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The price of your next MacBook just went up

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Brexit Bad Apple bites back at consumers

British consumers got bitten by Brexit as Apple quietly raised the cost of some of its products in the U.K. by 20 percent.

The computer-maker overnight began charging £2,999 ($3,650) for its “Mac Pro” desktop machine, the latest blow to shoppers after the decision to leave the European Union sent the pound sliding to a three-decade low.

The price hikes came days after supermarket giant Tesco battled with supplier Unilever over the cost of goods in “Marmitegate” and Microsoft also yanked prices. With inflation already accelerating at the fastest in two years, price pressures are likely to mount.

Separately, Electrolux Chief Executive Officer  Jonas Samuelson said he needs to “compensate by raising prices” by up to 10 percent. British Airways owner IAG also cut its earnings outlook for the second time since the Brexit vote in part because of sterling.

Highlighting the concerns for the economy, separate reports from Gfk, YouGov and Asda all showed consumer confidence falling and household spending power weakening as inflation accelerates. That’s a test for the Bank of England as its officials prepare to meet next week with traders not expecting an interest-rate cut.

(Bloomberg)

Uber Loses London Lawsuit Over Drivers’ Pay, Vacation Time

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Landmark lawsuit could have ramifications for over 400,000 drivers

Uber Technologies Inc. lost a suit over how the controversial taxi company treats its U.K. drivers in the first ruling to come out of a London tribunal examining whether they’re entitled to the minimum wage or holiday pay.

The case, brought by two drivers, is the first against Uber in Britain and could have ramifications for the rights and pay of more than 40,000 drivers using the service in the U.K. The company said that its UberX drivers in the country received an average of 16 pounds ($19.50) an hour after Uber had taken its service fee.

“This judgment acknowledges the central contribution that Uber’s drivers have made to Uber’s success by confirming that its drivers are not self-employed but that they work for Uber as part of the company’s business,” Nigel Mackay, a lawyer at Leigh Day who represented the drivers, said in an e-mailed statement Friday.

The San Francisco-based company has faced complaints about working conditions around the globe. A $100 million-settlement in a U.S. lawsuit with 385,000 current and former drivers in California and Massachusetts was rejected by a federal judge.

Freedom, Flexibility

Uber said that while the London ruling only affects two people, it planned to file an appeal.

“The overwhelming majority of drivers who use the Uber app want to keep the freedom and flexibility of being able to drive when and where they want,” Jo Bertram, regional general manager of Uber in the U.K., said in an e-mailed statement.

Winnings at London’s employment tribunals are capped at about 80,000 pounds unless claimants can prove they’ve been victims of discrimination or were mistreated for blowing the whistle on corporate misconduct.

The company was valued at $66 billion in its latest round in June, making it the world’s most valuable privately-held technology company.

The decision could have wide-ranging impact for the group of technology companies that claim they are operating “marketplaces” that connect freelance workers with customers. Among these companies are food delivery services like U.K.-based Deliveroo and Berlin-based Foodora, a brand that is run by Rocket Internet’s Delivery Hero.

‘Gig Economy’

“This decision will potentially open the floodgates for further claims, not just from Uber drivers but from thousands of others who work in the gig economy,” said Lee Rogers, an employment lawyer at Weightmans, who wasn’t involved in the suit.

In New York City earlier this week, the taxi drivers’ union and individual drivers sued Uber, claiming it engaged in “wage theft” by not paying minimum wage or overtime. Some of the same drivers and the taxi union had previously filed a different suit in U.S. federal court alleging Uber violates the U.S. Fair Labor Standards Act and New York labor law.

Uber has faced similar actions in the U.S. states of California, Florida and Massachusetts too. In those cases, Uber has so far been largely successful in arguing that drivers must take their disputes with the company to private arbitration, which prevents the drivers from pursuing a class action lawsuit against the company.

(Bloomberg)

FTSE 100 Advances 4th Time in 5 Days in Pursuit of Record

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Gains push the FTSE close to capping April’s all-time closing high

Gains in commodity producers boosted the FTSE 100 Index, pushing it within 1 percent of a closing record that has proved elusive in October.

Anglo American Plc and BHP Billiton Ltd. rose at least 2.3 percent, sending a gauge of miners toward its highest level since June 2015. EasyJet Plc gained 3.2 percent after UBS Group AG recommended buying the shares. Petra Diamonds Ltd. climbed 6.4 percent after reporting a 30 percent increase in quarterly production.

The FTSE 100 rose 0.4 percent at 9:15 a.m. in London. The benchmark has struggled to close at a record after briefly reaching it on an intraday basis earlier this month. It’s 0.8 percent away from the all-time closing high of April 2015. The gauge of megacaps is on track to be the biggest winner of 2016 among western-European markets, up 13 percent as commodities rallied and a Brexit-induced sterling losses boosted its exporters.

The FTSE 250 Index of mid-cap shares climbed 0.5 percent today, extending its fourth straight monthly advance. That would make it the longest rally since February 2015.

Among other shares active on corporate news, Cobham Plc tumbled 16 percent after the U.K. aerospace and electronics supplier downgraded its full-year earnings forecast, its third profit warning in less than a year.

by Namitha Jagadeesh

(Bloomberg)

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Nissan Confronts Post-Brexit Reality With SUV Plant Decision

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The Japanese automaker’s decision on building its next car in Sunderland plant hangs in the Brexit balance

Nissan Motor Co., the U.K.’s top auto producer, will decide next month whether to continue producing one of its best-selling vehicles in the country preparing to leave the European Union.

The Japanese automaker is determining whether to build the next-generation Qashqai sport utility vehicle from the Sunderland plant, which employs about 6,700 people, Chief Executive Officer Carlos Ghosn told Ma Jie in an interview with Bloomberg Television. The factory’s competitiveness needs to be protected regardless of Brexit-related discussions, he added.carlos-ghosn

Take care of your competitiveness

“We’re at the eve of a sourcing decision,” Ghosn, 62, said Friday from Nissan’s headquarters in Yokohama, Japan. “If you don’t take care of your competitiveness, one day or the other you lose your sourcing.”

Nissan met with Prime Minister Theresa May last week after having called on the U.K. to compensate the company for any negative consequences resulting from Brexit as a condition for new investment in the country. Nissan built one in three of the vehicles the U.K. produced last year and exports more than half of them to Europe, exposing Japan’s second-largest automaker to risks.

While exporters including Nissan have benefited from the pound’s fall since the June referendum, May has indicated favor for a so-called hard Brexit, gaining greater control over immigration but losing membership in the single market. That’s raised concerns U.K. exports might face tariffs in the EU.

“We and the British government understand each other,” Ghosn said. “The future of Sunderland lies in the competitiveness of Sunderland. We have sent a clear message on that and there’s no confusion about that.”

About 61 percent of votes cast from Sunderland during the June referendum favored leaving the EU.

by Ma Jie

(Bloomberg)

Sky sees ‘substantial’ room to poach UK mobile customers

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The Sky is the limit…or is there really room for another provider in a crowded market?

Pay-TV provider Sky Plc, preparing to take on telecom fixtures like BT Group Plc and Vodafone Group Plc, has an opportunity to win a “substantial” number of mobile-phone customers from its U.K. rivals, according to the company’s top executive for the region.

“There are literally millions of customers for us to go after,” Stephen van Rooyen, chief executive officer of Sky’s U.K. and Ireland unit, said Thursday at the company’s capital markets day west of London. “We’ve long had our eyes on the size of the prize. The mobile market is huge.”

EXPANDING IN A CROWDED MARKET

Sky, which operates in five European countries, is expanding out of its home turf in pay-TV to get customers to buy as many as four different products, intensifying a battle with BT and Liberty Global Plc’s Virgin Media, which have already moved into mobile. It’s stepping into a U.K. mobile-phone market of about 15 billion pounds ($18 billion), allying with Telefonica SA’s O2, which will carry the service on its network.

The market is already crowded with four network operators — BT’s EE unit, Vodafone, CK Hutchison Holdings Ltd.’s Three UK and O2. Virgin is among a handful of so-called MVNOs that use others’ network, as Sky plans to do.

uk-mobile-phone-market-stats

 

Existing Sky customers can register for mobile service starting Oct. 31, executives said Thursday at the company’s capital markets day, a seven-hour meeting for investors and analysts at its campus west of London.

The company will reveal pricing later, and will begin service to existing customers this year, followed by marketwide sales in 2017, Van Rooyen said. He didn’t provide firm dates. Research suggests two-thirds of Sky’s existing customers would consider switching to its mobile service, he said.

SKY IS THE LIMIT?

The executives’ enthusiasm for the mobile service failed to boost Sky’s stock. It fell the most in almost three months as investors digested the company’s growth plans — not only in mobile-phones but elsewhere in its business. Projections for Germany seemed aggressive, according to Ian Whittaker, an analyst at Liberum Capital Ltd.

“It looks like their mid-to-high single-digit revenue growth depends a lot on success in getting double-digit growth in Germany, a market that has always promised much but never fulfilled its promise,” Whittaker said in an e-mail.

The shares were down 2.4 percent to 835.5 pence at 1:06 p.m. in London, after dropping as much as 3 percent earlier, which would be the biggest loss since July 21.

Sky may enter the U.K. cellular market with attractive prices for mobile data, such as 5 pounds for 2 gigabytes per month or 10 pounds for 10 gigabytes per month, undercutting its peers, Wilton Fry, an analyst at Analysts at RBC Europe Ltd., said in a research note this week.

by Rebecca Penty

(Bloomberg)

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Latest figures show sharp drop in credit demand

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Corporate and mortgage lending down while consumer credit cards still in demand

The latest results released from the Bank of England Credit Conditions Survey show that credit demand has retreated sharply post-Brexit, despite measures including a cut in the base rate and the introduction of the term funding scheme. The most notable drop has been in demand for credit from corporates, which has shown a sharp drop,  particularly among medium and large enterprises. This echoes the findings of the recent Deloitte CFO survey, which revealed that 57% of CFOs surveyed in FTSE 100 and FTSE 250 companies were planning for cutbacks to  capital investment in the next 12 months.

Mortgage lending also saw a lessening of demand, with the largest decline in the buy-to-let sector, since the survey began after the regulatory changes in Q2. Overall, new lending is set to slow down over the coming months in the mortgage market.

Strong demand was still evident in the unsecured lending demand sector in Q3, particularly for credit card lending, which suggests the UK consumer will continue to support GDP growth in the near term. Analysts expect, however, that Tuesday’s CPI data will reveal a sharp uptick in inflation in September, pointing to the possibility of real wage growth turning negative in the near future, with a knock-on effect of slowed household spending.

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The evolution of London’s gold market

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After a century of tradition, changes in how gold is traded are on the way

When the precious metals industry meets in Singapore next week for an annual gathering, one of the key topics will be the coming changes to how gold is traded in London.

A new trade-reporting service and the introduction of exchange-traded futures will be the latest developments in a market that until recently remained largely unchanged for about a century. Here’s a timeline of main events over the past 350 years, according to the London Bullion Market Association.

1676

After moving to London from Amsterdam, Moses Mocatta partners with the East India Co. to ship gold to India. The firm he built, the oldest member of London’s bullion market, has today evolved into ScotiaMocatta, part of the Bank of Nova Scotia.

1717

As master of the Royal Mint, Isaac Newton set gold at 4.75 pounds an ounce, a price which lasted two centuries. Gold costs about 1,033 pounds ($1,260) today.

1732

With gold volume rising in London, the Bank of England opened the city’s first bullion vault. By then, almost two-thirds of the world’s gold production was passing through London.

1817

The Royal Mint produced the first gold sovereigns, replacing the guinea, a coin equal to about a quarter-ounce of gold.

1871

The BOE began accepting 400-ounce bars (up from 200 ounces previously) — the traditional size accepted globally today — to meet demand from central banks in Europe for their reserves.

1897

The first silver fixing took place at the London office of Sharps & Wilkins, with dealers Mocatta & Goldsmid, Pixley & Abell, and Samuel Montagu & Co. The daily process used by brokers, mining companies and jewelers to trade and set prices would remain largely unchanged for more than a century.

1919

The first gold fixing took place. Meetings were held in a wood-paneled room at N.M. Rothschild & Sons Ltd.’s offices until the process switched to a telephone conference call in 2004. Dealers who met in the room each had small Union Jack flags to signal the need to change orders.

1934

The U.S. fixed gold at $35 an ounce, with the American assay office buying large amounts of the metal at that price. London’s good delivery list, which set quality standards for gold bars, expanded to include refineries and mints in eight countries.

1985

The London Metal Exchange closed its gold futures market after just three years because of a lack of domestic investor and speculator interest.

1987

The BOE establishes the LBMA, the international trade association representing and overseeing London’s gold and silver market.

2014 and 2015

Silver became the first precious-metal fixing to move to an electronic auction after Deutsche Bank AG withdrew from the old phone system amid a pull-back from commodities. Regulatory scrutiny of how benchmarks are set intensified after traders manipulated Libor rates. Platinum, palladium and gold fixings were also replaced by new electronic auctions.

2016

The LME, World Gold Council and a group of banks said they’ll introduce centrally-cleared gold and silver futures in the first half of next year. Separately, the LBMA picked technology firm Boat Services Ltd. to develop a trade reporting service to boost transparency in the over-the-counter market.

By Nicholas Larkin

© Bloomberg

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Tesco pulls Unilever products in pricing row

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Unilever products have been removed from Tesco website after Brexit symptom pricing row

Tesco has pulled dozens of Unilever products from sale on its website after a disagreement on pricing. The consumer goods supplier wanted to raise prices to counteract the effect of the sterling slump and a standoff had developed with retailer Tesco.

The Guardian reported Unilever wanted to raise prices by about 10%. Unilever wanted to implement the price change across a wide range of goods stocked in the big four supermarkets – Tesco, Sainsbury’s, Asda and Morrisons – in order to offset the higher cost of imported commodities, two people with knowledge of the situation told Reuters.

As of last night Unilever products including Marmite spread, Ben & Jerry’s ice cream, Lynx body spray and PG Tips tea were no longer available on Tesco’s website, but the shortage had not yet affected stores, a Tesco spokesman said.

Shares in Tesco were down 1.6% while Unilever was down 1.4%.

 

 

What’s really keeping corporate treasurers awake at night?

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A new report from the Economist Intelligence Unit reveals the top concerns of treasurers worldwide

Against a challenging macroeconomic and regulatory backdrop, corporate treasury is expanding its company-wide responsibilities, according to Managing risk in challenging economic times, a white paper published today (October 12th) by The Economist Intelligence Unit (EIU) and sponsored by Deutsche Bank. The report builds on a survey of 150 corporate treasurers and 150 CFOs. Respondents were drawn from across the world, with 100 in the Americas, 100 in Europe, the Middle East and Africa, and 100 in Asia-Pacific.

GLOBAL GROWTH

Four in ten survey respondents list global economic growth among the top three most serious macro risks. More than half (55%) acknowledge that their function struggles to keep abreast of the rapidly changing macroeconomic environment. The difficult macroeconomic climate notwithstanding, 80% still hold fair or large amounts of excess cash. Hence, “expanding or modifying investment strategies for excess cash” is the preferred way to adapt treasury management strategies in light of low or negative interest rates in many markets.

LOW INTEREST RATES

Low interest rates are one long-term consequence of the financial crisis; the wave of financial regulation is another. Almost 40% think the workload resulting from regulation will remain unchanged over the next 12 months, and another 40% expect that it will actually increase.

CYBER RISK

More than seven in ten respondents say the adoption of new technologies is gaining momentum in their company’s treasury department. However, interviews conducted for the white paper reveal that treasurers are reluctant to embrace new technologies. Almost seven in ten survey respondents are concerned about cyberattacks, for example.

Martin Koehring, the white paper’s editor, said: “The macroeconomic, regulatory and technological challenges are not just shaping the outlook of corporate treasurers—they are also changing how the function is interacting with the rest of the business. Our white paper confirms that partnering with the business has increased in areas such as mergers & acquisitions and working-capital management. Encouragingly, more than eight in ten CFOs say that leadership teams now increasingly consult corporate treasurers on strategic questions.”

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British firms not adequately insured against cyber risk

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Inadequate insurance products leave companies exposing themselves to cyber threat

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The number of British firms insured against cyber threats has fallen sharply in the past year even though many doubled their security budgets after some high-profile companies suffered attacks, a survey by PwC showed on Wednesday.

The auditing and corporate advisory firm said companies were reluctant to invest in cyber insurance because they viewed products available as inadequate.

PwC interviewed 479 executives at British companies and only 38 percent said their company had a cyber insurance policy, downfrom 59 percent in a similar survey a year ago.

“The drop in take-up of cyber insurance shows that this is still maturing as a product,” Domenico del Re, insurance director at PwC, said.

“Companies do not see the cover currently on offer as targeted to their individual risks and therefore not value for money.”

The amount of cover insurers offer does not come close tothe potential losses seen by companies from a truly damaging cyber attack, PwC said.

Over the past two years, British companies such as broadband operator TalkTalk, Experian, the world’s biggest credit data company, and Sage Group, a financial software provider, have been targeted by hackers.

Cyber attacks cost British firms 34 billion pounds ($44billion) a year in lost revenue and increased IT spending after the attacks, research by the Centre for Economics and Business Research and computer security group Veracode estimated in a report last year.

PwC also spoke to 14 specialist insurance companies in London to look at how the insurers view cyber risks.

Half of insurers who responded sell cyber policies, or see cyber insurance as an area of growth, while the other half do not actively pursue it, often believing the risk to be “borderline insurable”, PwC said.

Most of the insurers who offer cyber cover, however, still “tread carefully” and tend to limit the amount of cover offered under each policy.

About 95,000 subscribers left TalkTalk following the cyber breach, when the personal details of 157,000 customers were stolen from its database via its website.

The cost of the attack was clear in TalkTalk’s full-year statutory pretax profit which more than halved to 14 million pounds after exceptional items of 83 million pounds.

British companies, which now spend about 6.2 million poundson average on security, are also more likely than firms around the world to keep their cards close to their chest and not share security knowledge, PwC said.

($1 = 0.7857 pounds)

(Reporting by Noor Zainab Hussain in Bengaluru; Additionalreporting by Sanjeeban Sarkar; Editing by Susan Fenton)

Copyright(c) Thomson Reuters 2016.