🔒 Flash Briefing: Trump ditches Davos; Richemont jumps on good 4Q; Aussie housing slump

By Alec Hogg

In today’s global headlines:

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• Ford Motor Company’s president of Europe, Middle East and Africa has announced an overhaul of these operations. Actions will include retrenchments, plant closures and stopping the production of low profit models. EMEA head Steven Armstrong’s announcement, focused on Europe where Ford’s sales were down 2.3% in the first nine months of 2018. He said the job cuts would affect a significant number of the 53,000 European employees. This is part of the global drive to redesign the business in line with a decision by Ford to cut annual costs by $14bn. US rival General Motors sold its European business to Peugeot in 2017 and last year announced it would be closing five plants in North America. Britain’s biggest carmaker Jaguar Land Rover said yesterday it would be cutting 4,500 jobs worldwide. Ford was South Africa’s second biggest exporter of cars in December, selling over 9,000 vehicles abroad.
• US president Donald Trump won’t be going to Davos after all. Trump yesterday announced the cancelation of his proposed return to the World Economic Forum’s annual meeting later this month as opposition grows against his proposed border wall and the partial shutdown of the US government continues. He also suggested declaring of a state of emergency to release the $5.7bn needed to pay for a wall on the Mexican border. Pressure escalated on another front yesterday with news his long-time personal lawyer and confidante Michael Cohen will testify before the House of Representatives next month. Cohen has turned state witness in a criminal action against his former boss relating to hush money two former lovers were paid at a critical point of the 2016 presidential election.
• Australian house prices fell just over 6% in 2018 after an acceleration of the decline during December, with property prices in Sydney falling an annualised 15% in the final quarter and Melbourne down 12%. A report by Investment bank Morgan Stanley says house prices are falling at the fastest rate in 35 years, warning that this could translate into a broader impact on the economy. Its analysts see the downward trend in property prices continuing in 2019.
• In South African-related news, the share price of global luxury goods group Richemont rose more than 2% this morning on the release of strong results for the December quarter. The sales growth number came in at 24%, primarily due to the consolidation of online operation Yoox Net A Porter, which became a wholly owned subsidiary last May. On a directly comparable basis Richemont’s sales were 5% above those of the same three months of 2018 in constant currency terms. This compares favourably with the nightmare Christmas experienced by high street retailers, including the US’s Macy’s whose share price fell almost 20% on yesterday’s release of its latest financials. In the UK, poor results from Debenhams led to its shareholders firing its chairman and CEO yesterday. Richemont’s global diversification played its part with sales up 10% in China, 9% in the US and 7% in Japan, offsetting a fall in Europe because of the impact of French unrest on store opening hours, and the Middle East and Africa due to unfavourable currency movements.