Africa.

 

It added that customer confidence in its offering has stabilised.

 

On Friday it said Pepkor Europe was well advanced in negotiations to
refinance its existing term loan facility, which matures in 2020, with a
successful conclusion anticipated in the second half of this financial year.

 

The debt of the retailer remains high, with net debt of 9.1 billion euros.

 

($1 = 0.8885 euros)

 

($1 = 13.9684 rand)

 

 

IMF approves Congo Republic bailout after China debt deal

JOHANNESBURG (Reuters) - The International Monetary Fund’s (IMF) executive
board approved a bailout worth nearly $449 million for OPEC member Congo
Republic on Thursday, potentially setting a precedent for other nations
struggling under the weight of large debts to China.

 

Congo’s economy suffered from a sharp drop in crude prices in 2014, and debt
levels had ballooned to 118% of GDP by 2017. But even as its oil producing
neighbours secured IMF programmes, Congo’s negotiations for a bailout
dragged on for two years.

 

The Fund demanded that Congo ensure the long-term sustainability of its debt
as a precondition for a three-year extended credit facility programme.

 

Congo reached an agreement to restructure a portion of its Chinese debt in
April.

 

“The recent agreement to restructure the Republic of Congo’s bilateral debt
should be accompanied by continued good-faith efforts to restructure
commercial debt,” said IMF Deputy Managing Director Mitsuhiro Furusawa.

 

Congo’s Chinese debt stood at nearly 1.48 trillion CFA francs ($2.56
billion) at the end of March.

 

Under terms of the restructuring deal, repayment of 944 billion CFA francs
will be extended an additional 15 years. Congo, however, must pay off a
third of that amount by the end of 2021 and China will not reduce the amount
of principal owed, a process known as taking a haircut.

 

“There is a substantial reduction in the amount of debt service that would
have been required during the programme period,” Alex Segura, IMF mission
chief for Congo, told Reuters.

 

The extension of the debt’s maturity will also ease Congo’s debt service
burden in following years, he said.

 

TEST CASE

Many observers see Congo as a test case for the IMF.

 

A number of African countries facing unsustainable debt resulting from
commercial borrowing, a boom in Eurobond issues and years of Chinese lending
on the continent are expected to turn to the IMF for help in the coming
years.

 

“The IMF is tacitly accepting that China will not take a haircut on debts to
African governments,” said one banker, who has followed the negotiations.

 

The IMF is also advising Congo’s government to restructure high-interest
debt it contracted with oil traders including Glencore and Trafigura despite
a previous pledge to the Fund that it would not engage in oil-backed
borrowing.

 

“I think they’ve learned their lesson as to the costs of these kinds of
practices,” Segura said.

 

To qualify for the IMF programme, Congo’s government has undertaken a series
of reforms to improve transparency in the management of public resources,
particularly in its traditionally opaque oil sector.

 

But natural resource transparency advocacy group Global Witness complained
that details of oil-backed loan agreements and major infrastructure
contracts remained largely hidden.

 

“The IMF’s decision to grant Congo another bailout is a concerning case of
institutional amnesia and undermines the Fund’s renewed anti-corruption
drive,” said Global Witness oil researcher Natasha White.

 

($1 = 578.5000 CFA francs)

 

 

 

South Africa's Eskom new funding bill expected July 23

CAPE TOWN (Reuters) - South African Finance Minister Tito Mboweni aims to
table a bill in parliament on July 23 to give struggling state power firm
Eskom more money for the current financial year and next, to alleviate its
acute liquidity problems.

 

Mboweni told parliament on Thursday that Eskom presented the biggest risk to
the country’s fiscal framework and stressed that there were serious risks to
the economy if it collapsed.

 

Eskom, which supplies more than 90 percent of the country’s electricity but
has implemented severe power cuts this year, fails to generate sufficient
profit to meet its debt-service costs and has required state cash injections
to stay afloat.

 

Mboweni, a key ally of President Cyril Ramaphosa, added that the government
would also provide financial support from its contingency reserve to ailing
South African Airways, weapons manufacturer Denel and broadcaster SABC.

 

“This additional financial support cannot be a blank cheque to these
state-owned enterprises,” Mboweni said. “We really and truly cannot go on
like this.”

 

The minister said South Africa’s tax collection was underperforming due to a
weak economic environment and the government would focus its short-term
efforts on addressing rising debt and on stricter controls on expenditure.

 

 

 

South Africa's rand set for weekly gains, stocks flat

JOHANNESBURG (Reuters) - South Africa’s rand retreated from a five-month
high on Friday as risk appetite subdued, but was on track for weekly gains
after expectations the U.S. Federal Reserve would cut interest rates had
stoked demand for the currency.

 

On the bourse, stocks were flat as worries over global economic growth and
U.S.-China trade quelled investor appetite for emerging market equities
after an earlier rally fuelled by hopes of looser U.S monetary policy.

 

At 1520 GMT, the rand was 0.25% weaker at 14.0050 per dollar, retreating
from a five-month high of 13.8200 reached earlier in the session. The
currency was on track for weekly gains of more than 1%.

 

Also helping the currency in the week were media reports on Thursday that
state asset manager Public Investment Corporation (PIC) might consider
converting the $6.4 billion debt of struggling state power utility Eskom to
equity.

 

Market focus is now on the South African Reserve Bank’s monetary policy
committee (MPC) interest rates announcement on Thursday.

 

“The MPC is also highly likely to reduce local interest rates during its
meeting next week, but the impact on the rand will probably be overshadowed
by the positive effect of the expected Fed rate cut, and the expected
benefits to the South African economy,” said Bianca Botes, a treasury
partner at Peregrine Treasury Solutions.

 

“The local economy, however, will require more than an interest rate cut to
see any significant and sustainable growth.”

 

In equities, the benchmark Johannesburg Stock Exchange Top-40 Index fell
slightly by 0.06% to 51,157.41 points while the broader All-Share Index
dipped by 0.05% to 57,243.86 points.

 

“We’re seeing risk-off trade in emerging markets coming through towards the
end of the week based on possible Fed outcomes, the ongoing trade war, and
the U.S. and China not coming to the party and saying or commenting on
further agreements,” said Wilmar Buys, FFO Securities portfolio manager.

 

The bottom performers were mining company Gold Fields, which slipped 2.97%
to 72.20 rand, and paper and pulp maker Sappi, which dropped 2.24% to 49.80
rand.

 

Crisis-hit retailer Steinhoff, however, rose 12.60% to 1.47 rand despite
reporting a 356 million euro ($401 million) half-year loss from continuing
operations as the damage from a massive accounting scandal drags on.

 

Bonds retreated, with the yield on the benchmark 2026 issue rising by 6
basis points to 8.09%.

 

 

 

Facebook 'to be fined $5bn over Cambridge Analytica scandal'

US regulators have approved a record $5bn (£4bn) fine on Facebook to settle
an investigation into data privacy violations, reports in US media say.

 

The Federal Trade Commission (FTC) has been investigating allegations that
political consultancy Cambridge Analytica improperly obtained the data of up
to 87 million Facebook users.

 

The settlement was approved by the FTC in a 3-2 vote, sources told US media.

 

Facebook and the FTC told the BBC they had no comment on the reports.

 

How was the settlement reached?

The consumer protection agency the FTC began investigating Facebook in March
2018 following reports that Cambridge Analytica had accessed the data of
tens of millions of its users.

 

The investigation focused on whether Facebook had violated a 2011 agreement
under which it was required to clearly notify users and gain "express
consent" to share their data.

 

Cambridge Analytica: The story so far

Are we addicted to the ‘like’ button?

Facebook, Google and Twitter in data regulators' sights

The $5bn fine was approved by the FTC in a 3-2 vote which broke along party
lines, with Republican commissioners in favour and Democrats opposed.

 

The New York Times reported that the Democrats wanted stricter limits on the
firm, while other Democrats have criticised the fine as inadequate.

 

"With the FTC either unable or unwilling to put in place reasonable
guardrails to ensure that user privacy and data are protected, it's time for
Congress to act," US Senator Mark Warner said.

 

The fine still needs to be finalised by the Justice Department's civil
division, and it is unclear how long this may take, the sources said.

 

If confirmed, it would be the largest fine ever levied by the FTC on a tech
company.

 

However, the amount falls in line with estimates by Facebook, which earlier
this year said it was expecting a fine of up to $5bn.

 

Investors responded positively to the news, pushing Facebook shares up 1.8%.

 

Facebook has been expecting this

Analysis by Dave Lee, BBC North America technology reporter in San Francisco

 

Facebook had been expecting this. It told investors back in April that it
had put aside most of the money, which means the firm won't feel much added
financial strain from this penalty.

 

What we don't yet know is what additional measures may be placed on the
company, such as increased privacy oversight, or if there will be any
personal repercussions for the company's chief executive, Mark Zuckerberg.

 

The settlement, which amounts to around one quarter of the company's yearly
profit, will reignite criticism from those who say this amounts to little
more than a slap on the wrist.

 

What was the Cambridge Analytica scandal?

Cambridge Analytica was a British political consulting firm that had access
to the data of millions of users, some of which was allegedly used to
psychologically profile US voters and target them with material to help
Donald Trump's 2016 presidential campaign.

 

The data was acquired via a quiz, which invited users to find out their
personality type.

 

As was common with apps and games at that time, it was designed to harvest
not only the user data of the person taking part in the quiz, but also the
data of their friends.

 

Facebook has said it believes the data of up to 87 million users was
improperly shared with the now defunct consultancy.

 

The scandal sparked several investigations around the world.

 

In October, Facebook was fined £500,000 by the UK's data protection
watchdog, which said the company had let a "serious breach" of the law take
place.

 

Canada's data watchdog earlier this year said Facebook had committed
"serious contraventions" of its privacy laws.--BBC

 

 

Volkswagen and Ford team up on self-driving and electric cars

Volkswagen and Ford have said they will work together on developing
self-driving and electric cars in an attempt to reduce costs on new
technologies.

 

VW plans to invest $2.6bn (£2.1bn) in Ford's self-driving unit, which is
valued at $7bn.

 

The move comes after the duo said in March they would build vans together.

 

The two firms said whilst they remained "fiercely competitive" in the car
market, the tie-up would give them "significant global scale" in new tech.

 

The agreement is the latest example of once fierce industry rivals joining
up to develop new technologies.

 

In February, BMW and Daimler unveiled a joint venture covering
new-generation services such as driverless vehicles, ride-hailing, and
pay-per-use cars.

 

While late last year, Honda invested $2.75bn (£2.1bn) in rival General
Motors' driverless unit with a view to launching a fleet of unmanned taxis.

 

There have been similar tie-ups between Tesla and Daimler, and Volvo and
PSA, as well as a host of pacts between carmakers and tech firms.

 

As part of the deal, VW will become an equal stakeholder in Ford's
self-driving cars venture, while Ford will get access to VW's electric
vehicle technology.

 

VW chief executive Herbert Diess said the firms were continuing to look at
other areas which they could collaborate on.

 

The tie-up "improves the positions of both companies through greater capital
efficiency, further growth and improved competitiveness," he said.

 

Prof Peter Wells, director of the Centre for Automotive Industry Research at
Cardiff Business School, told the BBC earlier this year, that the increasing
number of collaborations between car firms was aimed at lowering the risk
and cost of developing new technologies.

 

"The problem for the industry is that it is struggling to afford its own
future.

 

"The research and development to develop these new technologies also costs
billions, so it makes sense to share the burden rather than duplicating," he
said.

 

Car firms are also facing new competitors in the industry such as Google and
Uber which are also working on self-driving vehicles and have access to
enormous financial resources.--BBC

 

 

 

The pound's fall: a tale of two cities

Rob and Chloe are sharing a small Starbucks while admiring the bright lights
of New York's Times Square. Coffee cost? Almost $5. They've also had a cake
and a sandwich. $16-plus.

 

Based on the exchange rate they got back in Kent, nurse Chloe estimates the
total cost was around £17. "Given where we are I suppose it wasn't too
excessive," she says. "But I think it's the most expensive coffee I've ever
bought."

 

Lunch, in the heart of Little Italy, was also an eye-opener. Two margherita
pizzas, two glasses of wine, and tip (obligatory everywhere): $96.

 

'Watching the pennies'

Chloe said: "We are watching the pennies. It's not spoiling our trip... but
there are things we thought we'd do that we won't now."

 

They'd come to Times Square for discounted tickets for Broadway shows. Even
these were too pricey. "We'll give it a miss this time," says Rob, who, like
Chloe, did not want his surname used.

 

Like tens of thousands of UK tourists, the couple picked an expensive time
to visit America.

 

This week sterling hit a more than two-year low against the dollar, trading
below $1.25, a rate not seen since April 2017. But these are commercial
rates. Tourists get a worse deal when exchanging currency.

 

And yet, sterling's recent weakness has failed to dent visitor numbers.

 

According to the US Department of Commerce, 1.8 million Britons visited the
US in the five months to 31 May, 8.2% up on the period in 2018. The
overwhelming majority were tourists and people visiting friends and family.

 

For 2018 as a whole, 4.7 million visited, up 4% on 2017. This, though, is
below the peak year of 2015 when 4.9 million people visited.

 

But analysts doubt the numbers will hold up for the rest of 2019. Indeed,
Adam Sacks, president of Philadelphia-based Tourism Economics, thinks the
official data over-estimates the picture.

 

'Defying gravity'

For a start, airline passenger growth from the UK to the US is up only 4%,
he said. "Right now, the market [from the UK] is defying gravity."

 

It helps that the US is a bucket-list attraction. "That will always underpin
tourism," he said.

 

But with sterling facing more headwinds because of Brexit, economic
slowdown, and trade wars, "I'm expecting inbound total traffic for the year
to end about 2.5% up on 2018," he said.

 

It's not the first time the Strattons, from Hatfield, Hertfordshire, have
visited New York, but it's probably the most expensive.

 

They booked their hotel and flight last year, so think they got a better
deal than now. "And we're aware of all the free and discounted attractions
that are available," says Annette. She advises visitors to do their research
and seek these out to save money.

 

But, Richard says: "Eating out for the four of us is very expensive - $100 a
time at least. Sales taxes and tips mean costs soon increase. Even the hotel
charges for wifi use."

 

They've split some breakfasts and drinks between them to help cut costs. And
they had hoped to take in one of Broadway's blockbuster shows - hopefully
Hamilton. "But not at $1,200 for the family," said Richard.

 

Annette says that when you're on holiday there's a certain "pay what it
takes" attitude. And daughters Georgia and Kerensa say they are loving their
trip - which as parents know, is what matters most.

 

The girls are especially looking forward to next week, when they visit
Florida's amusement parks. Mum, though, thinks it could be even more
expensive than New York.

 

Chris Heywood, an executive at New York's tourist board, NYC & Company, says
it would take a sustained and prolonged sterling depression to hit hard the
number of UK visitors to his city.

 

Britons make up the single biggest group of overseas visitors, with 1.26
million seeing the sites in 2018. The number has grown steadily since 2012,
when one million visited.

 

"People are planning their visits better. More come in the first three
months of the year, when hotel rates drop," he said. His single biggest
piece of advice: "Check our website. There is so much free stuff to do."

 

'Not a shocker'

In London, however, Americans are getting slightly more bang for their buck.

 

Joy Smith, from Colorado, was in London to meet her daughter, Reilly, who
was on the final stop of a six-week European tour with husband Seth before
the couple return to Texas.

 

Joy said she was expecting prices to be higher but, in fact, the cost of
food was "very comparable" to prices back home.

 

But the Baycroft family had a different London culinary experience. Johanna,
had just bought her son, Cougar, a meal at McDonald's, which she said would
have been almost half the price at home in Washington state.

 

Nevertheless, prices overall were lower than she had budgeted for, although
she had prepared for the worst and saved money by staying with her sister.

 

Bob and Priya were leaving Hamley's with their two daughters, who had bought
two teddy bears. The couple were used to New York prices so London "wasn't a
shocker", Bob said.

 

The EU referendum in June 2016 knocked the value of the pound, making things
cheaper for US tourists. Before the vote, $1 was worth around 68 pence. It's
now worth about 80p.

 

And that spurred a big increase in the number of people crossing the
Atlantic. The Office for National Statistics recorded a 13% jump in the
number of Americans arriving in London in 2017, with 2.6 million visitors
spending about £2.2bn - when $1 was worth an average of 81 pence.

 

That helped to offset a slowdown in domestic spending, according to Henry
Gregg, from the New West End Company, which represents Central London
businesses.

 

"For domestic shoppers, it's bad because they see prices increase," he said.
But it's good for international shoppers who can take advantage of the "big
pricing differential" in the short term, he said.

 

Luxury brands have been the biggest beneficiaries of the increase in
spending by US tourists, Mr Gregg said. Budget retailers like Primark have
also benefitted. It's been "middle of the road" clothes stores like Topshop
that have missed out, he said.

 

While the number of Americans visiting London increased slightly in 2018,
they cut back on spending, forking out £2bn, 8% less than the previous year.

 

Mr Gregg puts the tightening of purse strings down to a normalisation as
retailers increase prices to reflect an increase in costs as a result of an
unfavourable exchange rate for importers.

 

But that's not deterring Americans from bringing their tourist dollars to
London, according to the New West End Company, which also tracks room
bookings - an early indicator of visitor numbers.

 

It said projected visitor numbers would rise 4.8% for June-to-August.

 

London, like New York, is on the must-see list of most tourists. Exchange
rates may fluctuate, but the lure of the bright lights remains.--BBC

 

 

Thomas Cook in £750m rescue deal talks

Troubled travel company Thomas Cook is in £750m rescue talks with banks and
its largest shareholder, Fosun.

 

The measures, which have not been finalised, would see the Chinese investor
buy the firm's tour business.

 

Thomas Cook's chief executive, Peter Fankhauser, said the proposal was "not
the outcome any of us wanted" but insisted it was "pragmatic".

 

He told the BBC that customers did not need to worry because their holiday
bookings were "secure".

 

Is my holiday safe?

"They can book with us without worries," Mr Fankhauser said. "We have enough
resources to operate our business so they can enjoy their holidays with us."

 

And this cash injection would give the group enough money to trade through
to the end of next year and invest for the future, Thomas Cook said.

 

When store closures and cost-cutting measures were announced at the firm
earlier this year, Thomas Cook said holidaymakers could have "complete
confidence" because it is an ATOL-protected business.

 

Protection under the ATOL - or Air Travel Organiser's Licence - scheme means
UK travellers on an air package holidays do not lose their money or become
stranded abroad if a travel agent collapses.

 

It also covers many charter flights and means that, if the operator
collapses while people are away, they can finish their holiday and be flown
home at no extra cost.

 

Why does Thomas Cook need the money?

The travel agent has found it difficult to maintain a presence on the High
Street in the face of increased online competition. Last year, it also
issued a number of profit warnings blaming a heatwave for a dip in summer
holiday bookings.

 

It launched a strategic review in February, but since then, dwindling
bookings and uncertainty surrounding Brexit have contributed to a
deterioration in the market. In March, the firm announced plans to close 21
stores, costing more than 300 jobs, and in May, it revealed a £1.5bn
half-year loss.

 

Thomas Cook said it was trying to combat those challenges with a "rigorous
focus on cost" and by "delivering a stronger holiday offering to customers
through high quality, higher-margin hotels".

 

The travel firm - which has 9,000 employees in the UK - had already
announced plans to slash costs, axing 150 roles from its head office in
Peterborough, in the face of tough trading conditions and higher fuel
expenses.

 

On Friday, Thomas Cook said the European travel market had become
"progressively more challenging" as it painted a bleak picture for the
second half of the year, blaming an "uncertain customer environment" for
"intense competition".

 

That has hit the firm's finances and made it difficult to sell its airline
or tour business to generate some cash.

 

As a result, the group has been forced to enter into talks with its banks
and Fosun, which will own a significant majority of the travel company's
tour operator and a large minority stake in its airline if the deal goes
ahead.

 

Is it a good deal?

Mr Fankhauser told the BBC's Today programme that "considering all options
we had on the table", the deal was the "best available" choice.

 

Responding to a suggestion that the proposed deal was a last resort, he
said: "This is a very good option to secure the business and to put the
business on a solid financial foot for the future."

 

Earlier, in a statement issued by Thomas Cook, Mr Fankhauser said: "While
this is not the outcome any of us wanted for our shareholders, this proposal
is a pragmatic and responsible solution which provides the means to secure
the future of the Thomas Cook business for our customers, our suppliers and
our employees."

 

What about shareholders?

Thomas Cook said people who currently hold shares in the firm would see the
value of their investment "significantly diluted" as a result of the
proposed deal.

 

"Basically, it's wipe out time" for shareholders, according to Markets.com
analyst Neil Wilson.

 

But Thomas Cook said existing shareholders may be given the option to
reinvest in the firm, alongside Fosun, to become creditors.

 

The proposed rescue deal may even indicate a potential retreat from the
stock market for Thomas Cook, in a move that would see the world's oldest
package holiday firm become a private company.

 

Shares were trading down by about a third on Friday, at just under 9p
apiece. The company's stock price has shed more than 90% of its value in the
past year.

 

What is Fosun?

Fosun is a £74.4bn Chinese investment giant that is listed on the Hong Kong
stock exchange. The firm already has an 18% stake in Thomas Cook, but if
this deal goes ahead, it would gain a "significant majority" of the firm.

 

Fosun's portfolio of companies runs the gamut from insurers to football
clubs. It says it operates in three major segments: "health, happiness and
wealth".

 

The investor said it had "extensive experience" in the global travel
industry.

 

"We are committed investors, with a proven track record of turning around
iconic brands, including Club Med and Wolverhampton Wanderers FC," it
said.--BBC

 

 

 

Heathrow strike threat to summer holiday travel

Holidaymakers jetting off on summer breaks could be hit by strike action
planned at London's Heathrow airport.

 

More than 4,000 workers at the airport - including customer service,
engineering and security staff - have voted to strike over pay.

 

Staff will walk out on 26 July, 27 July, 5 August, 6 August, 23 August and
24 August, which the Unite union said could create "summer travel chaos".

 

Heathrow says it has contingency plans to remain open and operate safely.

 

Unite said members had voted in eight ballots to support action after an
18-month pay rise offer averaging 2.7% was rejected.

 

Heathrow airport: Third runway plan revealed

Thomas Cook in £750m rescue deal talks

Wayne King, the union's Unite regional co-ordinating officer, said: "There
is deepening anger over pay among workers who are essential to the smooth
running of Heathrow Airport".

 

Unite said the dispute was also in part because of different pay rates for
the same job, as well as discontent with the pay package of airport boss
John Holland-Kaye.

 

According to the company's annual report, last year the Heathrow boss banked
a 103.2% pay increase, from £2.1m in 2017 to £4.2m in 2018, thanks largely
to a long-term bonus scheme.

 

The union said the airport's current pay offer amounted to £3.75 a day extra
for its lowest-paid workers.

 

Heathrow urged the union to return to the bargaining table to resolve the
pay dispute.

 

"We have proposed a progressive pay package giving at least a 4.6% pay rise
to over 70% of our frontline colleagues. The total package offered is above
RPI [Retail Prices Index] and is specifically designed to boost the wages of
lower paid colleagues".

 

As the dispute rumbles on, the airport said its contingency plans would
ensure flights could still take off and land during one of the busiest
period of the year.

 

"We will be working alongside our airline partners to minimise disruption
caused to passengers as they look towards their well-deserved summer
holidays," it said.--BBC

 

 

 

AOC is right: Inflation is solved. That's why central banks are doing the
unthinkable — cutting rates when we've got full employment and the Dow at
27,000.

The economy — with full employment and sky-high stock markets — is screaming
for an interest rate rise. But the US Fed and the ECB have signaled they're
going to cut instead.

 

Why are we living in a Bizarro World where an overheating economy generates
low inflation, and central banks shovel ever more cash into an on-fire
market?

US Rep. Alexandria Ocasio-Cortez touched on the issue in a recent hearing:
"Unemployment has fallen three full points since 2014 but inflation is no
higher today than it was five years ago."

 

That's because we have solved inflation. It is no longer a problem. Macro
deflationary forces are more powerful than central bank monetary forces.

The next issue is whether governments will be willing to take advantage of
the extra fiscal spending space this historic opportunity presents.

Visit Business Insider's home page for more stories.

 

The economy in Europe and the US is an unusual beast right now. We have full
employment, extended GDP growth, and the stock market is through the roof.
The S&P 500 has breached 3000, the Dow is at 27,000, and the FTSE 100 is at
7530 — all at or near all-time highs.

 

Normally, these conditions would be screaming for an interest rate rise. The
economy ought to be overheating, inflation ought to be spiraling, wages
ought to be going up, along with demand, and employers should be struggling
to find extra workers and resources to fill their order books.

 

But the opposite is happening.

 

The European Central Bank just concluded that it needs to " be ready and
prepared to ease the monetary policy stance further" after failing, again,
to goose inflation up to its 2% target.

 

The European Central Bank has failed to generate inflation despite years of
low interest rates.

Focus Economics

In the US, Federal Reserve chair Jerome Powell also signaled he will cut
rates. " There is a risk that weak inflation will be even more persistent
than we currently anticipate," he told Congress.

 

So what's going on? Why are we living in a Bizarro World where a powerhouse
economy generates low inflation, and central banks shovel ever more cash
into an on-fire market?

 

The old relationship between employment and inflation is broken

The answer was touched upon by US Rep. Alexandria Ocasio-Cortez, who is
turning out to be a surprisingly prolific generator of debates about the
fundamentals of economics.

 

"Unemployment has fallen three full points since 2014 but inflation is no
higher today than it was five years ago," she said in a congressional
hearing with US Fed chair Jerome Powell [see mark 2.06.30].

 

Rep. Alexandria Ocasio-Cortez.

"The economy can sustain much lower levels of unemployment than we thought
without troubling inflation," Powell responded.

 

That, really, is the headline here: inflation no longer exists.

 

We should be living in the Weimar Republic. But we're not.

Inflation is gone.

 

Even 10 years of interest rates set near zero no longer generates consumer
price increases. The textbooks of the early 2000s said we should be living
in the Weimar Republic, or Zimbabwe, right now. Instead, house prices in
London have been in decline for more than a year.

 

Inflation has been solved. We solved it, through our new inventions.

 

Spotify makes music cheaper. Uber makes taxis cheaper. Google makes
information cheaper. Facebook makes advertising cheaper. Amazon makes
shopping cheaper. The gig economy makes wages cheaper.

 

View of main trading floor of NYSE during Uber Technologies Inc. IPO in New
York.

Reuters

The macro effect of all this "solving" is a permanent downward pressure on
prices — which is good for workers who don't want their wages eaten away by
inflation (but bad for workers who want nominal pay rises).

 

That notion that inflation is extinct is not obvious

In a note to clients last week, Nomura analysts Rob Subbaraman and Andrew
Ticehurst said: "Major central banks seem trapped in an era of ultra-loose
monetary policy. Very low interest rates for an unusually long period of
time involve diminishing returns and rising costs that make normalisation of
monetary policy increasingly difficult."

 

They worried that the "problem" of low inflation would create "a loop that
makes it even harder to normalise."

 

A low-inflation, low-interest rate environment can definitely create
problems:

 

Asset price bubbles (stocks, property) disproportionately benefit the rich
and increase inequality;

the overall level of debt increases as its quality declines;

and large investors will foolishly mis-allocate ever-more cash in
dangerously illiquid investments, in their search for yield.

But low inflation brings opportunities, too.

 

In a deflationary world, fiscal policy — government spending — is more
important than monetarism

Governments now have more fiscal "space" to invest and build.

 

"In countries with fiscal space, it should be used more forcefully to boost
sustainable growth, especially spending on worthwhile things like
infrastructure, education and R&D," Nomura's Subbaraman and Ticehurst said.
They are part of an ever-noisier chorus of investment bank analysts begging
governments to wake up and smell the money.

 

Now is the time to spend. Not just to create inflation (and avoid deflation,
which can be even worse). But to build the energy, transport, defence,
health, and education infrastructure we will need for the future. Low cost
debt makes this spending cheap.

 

It's a rare, golden opportunity for governments ( and an intellectual defeat
for conservatives).

 

Hopefully, they won't squander it.--businessinsider.com

 

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


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been compiled from sources believed to be reliable, but no representation or
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opinions expressed and recommendations made are subject to change without
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