Category Archives: Finance

May 2, 2019 · 11:55

Epee and quarterstaff

It is an old riddle that goes back to the renaissance: ‘What do the Epee and quarterstaff have in common?’ The answer is that they extent reach. The lesson is that everything has its reach and the power remains when you do not exceed the 90% of it until you are either forced, or if you have a 100% certainty of causing a fatal hit. Making the mistake in those days meant certain death. Those days were not about points, it was not about bragging on besting a person, it was kill or be killed, plain and simple. A lesson that is 500 years old and Apple apparently never learned it. So in the Guardian (at https://www.theguardian.com/technology/2019/apr/30/apple-iphone-sales-first-quarter-earnings) we see ‘Apple’s iPhone sales fall 17% in first quarter as flagship product struggles‘, what was interesting was: “The company made a profit of $11.6bn – ahead of expectations. But this quarter marked another quarterly decline in profit and revenue as the company struggled to move beyond the iPhone“, even as Apple is in a buyback phase to regain its heralded one trillion dollar company, there are still clouds in the background. It starts with the iPhone, an iPhone Xr 128GB is $1299, the not most powerful version of the iPhone Xs is $2049. Yet the competing Androids are $1499 (Google Pixel 3), $1599 (Huawei P30 pro) and $1699 (Samsung S10), those are all on the same, or in some regards on a more superior level; if we are concerned consumers and we are willing to step down a little we can get decently competitive phones for $449, that is what Apple is up against, you can shout all you want on how refined, elitist and top range your phone is, but the amount of people with that kind of cash available is dwindling down and Apple is realising that buying back stock and take control of the smacking they are about to get is indeed a wise choice, but so far my prediction remains that Apple is heading towards a 30% decline of net value is not unrealistic at all. Then there are the issues on the computer side of apple too. What Digital Trends called ‘Flexgate’ last January is still on the mind of many, and as they gave us the quote: “the stage light effect is caused by flaws with a cabling system that Apple uses to attach each MacBook display to the internals of the laptop. In MacBook models from 2016 and newer, Apple switched to a new flexible and thin ribbon cable, which over a long period of time can face fatigue and eventually tear as the lid is repeatedly opened and closed on the laptop” with additional information (at https://www.digitaltrends.com/computing/flexgate-issue-plaguing-some-macbook-pro-owners/) we see that Apple has played the ‘presentation innovation’ card slightly too visible, so now there is a backlash. Then there is bendgate (iPad Pro bending), then we get in addition the May 2018 class-action lawsuit that alleges that Apple has “failed and continues to fail to disclose” problems with its butterfly keyboard. It says Apple’s actions are violating several competition and regulatory laws, including California’s Unfair Competition Law and the Magnuson-Moss Warranty Act. The lawsuit is seeking damages for the class, as well as an acknowledgement by Apple that there’s a problem with its keyboard design. This case is not over and done with, because it will be a global problem soon enough, so the steps that Apple has to take will take a massive chunk on their value and profit reporting within the coming year. Al these actions whilst they have plenty more issues coming their way. Now in their defence, the entire Flexgate could have happened to anyone, but proper testing does give light to these dangers, it is interesting to note that IKEA might have a better quality testing department than Apple does, which shows that Scandinavians optionally have a better idea towards exceeding customer service and keeping proper tabs on quality. This all before you realise that Tech Insider reported ‘Apple is squirrelling away money to pay for lawsuits related to its iPhone ‘batterygate’ throttling scandal‘ (at https://www.businessinsider.com.au/iphone-batterygate-lawsuits-cause-apple-to-set-aside-money-2019-2) an issue that is still not done with and might not be done with until 2020. So when you see that list costing them optional billions, do you think that my view was unrealistic?

As they give us: “previous class-action suits have resulted in $US450 million judgments against the iPhone maker“, I feel certain that this will not get it done in this case and if they are really really lucky, it might only cost them $45 billion, you forget that the Euro courts are snapping at the heels of Apple as well, 27 nations all with a score of angry customers, we realise that there is always a cost to doing business and there is premium to pay when the limelight is set on what might call ‘intentional deceptive conduct’ and ‘batterygate’ fits that bill and then some. This is not the end; there is also indirect damage to come. This was given by Apple Insider with ‘Latest Facebook-related security breach finds millions of records exposed on Amazon servers‘, there we see (at https://appleinsider.com/articles/19/04/03/latest-facebook-related-security-breach-finds-millions-of-records-exposed-on-amazon-servers) that Apple was connected: “These include data sharing deals with companies like Apple, Amazon, Microsoft, and Sony, plus people being able to look up strangers based on phone numbers submitted for two-factor authentication“, so when we see data-sharing, we think it is only Facebook, but sharing goes in many directions and what did Apple share? the entire ‘people being able to look up strangers based on phone numbers submitted for two-factor authentication‘ implies that Apple optionally has a decent amount to answer for, or perhaps better stated, there is plenty of issues brought to light that the Apple legal teams need to ignore, deny or carefully phrase into another direction, there is only so many fines any company can live with before the larger population bails and if that happens before December 2019 than my prediction of 30% could end up being way too optimistic, but I keep a conservative view on the matters for now. Consider the steps that Apple has been making, their ‘new’ iMac Pro, it is a computer that starts at $7,299, whilst the normal new iMac, a computer that would satisfy 95% of all Apple users is a mere $2,799. Now, I am not opposed to an overpowered computer, but consider the cost of creating it, redesigning parts and making it look more expensive, do the amount of buyers rectify for that? Is the ROI curve not massively overstated and when we realise that, is a company where its marketing is insisting on annual innovation not out of control? What is the price tag of that you reckon? It becomes even more laughable when we consider a review (at https://www.youtube.com/watch?v=6YwYZvmYecI) where we see the MacRumors channel giving us at 5:30 that the iMac Pro (2017 model) exports 4K video in 2:44, whilst the normal iMac (2019 model) does the same thing in 2:31, it seems trivial, yet remember that there is a $7,299 versus $2,799 in play and within 2 years the value of $4,500 was lost to the user, as such the life time value of an iMac has pretty much gone into the basement taking out customer loyalty overnight. the last time I looked, looking cool for a year at the price of $4,500 was decently overrated for most people, and it makes for a business case that the iMac pro could be regarded as wasted investment for its consumers soon thereafter (in some places they refer to that as: ‘warranty until you exit the premises‘.

These are some of the issues that Apple is facing and there are a lot more issues (yet most of those are actually trivial). It is there that we return to the Guardian with: ‘the company struggled to move beyond the iPhone‘, that and the 2018 iPad Pro Bendgate issue does not help any and that is where we see that quality assessment has failed miserably. The need to look innovative, lighter and thinner means that testing becomes more and more important. So when the consumer was treated to ‘Apple releases an official statement on reports that some iPad Pros have come bent right out of the box’ on January 2019 with: “Relative to the issue you referenced regarding the new iPad Pro, its unibody design meets or exceeds all of Apple’s high quality standards of design and precision manufacturing.”, and as such the consumer feels duped to say the least. One source also gives us: “Apple claims that the bending can’t exceed more than 400 micron–“the width of fewer than four sheets of paper at most,” which is a “tighter specification for flatness than previous generations,” the note says.

The tech note further states that the antenna splits “may make subtle deviations in flatness more visible only from certain viewing angles that are imperceptible during normal use.”“, whilst the image from MacRumors (at https://www.macrumors.com/guide/ipad-pro-2018-bending-issue/) shows a bending issue close to 1,000% of what they claim, making the issue rise to the surface and also gives a much larger light of additional class actions that might be filed later this year if Apple does not change policy immediately, so is my 30% drop still off? I already gave some visibility to that (at https://lawlordtobe.com/2019/02/24/future-through-the-sub-line/) almost 3 months ago, and I have not noticed any clear loud actions by Apple Marketing to counter the damage that this issue was bringing.

It is not what Apple claims to do, it is the failing on a few levels, the marketing on several product lines and the neglect of services that shows that not only is it struggling to move beyond the iPhone, at present they have very few options left to them in any of the product lines to set any stage of ‘moving beyond’ and that too will suppress growth to a much larger degree, and optionally for a much longer time. All that whilst they should have known when they started the Pro and high priced iPhone series that they are selling to people who demand perfection and high end quality especially at the prices that they are selling it at, at that point your QA department is the most important department you have, not your marketing department.

It is the direct visibility when you extent beyond your reach, you get hammered down and you get hammered down hard, in the renaissance that apple individual would not be defeated, that person would merely be dead and forgotten, I hope that this is the lessons that apple takes to heart because the treasures of 5G are looming and Apple might be out in the cold soon enough. I reckon that the $4.5 billion payment to Qualcomm is making that obvious and clear to all, which is news that was released only hours ago with: “As pointed out by Axios, Qualcomm will record $4.5 to $4.7 billion in revenue from the Apple settlement, which includes a “cash payment from Apple and the release of related liabilities.”” (Source: MacRumors).

Apple still has a long way to go to get back on top, I wonder if they ever will.

 

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May 1, 2019 · 10:56

A little pain to Huawei

Yes, there is finally a moment where we need to ask Huawei questions. Bloomberg reported (at https://www.bloomberg.com/news/articles/2019-04-30/vodafone-found-hidden-backdoors-in-huawei-equipment) that backdoors have been found. More accurately: “Vodafone asked Huawei to remove backdoors in home internet routers in 2011 and received assurances from the supplier that the issues were fixed, but further testing revealed that the security vulnerabilities remained, the documents show“, yet knowing the track record of Vodafone, that is not the whole story. Is there an issue? Seemingly not, as the headline gives us: ‘While the carrier says the issues found in 2011 and 2012 were resolved at the time‘, so an issue found 7 years ago was resolved at the time. Is that issue there now? Bloomberg does not really give us that do they? It gets to be a larger issue of what is seemingly called reporting when we see the ZDNet report from 2017 (5 years after the Bloomberg reported issue: “Thousands of routers, many of which belong to AT&T U-verse customers, can be easily and remotely hacked through several critical security vulnerabilities“. that as well as: “Among the vulnerabilities are hardcoded credentials, which can allow “root” remote access to an affected device, giving an attacker full control over the router. An attacker can connect to an affected router and log-in with a publicly-disclosed username and password, granting access to the modem’s menu-driven shell. An attacker can view and change the Wi-Fi router name and password, and alter the network’s setup, such as rerouting internet traffic to a malicious server“, these are much larger issues and were they resolved? We would think yes, but the article did not give us that. They did give us: “The report said Arris NVG589 and NVG599 modems with the latest 9.2.2 firmware are affected, but it’s not clear who’s responsible for the bugs“. The small fact that this constituted 5 flaws as well as a reported statement of: ‘the vulnerabilities are not limited to the hard-coded credentials flaw‘ give rise to a whole range of issues. So even as we might think that this one flaw is a stitch in the high regard for Huawei, the fact that an American solution has well over 500% the amount of vulnerabilities and as stated on several levels give rise to the reliability of Huawei. Moreover, the length of the issue is also a given at times as well as the need for better 5G equipment. Yet in all this, how much actual damage has either caused, Bloomberg was willing not to disclose that either. Yet Huawei is not out of the woods yet. The article gives us ‘further testing revealed that the security vulnerabilities remained, the documents show‘ and that is indeed a larger problem, yet these documents were from 2012, when was it actually resolved? The fact that we do not see that it was never ‘not resolved’ implies that it was, in addition, the 2012 issues in Italy were resolved that year. Then there is the quote ‘it couldn’t find evidence of historical vulnerabilities in routers or broadband network gateways beyond Italy‘ making it a localised temporary issue.

In all this Huawei has an issue to deal with and even as we see the lack of comparison flaws (I added the AT&T issue so you can be aware), the unbalanced reporting, as well as the clarity that there is to some extent an issue remains. The fact that the huge AT&T disaster was never called to answer questions might be equally a consideration to make. All computers and most software have bugs and security flaws. When I looked this morning, I found a list of 845 vulnerabilities in Windows 10, some of them critical. So when we compare these issues, we should consider that your Huawei router is not the largest problem and that is merely the beginning of the issue. Historically speaking, from 1999 we see that Windows have had 113,811 vulnerabilities; 4911 vulnerabilities regarding the ability to gain privileges, 10377 on getting information and 6001 on bypassing options. So in all we need to consider that your choice of Windows is a much bigger concern than your Router is, if the Chinese government wants to get access to your data they merely need to wait for you to switch on your windows machine, there are plenty of options to get to the stuff no matter which router you buy and if you got the Arris NVG589 or NVG599 modem it would have seemingly been easy as pie to just copy whatever you had, so in the end can you see that the entire Huawei mess is merely an American mess to project the notion that you should not buy Chinese, but consider the optionally more flawed American solutions?

And whilst I got to AT&T, the news (three days ago) was ‘AT&T claims title as first U.S. carrier to hit 2Gbps on 5G network‘, yet when we consider the quote by VentureBeat: “It’s great in the abstract that some businesses in Atlanta may be able to get 2Gbps speeds on a 5G device regular consumers can’t buy. But what really matters is the actual speed normal 5G users across multiple cities will see on actual consumer devices. Verizon has provided a sub-1Gbps sense of what to expect, but AT&T hasn’t.”

We see that what is regarded as reliable in America is a bit of a stretch at some point, for the most I was most disappointed with is the fact that the Bloomberg article should be regarded as an attack on Huawei whilst there is no comparison given as to how that flaw related to the flaws others had, more important the fact that there were larger flaws from others much more recent is a missed part. Still Bloomberg did raise a really valid point on a flaw that Huawei seemingly has, with the perception that the news could have been given in 450 words, the rest was a lot of smoke around an issue that dwarves against some of the other issues, issues where there is actual fire, not merely smoke.

But that is merely my $0.02 on the situation.

 

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May 1, 2019 · 10:41

Waking up 6,897 miles away

I admit that at times I do not understand the motive of those who embrace extreme actions. The LA Times gave us yesterday (at https://www.latimes.com/local/lanow/la-me-ln-los-angeles-terror-plot-20190429-story.html) the issue of continued action after an attack. In this case it is the attack on the Al Noor Mosque on the 15th of March 2019. There Brenton Tarrant decided to murder 50 innocent people, and almost succeeded in murdering 39 additional people. The event drove Mark Steven Domingo (26) to make an IED, and he had planned to detonate it at a rally scheduled to take place in Long Beach this past weekend. The man who only recently had converted to Islam seems to have converted with too much anger in his heart, or perhaps he was always too sociopathic and psychopathic to begin with and he hoped that Islam would give him more support in his violent needs. It is anybody’s guess; so this “U.S. Army veteran who wanted revenge for attacks on Muslims around the globe was planning to detonate a bomb at a Long Beach rally this past weekend before he was intercepted by law enforcement officials, authorities said Monday“. According to papers, he was planning “various attacks — including targeting Jews, churches and police officers“, in all this targeting the police makes even less sense, that is, unless you consider that his sociopathic nature came into play and he merely wanted to target people in uniform. And when I read: “Prosecutors said Domingo sought retribution for the March 15 attacks on New Zealand mosques and was willing to die a martyr“. I wonder if he actually wanted to do that at all. You see, it dawns on me (optionally a completely inaccurate view) that he is one of these people that fear taking their own life, and as the numbers of ‘suicide by cop‘ have dwindled, these people have sought out another path to get it done, because a clear ‘suicide by cop’ tends to become a conversation with the police being able to talk people like that away from such an edge pretty efficiently, yet a terrorist is a target that is to be killed on the spot to safeguard as many people as possible. The fact that he got arrested before his plan came together is merely a nice coincidence for all parties concerned (optionally with the exception of Mark Steven Domingo). In support there is the case of Suicide by Cop: A Psychiatric Phenomenon. It is a work from 2017 by Ralph H. de Similien and Adamma Okorafor. There is one part that came up to debate in light of this optional case. The paper gives us: “It is reported, for example, to be more common in those with previous encounters/experiences with law enforcement agencies. It is estimated that about 66% of victims have had criminal histories“, I am not debating that it is wrong, I wonder if the text needed to be altered to: ‘with previous encounters/experiences with law enforcement, or defence agencies‘, it would fit this bill, yet making a resolution fit is not academically correct and as such I am not stating that I am right, I am merely wondering whether I could be right.

And there are other considerations to make, like how did he convert to Islam? Was he officially converted by an imam khatib? At what mosque did this happen? These questions are equally important for the reason that we need to ascertain how he became radicalised, was it an interior push or an exterior one. The facts as they are shown at present seem to imply that he was an angry person seeking another solution to whatever problem he thought he had, an extreme one and that makes it an internal change, but that is not a given. The data is important here as it casts a much larger shadow on several key elements and until they have been resolved there is no certainty that this will not happen again in the foreseeable future, a threat that Long beach (and other places) can do without.

Even now we see more questions rise. The BBC gave us only hours ago: ‘US Army veteran ‘planned to bomb Nazi rally’‘, we might all think that this is not the worst idea to have, but the extreme part of this is starting to form a pattern, he wanted to blow something up. We can argue that we have all had it at some point; some lash out at their high school, some do it in their high school. There is more in this case: “the former infantryman with combat experience in Afghanistan“, as such I have met plenty of people from that place who came out alright, to some extent I am unwilling to merely hand it over to the label called PTSD. There is a larger issue in play in the United States and this is merely the beginning. Never before in history has a nation been this polarised both politically and socially.

The political players have done everything to better their own lives and quality of life, but for the most they have been utterly unable to do that for the lowest 35% of that nation. The homeless, the unemployed and the minimum wage employees have been under increasing levels of pressure. Some need to work two jobs just to meet the cost of living; it gets even worse when we consider certain facts. For example in Kalamazoo, Michigan (expertly found) we see that well over 30% of the city population lives below the poverty line. That is well over twice the U.S. poverty rate, which stands at 12.3%. In a place that is seemingly affordable, a place where houses are on a median that is below $100K, we see a splurge of poverty. A place that is roughly 2.5 hours from Chicago , a city where the prices are non affordable for most these people. Did you not think that this inequality would come home to roost? If there are 15 places where these economic groups can live than it would be a lot, the issue is a lot less positive and the pressures keep on going up.

When we consider that a US veteran, a person that signed up to protect its civilians, is now on a course to kill them; we need to see that the issue is a lot larger than we think it is. Now as the expression goes ‘One Swallow does not make for a summer‘ we can see that one case does not mean it is so, but the pressures are visibly there, the deterioration of the lowest 30% of American incomes is there and when we start seeing the difference on what represents the quality of life in the US against what is regarded to be the standard of living, at that point do we see a first light on how much change is needed in the US. This has been known for the longest time, yet when we consider the simplest part in all this; when we consider that up to 21 million Americans are getting water from systems that violate health standards. When we consider that this is 8% of all Americans and when we realise that this group is more likely than not represented in 95% of the lowest 35% incomes, people who more often than not cannot afford to buy bottled water, how serious do you think that the pressure issue is and how worse could it get soon enough?

I believe that Mark Steven Domingo is the beginning of a much larger problem, it was not founded in religion, it is founded in social desperation and when that hits the least balanced people are the first to totally lose it.

 

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April 28, 2019 · 14:07

When a dream is too delusional

We all have those dreams we know will never pass into reality, they are too delusional for comfort, but they are dreams, so we go with the flow. One example is winning the €135,000,000 lottery, the other could be one including Wallis Day (main character in the DC series Krypton) to spend a weekend to remember at her place (with all the extra options). Yes, all options that are delusional and never ever a setting that could ever be true. So in all this we get to yesterday’s article in the Guardian where we (at https://www.theguardian.com/business/2019/apr/27/very-disappointing-ashford-laments-loss-of-debenhams-branch) are treated to ‘‘Very disappointing’: Ashford laments loss of Debenhams branch‘, yes it might be very disappointing, yet consider a few items. First there is the building that they are in, then consider that Ashford has a population of 62,787, so we need to look at another side of it all, or in this case the 2016 Annual report (at http://www.annualreports.com/HostedData/AnnualReportArchive/d/LSE_DEB_2016.pdf).

They had a staff count of around 28,000 supporting 182 stores in the UK and Europe as well as their domestic and international websites. Now consider their premise of Gross transaction value (52 weeks) of £2.9bn. In that regard, how does a shop in a village of 62K people add up to anything? When we look deeper and consider that Debenhams had a total of 165 stores in the UK alone and the amount of cities in the UK from 100,000 people up to 1 million added up to 96 locations, in the remaining places how did Ashford got to be one of those 69 positions? Now, we can see that in Kent, the average income is set to £29,095, which is above the UK average, still, when we do the numbers, the entire validation of having Debenhams in Ashford does not add up. Not in such a posh place, making me wonder why the building was placed there to begin with.

Now consider the additional information that the Kent Online gives us (at https://www.kentonline.co.uk/kent-business/county-news/debenhams-to-close-four-kent-stores-203461/). So, Ashford, Canterbury, Chatham and Folkestone are all shutting down, in all this, I wonder why Ashford, Canterbury and Folkestone were placed in the first place. Kent with its 1.5 million people (in the entire county) has a case for one Debenhams but not 4. The numbers do not make sense. Now we need to remember that Debenhams has been around for two centuries and as such they do not all have new places, but when I see Debenhams Ashford, I see a story that seems to think it is in a multi-millionaire district with 20,000 shoppers, whilst 2,000 active buying shoppers at best would be an achievement in Ashford, the entire article by the Guardian left me with way too many questions. The shop is clearly set out to call in the higher spender; the Dior setting dominating the floor gives that impression. Now, it is not merely about the prices, because Debenhams has always shown to have value for money and their stuff is affordable, yet that also creates the need for a much higher volume of purchases and let’s face it, Ashford is not a place where people buy clothes at a non-stop speed, the cost of living is not supporting that, and the optional coffee machine at £282.00 is not one that most people would buy, the one off perhaps, but most will resort to the luxury Russel Hobbs at £35.00. Now we get the image clearing up, you see as margins are lower, the units need to be sold at much higher frequency and there we see that Ashford never had the stage, moreover it is at least two Kent stores that could be seen as a drain on the Debenhams fortune and that took less than 2 minutes to figure out, so how the continued expansion (read: building upgrade) was seen by those in charge is beyond me.

So when I see: “For other young people, the department store had little to offer. “I just go in there to use the spray on the beauty counters,” said Faith Figaro, 17. “I think it’s expensive, to be fair.”” we see a 17 year old making the case for me and I wonder what possessed the Debenhams top to go in this direction in the first place. It gets to be even worse when the Guardian prints the pragmatic “It’s all hairdressers and coffee shops and nail bars. People won’t come here to shop – they’ll go to a bigger town like Canterbury instead“, which in itself is a truth, making me wonder what is getting into some of these delusional big brands. The entire setting of the larger players has been under fire for the longest of time and the essential need to revisit locations is becoming an essential need for all of them, as such the statement: “Conservative MP Damian Green described the news as “very disappointing”. On Twitter, he wrote: “We need to redouble efforts to strengthen the town centre.”” becomes one of worry. Even as a conservative I wonder how Damian got elected, merely as I saw the writing on the wall within three minutes, so he should have been on the ball for a much longer time, as such the Debenhams situation should have been to be expected, not ‘disappointing‘. For me the entire issue that is started by “Ashford borough council said they would work with the owners of the shopping centre to try to find new occupiers” becomes an issue soon enough. It is the duty of the owner to seek shops and to seek occupancy. When you put an expensive Rolls Royce in an old meadow, you cannot expect your return on investment, you do that by slashing rental prices and by seeking long term solutions that can afford to be long term solutions. Staging ‘elite placement’ in a place where ‘elite placement’ is not realistic is the stage where we see the Australian Westfield issue explode on several stages, places that are intent to fall over within a year, it attracts the wrong facilitator and that is where things go from bad to worse.

It is not the end, it is the Kent Online that also gives us the words from Executive chairman Terry Duddy: “Debenhams has a clear strategy and a bright future, but in order for the business to prosper, we need to restructure the group’s store portfolio and its balance sheet, which are not appropriate for today’s much changed retail environment“. The words sound nice in theory, yet from my point of view; the stage we see in the 2016 annual report contradicts the actions of having most Debenhams in Kent. And when we look at the annual report making the: Profit before tax* (52 weeks) £114.1m claim. I get to the stage thinking that their clear strategy was anything but clear.

In that version of a report we see the strategy: “To be a leading international, multi-channel brand by delivering a compelling customer proposition and increasing availability and choice through our flagship digital platform and well-invested, well-located stores around the world.” I honestly think that they got that wrong by a fair bit. You see, from my personal point of view the setting of ‘well-invested, well-located stores‘ we see the stage where it should have been ‘well-invested, and viable well-located stores‘ it is that part where viable needs to matter and in 50 of the 166 cases it was not to be and that is not something from the last year, the action should have started no later than 2015 as I see it.

It gets to be slightly entertaining when I look at their risk management in light of their e strategic and operational goals, but let’s not make too much fun of the situation, shall we? Even as there is a lot to be said on their KPI’s, the clear message of net debt reduction is important and a good thing, if that £40 million net debt reduction had not been met, the entire matter would have been critically fatal for Debenhams no later than 2018, so good steps had been made, yet larger were essential two years ago, that is as I personally see it and without the raw data my findings are open to critical debate (as my view might be wrong). Yet at page 29 we see the largest flaw. When we see: “New UK stores 12%” we see the largest mistake, in a place where there were 166 stores whilst the population did not support further growth that should have been staged for modernisation for now. I get it, some stores are too old and new stores replace the old ones, yet the 5 year option to rely on upgrades until the economy is much stronger was an essential step to make, even if some of the lucrative old shops would shut down, the long term growth in this economy is just not there. This is why I got the 2016 annual report (the 2017 would have been better, yet I could not find that puppy). Aspects of 2016 and 2017 are seen now, its impact is now direct, like a good ship you adjust course and wait for the numbers to be clear so any adjustment in 2018 would not be a valid impact until 2020 (unless it is immediate navigation) and there is where we see some of the flaws of Debenhams. Even now I noticed that internationally they are not in Germany, it might be because Hennes & Mauritz AB is too great a threat, it might be for another reason, but the one nations where the economy is still in a much better place, is the one place they do not show up. Can they honestly claim that Debenhams Bonn, Berlin and/or Munich would not make it? In the Netherlands they would have a cat fight with C&A and a few others, in Sweden there is Hennes & Mauritz AB, Åhléns and a few others, so that makes sense, France is a dimension all on itself, so no way to tell, yet Germany? If I had to bank on Debenhams Munich or Debenhams Ashford, Ashford would never have been a consideration, yet with no timeline on Ashford I have to make the blind choice and it would not be Ashford, due to no fault of anything Kent related.

It is on page 138 we get the final part. Here we see the minimum lease payments under non-cancellable operating leases. Now some have been there for a long time, it was a choice made and that is fair, yet in the entire matter we see that for up to 5 years we see £96.7 million in play and I have some serious questions on those marks, in light of certain facts seen now, I wonder which of those should never have been made, but that is merely my view on the matter and with up to 50 stores up for closure I personally reckon I might have a case on that.

LSE_DEB_2016

 

 

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April 27, 2019 · 11:56

Then the hard

As we all are looking at the accusations towards Saudi Arabia, the political presented power plays (not real ones) against Iran on ‘no more sanctions waivers‘, all issues we knew were coming upfront of all the other issues, most people forgot to look at France. Or perhaps others were able to pull attention away from France.

Some give us ‘France’s Macron Promises Tax Cuts, Reforms in Response to Yellow Vests‘, others give us ‘Unsatisfied in France: Muted response to Macron sales pitch‘, the short and sweet of the matter is that tax cuts are almost out of the question. The French national debt has risen to over €2,446,051,000,000, France is approaching the €2.5 trillion mark and France is presently dangerously close to the next recession, they only passed it last quarter by nothing short of a miracle, it had nothing to do with President Macron or anyone else, for the most it was merely sheer luck that they avoided the recession stamp, Q2 might not be that lucky a moment. At that point, all the claims of ‘tax cuts via less spending‘ will fall flat soon thereafter, less spending will be the massive agenda point of Q3, and France will have no other way of dealing with it. It is even less good when we consider yesterday’s Financial Times (at https://www.ft.com/content/f9920a26-6750-11e9-9adc-98bf1d35a056) where we are treated to ‘French employees face challenge to short-hours culture‘. When the French system starts applauding the casual work staff solution, France will be heading to a much deeper pit than they imagine, President Macron played the game wrong and even as most would applaud a mental change to the workers environment and how things were done, the system is too rigid to accept changes and as that system went into shutdown mode for too often, the larger impact was ignored, President Macron was too stubborn and now there is a much large impact to be seen.

The FT opens up with the best statement ever: “French workers pride themselves on being more productive than their peers in other countries, despite the fact that they work fewer hours — but that advantage is waning“, it is the ‘waning‘ part that matters. The world had adjusted for the longest of times and their advantage is no longer there, so we have a protective system (which is fair enough) and whilst it was an advantage no change was going to happen, but now that the advantage is gone change is still not an option and now these labour laws become a noose, new investors and new companies are trying to find ulterior solutions (apart from growing outside of France), now we see that the need for longer hours is essential, or we see that these people are in a stage of becoming casual workers and being complemented (read: replaced) with other casual workers and the hours will go to the best performing people, making this solution more than a slippery slope. The Financial Times is giving us numbers where we see that French production is already surpassed by the Netherlands and Germany and that is also where we see that a growth system of part timers made that happen. You see in the end two people working 20 hours part time will perform better and get more done than one doing 40 hours and that is the shift that some France exploiters seem to be looking at, it partially improves tax revenue, but it also does something else. In the stage of cost of living these people will often work two jobs, so doing 2 times 20 hours and merely ending up working 20% harder for the same pay. When France gets there it will hit the French workforce really hard.

Now we get to the part where the €2.5 trillion mark matters, as the ECB is trying to find new ways to convince others that the continued provision of stimulus to the economy matters, that against all the odds and against all the previous parts, we see that the ECB policies will hit France harder, the debt makes it so and whilst the ECB is not an elected official, it is draining the options away from the European nations, all whilst so far it has been proven that there was no actual benefit to the economy twice over. So after three trillion in unacceptable spending the ECB still believed it can work, all whilst we see the data different.

It comes down to the old premise from Albert Einstein no less: “The definition of insanity is doing the same thing over and over again, but expecting different results” and this now gives us the optional premise whether ECB rate-setter Olli Rehn should be committed under section 20 of the Mental Health Act (the involuntary committing of a patient).

It hits several nations, yet in all what is happening these issues will hit France and Italy the hardest I reckon. That part is seen when we consider “In France only 71 per cent of the population was in employment last year, compared with 79 per cent of the UK and 80 per cent in Germany“, in this the case for casual workers is often easily made, yet in France the impact gives a larger rise, lets consider that it reduces 10% of the unemployed force, which would be great, if not for the fact that these 10% now employed imply that the same amount of employed people will see a 30% reduction to their quality of life as they now share the one job with another person. It will not increase tax revenue ad that is easily shown.

At present in France the first two tax brackets are: €9,964–€27,519: 14% & €27,519–€73,779: 30%

Example one: A person makes a full income of €35,000. This gets the treasury €4702, we now get two part-timers, giving each €19,000, giving the treasury two times €1265, making it €2530, a treasury loss of €2172.

Why? The zero bracket will now apply to both employees, and even they will not see it in their second job, we see a larger shift that will occur, so in their time of great debt the treasury will fail itself twice over and even in more ways than one thinks. When you consider that the average income in France is €26,700, the part timers will dent the treasury a lot further than you think, and consider that the second job is fully taxed, how long until the French will not go that way? How much will the treasury miss out on, that is beside the next wave of badly designed stimulus ideas, a game that only sees banks and members of the ECB winners, the rest gets an added debt, how was that ever fair, just or even beneficial to any economy? Yes, France too will face their endgame, yet whether this Endgame involves President Macron (Thanos) and the Avengers (the yellow coats) to come to blows is not a given, it is an expected must soon enough.

 

 

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April 27, 2019 · 11:51

First the soft

There is a wave of anticipation, having seen Avengers Endgame on opening night two days ago, we see the anticipation rush through. There will be no spoilers here, but I can give advance warning of the dangerous side shows in the cinema. You see, the final part is a three hour movie and worth watching, yet watching the parents with younger sidekicks watch the movie whilst the parent realising that after two hours the bladder of junior is under pressure is a sight to see. I saw at least two fathers rushing themselves (as well as junior) to the bathroom hooping not to miss too much is a sight to take momentary notice of.

Taking a large/jumbo drink into a three hour movie is a really bad idea!

The second one is sweet. In at least two points in the movie, something huge happens and it is a sight to behold, I was not ready for large crowds to stand up and cheer and clap, it was a little unexpected, the movie gets you that deep into the story, it is an amazing one and we get volley after volley of amazing moments for almost three hours.

So when we now see that Avengers: Endgame is heading towards a 700 million opening weekend (globally) is no stretch, it would make it the largest opening weekend in history. The three most successful movies never pulled that off, so Avatar, Titanic and Star Wars: the force awakens will not be the contenders. The question becomes, can Endgame surpass the opening weekend of Avengers: Infinity War, which had an opening weekend of $630 million. There is however one side that hold endgame back, as a few nations open a week later, and as at present the overseas record has not been surpassed, the end result is not a given, I believe that the movie has what it takes to surpass Infinity War in every way, in the end, it becomes a roll of the dice (to some extent). I believe that this movie has the goods to surpass the amazing results that Avengers: Infinity War brought, I believe to be proven right in the next week. I hope to be able to see the 3D version at that point.

So we end the soft part of the day with a detailed view on Bradley Cooper, who is going to be in the movie and that is not a spoiler at all.

 

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April 16, 2019 · 12:02

The pope’s mobile is on the clock

 

Hickory Dickory dock, the pope ran up the clock,

The clock struck one, and hit his bum, Hickory Dickory dock.

An old rhyme slightly adjusted and gives light to a joke that mattered, it is old and it goes like:

Q: Why does the pope kiss the ground when he arrives?
A: You’ve never flown with Alitalia have you?

That is where we are, the clock is counting down; Alitalia is on its last legs and merely has two weeks left. As sources report that EasyJet pulled out of the race and even as Delta is still on board, someone needs to be found for the remaining 40% and that is the hard ball, consider on how much of an issue Alitalia is when people like Warren Buffett and Bill Gates will not take a shine to it, it might be too harsh to call Alitalia a money pit, but that is what is amounts too. The flight market is close to saturated, even as we all needed to fly (quite literally) 20 years ago, the companies started to figure out not to give their profits to the airlines. On a global scale close to 9750 planes were in the air last year at any given time, transporting up to 1.3 million people. The operative part is ‘at any given time‘, so how much travel is required nowadays? In 1998 I was flying close to 21 weeks that year, giving trainings and doing consultancy round the clock, at times living from a suitcase with added support from my laptop giving IT trainings and software training. I circled the planet twice that year, from Amsterdam, New York, Atlanta, Sydney, Singapore, Istanbul, via Munich and back to Amsterdam. I thought it was great and as long as the profits were outshining the costs, my bosses kept on sending me to more locations, it was all fine by me. These days are over, even as we see more and more airports expanding to ‘facilitate’ for more passengers, we see a dangerous curve, Stockholm Arlanda is expanding to facilitate for 40 million visitors a year. The numbers give us that the top 25 carriers facilitated for 13,718,655 passengers and if they are all tourists, that would be fine, yet the business side is not adding up. You see 15 out of the 25 had a decrease the went up to 27.3%, the lowest 10 were below 4.5%, still they were all still decreases and the largest increase came from Riga, Latvia.

Now consider that on the other side, on the airline side, apart from the element where we see that Alitalia had no operating profit between 2009 and 2015 with added low points of well over minus a quarter of a billion, the setup of airlines seems to be too odd.

I do get it, a nations having a national airline is a matter of pride, we get it, but at what cost? The airline has about 100 planes as part of the mainline fleet and the cost of doing business is just too high, there is no decent chance that whomever owns the airline might do so, so that they can say that they own an airline, it seems the weirdest of reasons, but from the financial view that is as much as we are going to get and the bad news is not done at this point.

You see, the work I used to do can be done remotely more and more, when 5G is totally here, we can see the shift where the classes can be given remotely with a phantom screen and with the presentations running in the background, the speed will enable us to give individual service to all the participants in up to three locations at the same time, almost like remotely run classroom software with camera’s in all locations. At that point we will see even less traffic required implying that the business classes on these flights will be close to a thing of the past.

The more immediate and difficult part is that none of this is the fault of Alitalia. Yes, we can look at the scandals and the past sting operations, yet the foundation is not that, it is the need of people to travel. In that light the traveller will be the one using their local airline (like many would), some will select airlines for their service and there we see groups of people seeking flights by Singapore Airlines, Cathay Pacific Airways and Emirates. So these airlines are also poaching local travellers as they have shown and proven themselves to be a cut above the others. When it comes to business and tourist Italy, we see decline of both and falling harder, yet Italy is still the destination to several countries, namely Germany, France, UK and US as the largest four. These four add up to 23%; the rest is from all over. So, what makes me the specialist? I am not; I am merely using common sense. 100 planes, in an age where their power is tourism and we are going into the summer season, but that setting is a stage that represents merely 18 weeks out of 52, the numbers and the economy do not support the fleet, or so it seems.

when we consider that Rome Leonardo da Vinci-Fiumicino supported 42,995,119 passengers last year, there is a decent case that I am seeing it wrong, but that is from all airlines, beside Alitalia, we see Air India, Emirates, Turkish Airlines, United, Etihad Airways, Thai Airways, Asiana Airlines, Qatar Airways, Cathay Pacific, Air China, Lufthansa, Ethiopian Airlines, Finnair, British Airways, SWISS, EL AL Israel Airlines, Air France, Saudia, Ukraine International, Jet Airways, Air Canada, Egypt Air, KLM, Kuwait Airways, Brussels Airlines, Aeroflot, Korean Air, China Airlines, Singapore Airlines, China Southern, Iran Air, all flying to Rome, now we see a different picture, even as the airport needs the space and growth, we see no decent numbers on how the Alitalia flights are doing, some sources were giving me ‘No Data‘ and that is fair enough, but it makes a much stronger case that unless there is someone with deep pockets that Alitalia is on its last legs and in its final stage of a mere two week notice until it shuts down. Planes would be auctioned off and the lot to be repackaged for other management styles. And I do believe that the end is not in sight, Alitalia is not the only one in such a sordid state of affairs. I believe that the business case of airlines should have changed a long time ago, and it will get worse soon enough, as the oil price goes up, so do the prices of flights. You see the one element we seem to ignore is not the drop in non-tourist passengers. It is the fact that one barrel of crude oil only facilitates for up to 4 gallons of jet fuel, the turnaround is that high, 42 gallons can only make 4 gallons of jet fuel, after that it boils down to gasoline, diesel and other items, so when the barrel goes up in price, the impact is seen quite fast. Consider that a flight from Rome to New York takes 9 hours and 40 minutes (or 2,088,000 seconds), now consider that a 747 needs 1 gallon a second, so if the oil goes up by $1, the maximum cost of a flight would go up by 2 million times the price increase and we can only get 4 gallons bet crude oil barrel making it an optional increase of $500K per flight (which is not completely true as diesel and gasoline would need to bear part of those costs too, but with only 4 gallons to the barrel, jet fuel would take the hardest hit).

That part counts too and as such tourist numbers would go down to some degree, especially from America. These are all still mere elements in the hardship calculations, but the elements are starting to add up, more optional other choices, more localised incentives and less options for Alitalia, that is the sad reality for Alitalia. As far as I was able to see, the press (the non-Italian press) did not take a look at these elements. Even as the BBC did look at one element “At the time the Irish airline was struggling to contain the fallout from a pilot shortage, which led to the cancellation of flights for about 700,000 passengers“, the abundance of competition, as well as the dangers of fuel changes were not looked at. Yet there are other sources, Bloomberg (at https://www.bloomberg.com/news/articles/2019-03-18/easyjet-drops-from-alitalia-bidding-in-setback-to-government) gave us a month ago that Delta is “exploring ways to work with Ferrovie dello Stato and maintain our partnership with Alitalia in the future“, yet I am not convince that they are in it with their heart and soul. Merely a stage where their accountants can optionally see plans for the Alitalia infrastructure and options to give Delta a streamline boost and let Delta grow in other ways accepting Alitalia to some degree for some time, yet how that ‘for some time‘ develops will remain an unknown. Part of it is seen with “Delta would take a 10 percent stake, which would double within four years if certain business goals are met“, yet these business goals are not really heralded by any party. In that regard Lufthansa was open and clear by stating that Alitalia needs to shed 40% of the workforce and that is where the cost of the Delta business goals are likely to be seen as well and that 40% will remain part of the problem. The Italian government would had to euthanise 40% of the workforce in a time when it could not afford to do so and that is the issue to the larger extent. If that knife is thrust hard and deep Alitalia might be around on April 30th, yet at present that is not a given, the pressured parties are not willing to get to that point until the 11th hour and at that point it might just be too late, because in the end the airline is not the only player, the airports will try to make sure that their part of the equation remains safe and there are plenty of airlines offering to ferry people to these locations making the equation unbalanced and unrealistic for the bookkeepers of Alitalia, a sad story for an airline that only recently made it to its 10th year.

 

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April 14, 2019 · 14:40

At the end of a journey

Today is not for the faint of heart, or those who are hindered by emotional parts, today is not merely about gaming, it is about the game. We are currently confronted with a few issues, the first one is given by the Guardian, was for two weeks. My initial issues with ‘Apple Arcade v Google Stadia: which is the future for video games?‘ is a simple stage. Why can’t we have both? I was never anti one or pro the other ever. I was not about Atari ST versus Amiga, I was not about CBM-64 vs Atari 800, I was also not about N64 vs PS1. My issue with Microsoft was their stupidity, as well as their refusal to listen to their gamers, that is the mere reason why the Nintendo Switch is now on par with the total Xbox lifetime sold consoles, it took Nintendo less than 2 years to get there and they got there, the most powerful console is now actively being surpassed by the weakest of the three consoles, that is the impact of stupidity (optionally ignoring Karma was partially a reason too).

So I believe that there is space for both, a case can be made for either console and even as we are most likely to get one of them first, there is a decent case for getting them both down the track. We will have to wait what is in store for us, yet the Google controller clearly looks like something we have seen before. Yet wait; only two days ago we see Microsoft Stupidity strike again. This time in the shape of the Microsoft CFO giving us: ‘Xbox CFO on Google Stadia: “Cloud Won’t Match Local Experience”‘, so thank you Tim Stuart (apparently he is the Xbox CFO), thank you for confirming this, the entire push of Cloud and always online is proven to be a bad choice, as I stated for the last 6 years. Too bad that you never considered the stupidity of your console choices years ago, you might not have become the underdog, defeated by the weakest of all next gen consoles.

I particularly enjoyed the passage (at https://mspoweruser.com/xbox-cfo-on-google-stadia-cloud-wont-match-local-experience/) “Microsoft believes that it will struggle in providing gamers enough content as the company doesn’t have strong ties to Game developers and publishers.“, it is merely a temporary delay at best, you see, when it came to exclusive games, Microsoft was nowhere to be found for almost two years, and when we see on how the magnificent growth through indie developers is seen on the Nintendo Switch (which surprised me too), we see that new players giving free value like (Gems of War) on IOS, android, PS4, XB1 and Switch is showing to be an amazing journey and for those who have all the consoles 500% more joy than ever expected. By having micro transactions, but not pushing them, we see a much larger market that will also benefit Google Stadia, then there is Fallout Shelter and there is a whole range of games that will find a happy audience on the Google Stadia (and its Apple adversary). So when it comes to Microsoft, they gambled and lost, they have remained short sighted as I expected them to be and they (as I personally see it) openly forsake their gamers for illusionary short term goals end their loss against their competitors is not done yet, not by a long shot.

So when I see “In an interview with The Telegraph, Microsoft’s Chief Marketing Officer for Xbox, Mike Nichols said, “Emerging competitors like Google have a cloud infrastructure, a community with YouTube, but they don’t have the content.”” I see a new level of shortsightedness. I see the failing from Mike Nichols. I designed three ideas in gaming in under a week and I am not even the visionary that some are, content can be corrected for; indie developers can make up the difference much faster than the barricades that Microsoft erected long ago.

Google has an optional trump card that none of the others used and as such has the open advantage much sooner than expected. The article has more laughable statements, but let’s move on for now. You see, Techradar had the right idea last week when it gave us ‘Google Stadia may be the first good use for 5G phones‘, the entire setting of 4G ‘Wherever I am’ and 5G ‘whenever I want it’ will find unification in Google Stadia and it will grow close to exponentially soon thereafter. Techradar also gives us: “Google executive Phil Harrison, meanwhile, confirmed that Stadia has already started gaining momentum and that Google received strong support from developers the game streaming platform which in theory solves one of the major concern regarding Stadia“, I do remain critical on the need to measure and keep in check those who are in it for the micro transactions and short term gain for themselves, they are not a joy, they are the Achilles heel of gaming soon enough, but the momentum counts and must not be ignored. Apple Arcade has a larger issue, Apple lost well over 450 billion in value and even as close to 50% of the loss has been regained, Apple cannot afford to be casual, there are 2 billion gamers in the world and if Apple does not play its cards right, they merely become another short term player in a game setting that they might not comprehend. Microsoft didn’t, that much is clear and they got hit and they got hit hard.

The other side

You see, the moment I ‘feared’ has come to town, there have been two games over the last year, two games that changed it all. The first is God of War 4; a game so amazing, so large and so perfect in almost every way that is boggles the mind. Even now, watching the total cut scenes on YouTube is a journey that is close to 6 hours. 6 hours that is a story supporting a game with graphic perfection that was unseen until that day. Now we see ‘Sekiro: Shadows Die Twice‘, a game with graphic and gaming perfection. Both games are PS4 exclusives, both are singular reasons to upgrade to the PS4 pro and both are challenges of the largest degree. It sounds morbid, but at the end of my life, I am finally seeing what should be regarded as the apogee of gaming. Finally I see something that equals and surpasses on what my imagination could perceive, after 40 years of gaming, we are finally getting the games that are the top in its field. Both for the Sony console. That is what Apple and Google are up against, yet they are not. With their solutions they are much more a trump solution for the 1 billion mobile gamers wanting a little more. Nintendo Switch with their docking station is proving the switch between on the road and the large TV screen, both regarded in equal measure on one system and with 5G google can do the same thing, Google Stadia could be a growth system (optionally much more than Apple) in the stage where systems are vying for a billion gamers. So even as Microsoft was (in my personal view) deceptive to hide behind “We’re developing Project xCloud not as a replacement for game consoles, but as a way to provide the same choice and versatility that lovers of music and video enjoy today,” they are eager to avoid the entire online only and pushing us towards their Azure desk. They opened that door and they are now learning that Google is much better in applying that very same portal, another battle lost for Microsoft (and they were never that ready to begin with). A game lost in one generation, what the Xbox360 build form the strong setting of the very first Xbox, the Xbox One pretty much lost and at present they have no options to regain that market any day soon, they wasted too much options on that road.

Google has an additional advantage, the bulk of all gamers have a modern TV, so form that part we see more than the Guardian gave us (at https://www.theguardian.com/games/2019/mar/27/apple-arcade-v-google-stadia-which-is-the-future-for-video-games) two weeks ago. With: “streaming would open games up to millions – if not billions – of people who don’t want or can’t afford to buy pricey equipment“, take that consideration with a $59 Chromecast to stream to your TV, at that point a person’s Mobile is going to be the centre for gaming, stream to TV with merely a mobile and a controller. That is the true growth for Google and even those who have a console; it will be enriching to take a turn to the options Google offers, any gamer would want to take that path. As I see the gaming solutions that the CBM-64, the Atari ST and the Amiga offered, a mere high resolution upgrade will make hundreds if not thousands of games, none of them IP protected, all offering the original designers a stream of additional wealth, all there for the taking and all there for the streaming. Some of the most original games, even now still regarded as awesome passing of time, all ready for the next few years. So there we see just how the statement “Microsoft believes that it will struggle in providing gamers enough content as the company doesn’t have strong ties to Game developers and publishers” is not just a weak one, it is one that can be overcome close to overnight, a mere state of denial by what was once great and is optionally now soon forgotten, the mere application of not listening to gamers and keeping the focal point of greed and dependency got them there and now soon to be surpassed not once, but optionally twice. How is that for a lack of vision. Even as I see more solutions that could set a wining stage on the Xbox 360, now it will be the stage that fuels optionally both the Google as well as the Apple solution to gaming.

The games they provide will not equal the two games mentioned or what the PS3 pro offers for now, but as we clearly knew and what Nintendo Switch has proven to us, the most powerful console does not win, the best game does and when we see that, when we see that great gaming has existed for decades, yet some of these titles were forgotten, or better stated not played on current systems, they are not dead, they can be revived in the new gaming world that is introduced by Apple and Google.

So what was three is now set to the stage of 5 and in that stage we know the top  two, yet in the end Microsoft could fall back to 4th position soon enough, when that happens will they finally wake up in Microsoft land, or will we get more marketing and statements that can be laughed at soon thereafter. Gaming is a much more serious business than most realise and those who do not will not last long in that place, so the need to listen to the gamers was always a first, the one part that Microsoft never considered for the longest of times, that is why they are sliding from 2nd to 3rd and soon enough optionally 4th. If I am still around in 2022, I wonder if my words will be shown and proven to be correct. For Microsoft to gain momentum they will require to make massive changes to their way of thinking and with both Google and Apple entering that field, will they change fast enough, and more important, will they finally truly listen to their gaming population?

Time will tell.

 

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April 10, 2019 · 12:45

As perception becomes awareness

That is the stage we often face, we perceive we acknowledge, we become aware and that awareness becomes the reality we face towards the new reality we did not comprehend before. It is usually not that great a path to be on, especially when you see that the path you are on has a distinct route taking you to exactly the place no one wanted you to be.

Yet for the CAAT (Campaign against the Arms Trade), especially Andrew Smith, and optionally both Martin Chamberlain QC and Liam Fox as well. It is important to see that these people are not evil, they are not delusional and they are not entirely wrong, yet the reality that was given by CNBC half a day after my article ‘When the joke is on us all‘ (at https://lawlordtobe.com/2019/04/07/when-the-joke-is-on-us-all/) is now entering a new dimension. As CNBC gives us ‘Russian expansion in the Middle East is a ‘clear reality on the ground,’ WEF president says‘, we are also given: “Moscow has signed technical agreements and memoranda of understanding to sell its S-400 and other weapons to Saudi Arabia, Turkey and Qatar“, there is now optional noise that this could include a nice batch of shiny new MIG’s, as well as a few other items where we see that the UK is soon to lose the option to make £5 billion for its treasury giving the BAE Systems now headaches to content with. Anything that is related or connected to the UK facilitating to the kingdom of Saudi Arabia could optionally not happen, or will be receiving the standard ‘don’t call us, we’ll call you‘ status. Isn’t ideology great?

We might all (including me) accept the quote: “There is “overwhelming evidence” of violations of human rights law by both the Saudi-led coalition and other forces in Yemen, lawyers for the Campaign Against the Arms Trade (CAAT) told the court on Tuesday.” Most will be forgetting that to all interpretation, the Houthi forces are terrorist forces. Their connection with Hezbollah and Iran is not enough, the short and sweet is that they were not an elected government, they merely moved towards a coup d’état and instigated the war we see now.

So there we are, I now have to talk to the United Aircraft Corporation, owned and founded by Vladimir Putin and the parent organisation of the makers of the MIG, so as I try to get a meeting with the ‘Pоссийская Самолетостроительная Корпорация‘, on being their new exclusive contact for sales to Saudi Arabia (yes, I know, I have no chance in hell there, but I remain an eternal optimist), we see on how the high nosed ideologists are costing the UK billions, all that whilst the opposite of what the Saudi coalition is facing has been ignored or trivialised by a lot of people. You merely have to see what you can on Al-Manar (Lebanese satellite television station affiliated with Hezbollah, broadcasting from Beirut, Lebanon) to realise that Hezbollah is still a player there, it is less visible when it comes to Iran, Iran is playing the field low key and on what some call the down low. Even as the evidence is clear that Houthi forces have Iran drones, the way they got them remains unclear, speculated, but not proven and that too must be noted.

Yet in this era, and under these settings we now see that due to the CAAT, the UK will lose more footing and will have less of a voice at the grown up table that is trying to resolve the issues in Yemen. In the end the CAAT achieved nothing but the dwindling revenue stream for the UK, yet the Russian Federation will be grateful and if I get the job, I will send a huge hamper to the three parties involved (after my first bonus payment that is), the voice makers so to say.

This is the setting that governments and large corporations created form 2004 onwards, we all might have a huge national pride, but in the end, we need to sell, we need to make the cash that is required for rent and food and those in a stage where they set high moral borders in places where the impact is actually zero, you have no value, you have no gain, you merely end up with unpaid bills.

Now if governments had done something about the FAANG group 15 years ago, it would be different, but that is not the case, that is not the reality we face. You see, the fighters are just the start, as we enabled the Russians to get a foot in the door, they now have a direct path to both Syria (they already had options there) as well as Saudi Arabia (and optionally Qatar) to start deploying (read selling and training) these nations on the Altius-M drone. Especially in places where the price of a fighter is basically the same as three drones, drones will be the path many nations go and even as the America Predator looks leaner and meaner, the acts of US Congress as well as that from UK Parliament is now opening the doors for Russia, which is not a good thing (except if I get the job, it will be awesome at that point).

It goes from Bad to worse, especially for America. You see, the MIG-35 and the Altius-M are merely the start. In the end, the gold is found (for Russia that is) with the Sukhoi Su-57, I know little about that plane, yet the stories that it can outperform the F-35 are from sources that are not to be ignored, so even when we hear that the US has plans to counter that, in light of their failed USS Zumwalt comedy caper, those plans can be sneered at until they prove to work. And in the end it is almost as simple as: “Do you want this flag to be on a British, American, or Russian product?”

This all matters!

You see, the arms race is important not because they are weapons, but because the economies get huge incentives through those commercialised items. The fact that at present 6 nations are on the list for that new gadget and in light of the high winded American response in the past on who was allowed to buy a F-22 Raptor and it was vetting its allies in a crazy way. Now, in all truth there might be a case for that (I honestly cannot tell), but now that we see that Russia is willing to sell to sovereign states and they have no bar, whilst we see the unconfirmed part of: “State-run Chinese media is claiming that the People’s Liberation Army has been able to track the U.S. Air Force’s Lockheed Martin F-22 Raptor” implies that the stealth part is less stealthy than we thought it was, and any evidence will drive sales towards Russia too. All parts that had much less chance of happening as the UK systems were proven, they were great and now, or optionally soon, we get the resolution that sales to Saudi Arabia are off. Whether that is right or wrong is not for me to decide, but the fact that the £5 billion loss of revenue is triggering a $12 billion shift in other directions, optionally towards Russia is a part that most ignored to the larger extent, a sales path denied because people forgot that in any war, especially against terrorist forces, the people will always be in the middle. Oh, and if you think that it is all bad, consider that the makers of the F-22 Raptor (Lockheed Martin) also has other paths, so the F-22 profits also forges upgrades and new options in commercial flying, cyber solutions, Radar solutions, Communication platforms and a lot more, in that we see BAE Systems that has services in finance, Cyber security, Compliance solutions and a lot more. Now, the one sale towards Saudi Arabia might not impact it to the largest degree, but a change has been made and the competitors now get a larger slice to play with, and it can lead to additional repeat business, it is not a secret, it is not even an unknown, any person with a decent knowledge in Business Intelligence could have told you that and there is the problem, the one-sided ideology of CAAT is now optionally going to cost the UK a lot more than anyone bargained for.

As I said, I have nothing against ideologists and ideology is great when it can to some degree adhere to commercial reality, and selling to a sovereign nation is intelligent and common sense packaged together, yet when soft-hearted people overreact on events in Yemen, whilst the stage comes from Iranian funded terrorism, how can we go against that? The fact that 16 million Yemeni’s are in danger form several sides (disease and famine) whilst the Houthi terrorists are depriving these people of food, whilst they do everything to stop humanitarian aid via Hodeida and other places, are we not buttering the bread of terrorists?

How can you sleep knowing that this is happening?

BAE Systems, Lockheed Martin and United Aircraft Corporation are not evil, they are not a danger, they sell to governments and all three want to sell to the same governments making this a buyers’ market. The moment you forgot about that part of the equation, that did not make you an ideologist, it made you short sighted and that is my largest concern on CAAT, the fact they are needlessly depriving the UK government of treasury income, yet speaking for selfishly coated me, if it pays my bills, I am all fine with that in the end.

 

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April 7, 2019 · 15:27

When the joke is on us all

We all have moments where we imagine that the dice is cast, yet we play roulette, we think we have the numbers down, yet did you know that the roulette number sequence is different in Europe compared to America? These are all elements in a play of high stake gambling. That same setting returns when we look at the Guardian article ‘Campaigners head to court to stop arms sales to Saudi Arabia’. The article (at https://www.theguardian.com/world/2019/apr/06/campaigners-court-bid-to-stop-uk-arms-sales-to-saudi-arabia) holds two sides (apart from it being partially a joke in my eyes). You see, I have no issue with people who have the principle of being against weapons. That is their prerogative. What does bug me is that these same people will suddenly blame the government for all kinds of issues and they will scream that they want higher taxes for the rich, ignoring the fact that they are the cause of several issues that are the consequence of some faulty misdirected version of ideology.

So even as I am happy to step in and take over the arms trade to Saudi Arabia, mainly because I do not have the luxury of walking away from a multi-billion pound deal, you see the rent is due next week and I would like a nice mince pie after I pay my rent, the £3,576,229,000 will enable me to get both. OK that amount would not all be mine, but 20% could be and that is still £715,245,800.

My entire pension issue solved overnight. The article takes us a step further. With: “The UK court case comes amid the continued fallout from the murder of journalist Jamal Khashoggi, who was tortured and assassinated by Saudi agents“, I am fine with that step for the mere reason that there are too many question marks in that case. The evidence on several levels is missing proper scrutiny, the fact that Turkey has other agenda’s in play is ignored, and the involvement of Iran in all this is ignored on several levels. I am not stating that things did not happen, there is clearly a massive lack of proper scrutiny and people like the Campaign against Arms Trade are fuelling my opportunity and I am fine with that, if stupid people enable me to become wealthy, why would I oppose?

How Come?

Well, we are decently certain that something happened to Jamal Khashoggi, yet to what degree can government actions be proven? That is the issue, there is no evidence and as such can you, or should you stop dealing with a sovereign nation with a lack of evidence? In addition, in the other direction, we have seen a massive indecisive move towards Iran whilst Iran fuelled activities go on in Europe, October 2018, January 2019, covering Denmark, France, Netherlands, and the UK. Yet over at that point, we see an utter lack of actual actions (merely considerations).

Does it matter?

Well that is in part the question, we can accept that Campaign against Arms Trade wants it all to stop, but what is ignored is that merchants have markets and the UK cannot evolve next level defences if they cannot be sold. So whilst places like Saudi Arabia are still opening their internal market to have quality defence gear, places like the UK, Russia and America are looking to sell defence solutions to places that can afford them (Saudi Arabia, Egypt, UAE, Taiwan, South Korea and a few more players), yet the well is drying up, more and more countries have their own solutions and the size of the cake is getting smaller.

The next part is seen where we get Andrew Smith of Campaign against Arms Trade giving us: “This case could set a vital precedent and end UK complicity in the worst humanitarian catastrophe in the world.” In that I respectfully disagree, the catastrophe was that too many people sat on their hands for too long, the fact that Yemen is not just the Saudi-led coalition, the other side, the terrorist side is more than Houthi fighters, it includes Hezbollah as well as Iranian forces, by leaving that out, we see an unbalanced stage and in all this we see a deterioration of events, so even as we accept (to some degree) “civilian targets in Yemen have regularly been hit“, in addition we need to accept the Human Rights Watch who gives us clearly: “Houthi forces have repeatedly fired artillery indiscriminately into Yemeni cities and launched indiscriminate ballistic missiles into Saudi Arabia. Some of these attacks may amount to war crimes. Houthi attacks have struck populated neighbourhoods in Yemen, having a particularly devastating impact on Taizz, Yemen’s third largest city.” There is more than one player, yet these focus groups have merely looked at the Saudi side and that needs to stop, not because of what they are trying to achieve, but because the actions are much larger then they proclaim and there are two sides. In addition to what was given we need to consider the fact that Houthi forces have been staging some of the events. Al Jazeera gave us more than once: “The war has been at a stalemate for years, with the coalition and Yemeni forces unable to dislodge the Houthis from the capital, Sanaa, and other urban centres.” This indicates that the Houthi forces are in-between the population, with 16 million on the verge of death by starvation, is inaction even a problem?

Yet, from one point of view, I do not mind. If I get the option, I will sell it to the Saudi government and I will send Andrew Smith an authentic Fortnum and Mason hamper, just so that he knows I appreciate him enabling me to write a multi-billion pound invoice. Of course, the optional impact that the UK faces if the profitability of Britain’s largest defence company, BAE Systems is set to zero. I feel certain that Andrew Smith can explain it to the thousands of workers out of a job if I am given the assurance that I can get a much better margin by selling the Saudi government 47 Mikoyan MiG-35, complete with training and proper service level agreements. That puppy is a direct superior option against the Typhoon, the Super Hornet and a few others; my upside is that if I get Saudi Arabia on board, I am likely to get additional requests from Pakistan and at least three other governments.

So at that point, how exactly did Campaign against Arms Trade achieve anything (other than making me filthy rich and I will thank them in person for that). In this day and age where the markets and economies cannot take these hits, it is the ability of Andrew Smith that Europe fears, you see commerce is at the heart of the matter, and at this point, any nations bringing in bad news will stop being an asset, that is the Wall Street premise we all signed up for in 2005 when things started to get bad, we never corrected for any of it.

Distasteful like a Vegan

We can all consider where our ethical boundary is, yet in all this, we seem to forget that any sovereign nation has the right to self-govern, Europeans with their gravy train, ECB and shallow morals seem to have forgotten that. In all this having commerce allows diplomats to find a path that steers some nations away for certain practices and that path will be denied to them soon thereafter. Consider that I am all about profit and the Campaign against Arms Trade allowed for that change, how did they achieve anything? Because the UK misses out on have a dozen billions a year less? How many projects and funding issues will dry up the year after that starts? We have settings and measurements, most do not deal with terrorists, most do not sell to individuals, and the Campaign against Arms Trade is starting to allow for the return of those markets.

Sidestepping into art

Consider John Wyndham’s 1951 novel The Day of the Triffids. Some saw the movie, some read the book. Yet what happens when the sequel is a direct horror story? What happens when the sequel gives us the stage where the Triffids land on a planet ruled by vegans and vegetarians? How scared will they be (the Triffids that is)? This relates to the setting we have, you see, we seem to push towards everyone becoming a vegan and vegetarian (non-weaponised), because that is what their norm states, yet what are we going to do about the hunters (lion), the carrion eaters (Hyena) and other non-vegetarians? What do we do when people have certain norms and will not be told by anyone how to act? Is that such a weird issue?

You merely have to look at football hooligan UK to see that part of the equation, and there is no end in sight. It is a shallow connection, I agree, yet that is the ball game, someone wants to pressure towards an ideology whilst the other players are not interested. Now that does not invalidate the ideology, yet the fact that the reasoning is one sided, whilst the entire economic premise requires selling to other governments is a factor that cannot be ignored.

Who are we to dictate rules and manners? I get it, by denying the Saudi government one’s own screwed up values is all good, yet when the act does the opposite of what they are trying to achieve, can we agree that the action is not that bright? I am not comparing the Saudi people with either the Lion or the Hyena. I am merely stating that there is more than one option and that is fine for all concerned. How can any nation, most of them either dealing with their own levels of corruption, or facilitating to massive corporate tax evasion, as these elements also impact whatever was to be part of a government budget, do we have any business impeding the other paths that were available? Consider that we were treated only a month ago to ‘HMRC’s first probes into corporate tax evasion facilitation‘, the stage where we are seeing “HMRC has confirmed that it has opened its first investigations into the corporate criminal offence of failure to prevent the facilitation of UK tax evasion, using new powers to tackle corporate fraud contained in the Criminal Finances Act, introduced in the wake of the Panama Papers leaks“, an event that is close to 15 years late. How can we see the actions of a group stopping billions the UK government desperately needs? Don’t worry, in the end I might be ecstatically happy regarding their act, I am not so certain the British people will love the impact of what Campaign against Arms Trade invoked to happen. We can see that there is a lot that needs fixing, I am not sure that international arms trade to other governments no less is a first problem to solve, not with the competition and not with much larger issues in play.

And it is here where we see the delusional part of Andrew Smith, with “BAE’s solution will always be the same: it wants to sell more weapons, regardless of the atrocities they are enabling. Wherever there is war and conflict, there will always be companies like BAE trying to profiteer from it“, we get to see just how whacked his view is. Well, to be honest, he is allowed to have that view, it just does not add up. You see, the actual premise is: “BAE’s solutions are designed to keep Britain safe. Yet the development will cost 155 billion, to assure the top state of defence for the UK, who will only buy for up to 100 billion requires additional sales to global governments who could need that solution, even as the US buys a lot, it is not enough to fill the gap and that is where other nations come in. There is the Netherlands, Germany, Norway, Saudi Arabia, United Arab Emirates, Oman, Thailand, South Korea, Taiwan and a few others.“ In addition Andrew Smith seems to forget (or he does not care)that others like the US, France, Italy and Russia all have solutions to sell, so we need to ensure our survival for the need of growing British defence and keeping it as high as possible. This part is extremely important, because whoever has the best deals with places like Saudi Arabia is also in the best position to aid and guide international development in places like that. As Saudi Arabia is about to become a 5G powerhouse, that path is more and more important for everyone. Consider the impact if Campaign against Arms Trade is successful. Do you think that British Telecom has a chance in hell to grow the 5G options to the degree they could if their portfolio is auto rejected in several Middle Eastern nations, or only accepted at a mere 2% margin? Commerce is so intertwined in so many ways on a global level that the entire premise Campaign against Arms Trade is to regarded as too ideological, whilst ignoring common sense; it would be nice if this was a setting where there was only the US and the UK, yet there is a strong defence field that includes Russia and China, whatever the UK loses, China and optionally Russia will gain and in that regard, how did that help the British people?

The fact that we see a one-sided part against Saudi Arabia, whilst there is a large and utter denial (or silencing) on the acts from Hezbollah and Houthis firing Iranian missiles into the Saudi population is not mentioned. The article (at https://www.caat.org.uk/campaigns/stop-arming-saudi) gives more, yet leaves the atrocities of the Houthi and Hezbollah terrorists out of that equation, that part alone should be cause for concern. The small fact that at present there is no evidence, evidence that could stand up in court giving us a clear path that the Saudi government murdered Jamal Khashoggi, is also part of concern. As I stated earlier in other articles, I am not stating that they are innocent, I am stating that the evidence has gaps, large ones and the conviction through some political hacks came via a CIA report stating ‘high confidence‘, which is not the same. When did we allow the courts to decide on ‘confidence‘? The fact that the acts in all this (Yemen and Jamal Khashoggi) from both Iran and Turkey is largely ignored is making the entire stage even more appalling.

Yet, I will thank Andrew Smith in person when I get to deliver the goods making me rich, I do however expect him to be not so appreciative of it all in the end, even less so when others with no scruples at all (like myself) start delivering goods instead of BAE Systems, and deleting the job security of 83,200 employees? Well, it is ideology, is it not? They will just have to find another job.

 

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