Category: Uncategorized

1. In MACROECONOMIC & MARKETS NEWS, the EU tries to pitch to the US, China motors on, investors pile in and Tesla’s inclusion causes much head-scratching
2. In M&A AND IPO NEWS, UK M&A shoots up and S&P Global approaches IHS Markit while Airbnb and DoorDash aim high
3. In CORONATRENDS NEWS, Weight Watchers slims and Esports triumphs while preparations are made for vaccine rollout
4. In MISCELLANEOUS NEWS, the UK cuts Huawei off quicker, Arcadia faces collapse and Black Friday underwhelms in shops
5. AND FINALLY, I bring you “spot the sniper” and unusual Christmas tree decoration…

So the EU holds out an olive branch, China motors on and investors pile in while Tesla causes a kerfuffle…

EU pitches new post-Trump alliance with US in face of China challenge (Financial Times, Sam Fleming, Jim Brunsden and Michael Peel) shows that the EU intends to persuade the US to form a new global alliance to address the “strategic challenge” posed by China. The European Commission has prepared a draft paper that calls for new and deeper co-operation on all sorts of things like digital regulation, deforestation and how to tackle Covid. * SO WHAT? * After a somewhat testy relationship with Trump, Europe is now trying to pull both sides of the Atlantic closer together and this seems like a more conciliatory way of doing it rather than last week’s introduction of a digital tax by France. Europe has been largely frustrated in its wish to have a more co-ordinated approach regarding China and will see Biden as a way to get this going. This is only a draft paper, but outlines intent in black-and-white.

Talking about China, though, China stocks rise after data underscores economic recovery (Financial Times, Hudson Lockett) shows that the country’s factory activity had its best month for three years as the official purchasing managers’ index for manufacturing recorded factory output rising at its fastest rate since 2017 with a jump in new export orders. Chinese consumers move towards forefront of economic recovery (Financial Times, Thomas Hale and Ryan McMorrow) highlights strong consumer spending figures and cites a Morgan Stanley report which contends

that private consumption would supercede exports and infrastructure investment as the main catalyst for economic growth in China next year. The record-breaking amount spent on Singles’ Day last month alone is yet another testament to Chinese consumers’ willingness to spend.

Meanwhile, Investors pile record sums into global stock markets (Daily Telegraph, Tom Rees) shows that recent positive news on vaccines has triggered major inflows of money into global stock markets as hopes increase over a resulting economic recovery. As a consequence, global markets are expected to post their strongest monthly performance ever today.

Talking about markets, Tesla’s S&P debut is set to put $100 billion in trades in motion (Wall Street Journal, Michael Wursthorn and Gunjan  Banerji) shows that Tesla’s imminent entry to the S&P500 is causing a bit of a kerfuffle due to its size (market cap of about $555bn) and its share price volatility. It is causing so much concern (because of its potential outsize effect on the index as a whole) that the index is thinking of adding Tesla to the index over two days rather than one. * SO WHAT? * This is the biggest company ever to enter the index and will be, on entry, the sixth largest company in the S&P500 – bigger than Berkshire Hathaway but smaller than Facebook – so no wonder it will have an effect. It would be like you having a bath and then an elephant deciding to join you 😁. Not only will funds have to buy Facebook shares to reflect the constituents of the index, they will also have to sell down smaller constituents to buy Tesla shares (who will make up about 1% of the index). This is quite something for a company that makes b*gger all cars 😂

M&A activity increases while Airbnb and DoorDash aim high…

Suddenly big deals are the only game in town (The Times, Ben Martin) highlights the fact that M&A activity is increasing considerably as City stockbroker Peel Hunt points out that there have been 15 bids for London-listed companies since the start of August worth almost £23bn (RSA agreed to sell itself to Canadian rivals for £7.2bn, Caesars Entertainment is buying William Hill for £2.9bn and Codemasters is being bought by Take-Two Interactive while G4S is currently trying to defend itself from a £3bn hostile bid, for example). This is mainly due to a number of changes that have evolved under lockdown. Firstly, bankers and companies have become more accustomed to doing deals virtually. Secondly, stock markets have now recovered considerably since their February/March lows meaning that management are more open to being approached. Thirdly, everyone knows more about the virus and its effects, which means that it is getting increasingly easier to plan. If you add positive vaccine news into the mix, you can see why companies are more willing to look through current circumstances and think about how they’d like to position themselves on the other side of the pandemic. * SO WHAT? * Many believe that the M&A frenzy will continue as private equity firms are getting increasingly active on the buying front (think Warburg Pincus and TowerBrook’s purchase of the AA and Lone Star’s purchase

of McCarthy & Stone) and because there is a growing valuation gap between UK-listed companies and their foreign counterparts (presumably this is mainly due to Brexit concerns).

In terms of current deals, though, S&P Global nears deal to buy IHS Markit for about $44billion (Wall Street Journal, Cara Lombardo and Liz Hoffman) shows that two of the largest data providers to Wall Street are lining up for what could be the biggest deal of the year. IHS Markit, based in London, is worth about $37bn while S&P is worth about $82bn. A deal announcement is imminent.

Meanwhile, Airbnb, DoorDash aim for higher-than-expected valuations ahead of debuts (Wall Street Journal, Maureen Farrell) highlights both companies’ desires to aim for a higher valuation in their forthcoming IPOs as Airbnb is targeting a $30-33bn range (versus market expectations of $30bn) and DoorDash is targeting $25-28bn (versus expectations of $25bn). Listings are expected in the middle of next month and roadshows (where the companies visit potential investors) are expected to start about now. * SO WHAT? * Both companies have actually done quite well under lockdown and are no doubt wanting to take advantage of that being fresh in investors’ minds. Out of the two, I would have thought that Airbnb stands to benefit more over the longer term as they will do better from both domestic and international traffic as lockdowns change while I still think that companies like DoorDash SHOULD do less well in an environment where people are time rich and cash poor (takeaways are an expensive luxury IMO – sorry to be a downer!). 

Weight Watchers aims to lose weight, Esports benefits and preparations are being made for vaccine rollout…

Dieting giant begins to slim down its workforce (Daily Telegraph, Louise Moon) shows that Weight Watchers, trading as WW International since 2018, is considering cutting up to 50% of its UK coaches as soon as next week as it tries to migrate its business more online due to the pandemic and increasing competition. * SO WHAT? * Up until now the model has been such that WW coaches guide people through programmes via live-chats and in-person sessions but big debts and more competition are forcing the company to evolve. It is doing the right thing IMO as it needs to capitalise on its name as much as possible as quickly as possible or become irrelevant. In an increasingly crowded market, it needs to move with the times.

In Esports takes off in lockdown but will the bubble burst (Daily Telegraph, Michael Cogley) we see that esports has seen a major boost in popularity under lockdown – viewing figures on game streaming site Twitch reached a peak this month of 2.5m concurrent watchers, which is more than twice the number for the same period last year – but there are debates on how to monetise it most effectively. * SO WHAT? * I would say that esports has definitely established itself this year and you could argue that the coronavirus has meant that it has brought in far more new players and interest than would have been the case under “normal” circumstances, but the question is whether the pendulum could swing the other way when more live sport

comes back online. IMO, it WILL swing the other way as people under lockdown yearn for a “live” experience that could be made all the more intense after being restricted for so long and it could make people appreciate it more. Still, there will be some who have discovered that they like both – and that’s still a good thing for esports.

Elsewhere, International rollout of Covid-19 vaccine on track for next month (Financial Times, Donato Paolo Mancini, Guy Chazan and Joe Miller) looks at vaccine rollout plans as the UK is expected to be the first country to approve the Pfizer/BioNTech vaccine with the first jabs being made on December 7th, with US approval from the FDA expected to follow shortly after. The European Medicines Agency, which licences medicines for use across the EU, will be discussing approval next month of the Pfizer/BioNTech vaccine as well as Moderna’s. Pharmacies add freezers, train staff to handle Covid-19 vaccination drive (Wall Street Journal, Jaewon Kang) shows that all sorts of venues are making preparations to administer vaccines as part of “Operation Warp Speed”. They include supermarkets such as Kroger and Albertsons as well as CVS Health. * SO WHAT? * This is all very exciting but I am sure that there will have to be an accompanying PR campaign to get the general public to believe in the efficacy of these vaccines given how unusually quickly they have been developed and approved. After all, it’s all very well to have the capability – but if you don’t have Joe Public coming in there’s not much you can do. As I have said before, although governments seem to be loath to force people to take the vaccine right now, I would imagine that there will be a reasonable uptake as I would expect people to have to prove that they’d been vaccinated in order to do certain things (e.g. get on a plane, go on a cruise, go to a rock concert – maybe even go to a bar). 

Huawei takes yet another blow, Arcadia faces collapse and Black Friday underwhelms…

In other big stories today, UK to ban installation of Huawei 5G equipment from September (Financial Times, Sebastian Payne and Nic Fildes) has taken many by surprise as this new ban will come into effect for new Huawei equipment from September 2021 rather than the existing arrangement where companies will be able to buy Huawei equipment until the end of this year and use it until 2027 by which time it should all be removed. Telcos companies say that this will increase costs and delay 5G rollout by a number of years. * SO WHAT? * This is a particular nightmare for companies who have already stockpiled Huawei equipment (it will be useless now) and who have had to deal with changing government guidance on how to do business with the likes of Huawei. Nokia and Ericsson will be loving this new move (they provide similar equipment) and will no doubt use this opportunity to hike up prices. I guess this will make all telcos much more inclined to boycott Huawei completely given the shifting sands of government opinion.

Elsewhere, High street crisis deepens as Arcadia faces collapse (The Times, Callum Jones, Ashley Armstrong) shows that 13,000 jobs hang in the balance at shops owned by Arcadia (Topshop, Dorothy Perkins etc.) while the future of Debenhams (12,000 staff) is also likely to be decided this week. Interestingly, Mike Ashley’s Frasers Group is looking at intervening in both but has major beef with both Arcadia’s Philip Green and Debenhams, which he tried and failed to takeover a while back. Fears for suppliers as Arcadia faces collapse (Daily Telegraph, Laura Onita, Michael Cogley and Tim Wallace) shows that it’s not just Arcadia that will suffer. Dramatic times…

Then in Black Friday was a bust for many stores, better for online (Wall Street Journal, Sarah Nassauer and Suzanne Kapner) we see that US shoppers continued to buy online and avoid the physical stores. Those who DID venture out tended to stop in fewer shops and go to places like Walmart and Target that sell a wide range of goods. * SO WHAT? * This is hardly surprising given infection rates – but I do wonder whether the same will happen over here when some restrictions are lifted. 

…in other news…

I thought I’d leave you today with the impressive Camouflaged sniper hidden in forest baffles Brits as they struggle to spot him (The Mirror, Paige Holland) and the brilliant Mum shares hilarious result after toddler decorates gran’s Christmas tree (The Mirror, Courtney Pochin) 😂.

1. In BIG PICTURE & BITCOIN NEWS, Merkel suggests closing ski resorts, economic sentiment improves and Bitcoin suffers
2. In RETAIL/HIGH-STREET NEWS, hopes are high for Black Friday, Klarna benefits, Mulberry does better in Asia and UK pubs warn of more hurt
3. In TECH NEWS, social media pressures rise, the UK introduces a new digital watchdog and Salesforce/Slack gathers momentum
4. AND FINALLY, I bring you some impressive dad dancing (not me 😁)…

So Merkel plays party-pooper, UK economic sentiment improves and Bitcoin falls…

*** 📣 Watson’s Daily is going to start a monthly competition for SILVER members. The prize will be three weeks of commercial awareness sessions with me. More details to come…***

Merkel calls for closure of ski resorts across EU (Financial Times, Guy Chazan and Sam Jones) shows that Germany’s mum is appealing to the EU to close all ski resorts over the Christmas and New Year period to limit the spread of the virus. In a speech to the Bundestag, she said that “The ski season is approaching, [and] we will push for a vote in Europe to close all ski resorts”. Austria is dead against it as its winter sports industry is a key part of its economy and says that this is an individual country thing and not a Brussels thing. The ski sector accounts for 4% of Austria’s GDP and almost 8% of winter employment. Elsewhere, Italy’s PM wants to see all ski resorts closed but France is currently keeping resorts open at Christmas although ski lifts are be closed (so you will still be OK to ski if you are incredibly fit and can walk up the mountains and/or if you own a helicopter 😂). Many of Switzerland’s largest ski areas are already opening. * SO WHAT? * This is a tough call as both sides have a point. You can understand Merkel’s appeal for unity on this  given that the Austrian ski resort of Ischgl was a notorious coronavirus hotspot during the first wave. Then again, you can understand the other side of this as well because those involved in the industry need to keep things going.

UK’s economy suffers in November but Covid vaccine hopes ease gloom (The Guardian, Richard Partington) is an interesting article that sums up a number of economic indicators that gauge current economic sentiment. It talks about concerns of rising infection rates, lower traffic levels reflecting movement restrictions, vaccine hopes lifting spirits, clothing and secondhand car prices rising, our economy sinking into a double-dip recession as new restrictions hit, rising unemployment, the UK consumer’s last hurrah before Christmas and fast-rising house prices – among other things. FWIW, I think that things will pick up as we head towards Christmas but there could be an almighty hangover in the new year as reality hits – although a thumping “headache” may be avoided if there is more positive vaccine news.

Bitcoin slumps after rallying to all-time high (Financial Times, Eva Szalay) shows that the cryptocurrency fell by as much as 13% to $16,320 in trading yesterday after reaching a new all-time high of $19,510 the day before. * SO WHAT? * Bitcoin has shot up by 50% in the last three months – and by 140% this year – so you have to see this fall in context. This could be a “correction” as traders take profits but it feels different to the boom-bust it had in 2017/8 because the cryptocurrency is becoming more mainstream.

There are high hopes for Black Friday, Klarna benefits, Mulberry sees an Asian uptick and pubs announced more cuts…

Black Friday expected to beat UK online sales records (The Guardian, Zoe Wood) suggests that Black Friday 2020 is going to be a good one for retailers. Since its introduction by Amazon in 2010, Black Friday has become the biggest shopping event of the year and many retailers have jumped on the bandwagon with a range of discounts to tempt shoppers to part with their cash (for instance, Asos is offering up to 70% off and Boohoo up to 90% off!). The internet industry body IMRG said last week that online sales were 56% higher than they were in 2019 and money.co.uk research found that 10% of shoppers were planning to spend much more on Black Friday than last year – £350 on average. * SO WHAT? * While online is clearly going to do well out of this as almost all shops are currently closed, let’s hope that people have enough left over to spread the retail joy when they DO open again. This Christmas, of all Christmases, is going to be the key to survival for many shops.

Shoppers’ online surge pays off for Klarna (The Times, Katherine Griffiths) shows that it’s not just the retailers who stand to benefit from all this Black Friday frenzy. Klarna, the buy-now-pay-later specialist, has seen a huge upswing in the usage of its platform as customers continue to spend more under the pandemic. It said that it saw a 43% hike in the value of transactions in the first nine months of this year and income rose by 37% over the same period. * SO WHAT? * I really am concerned about Klarna. It just sounds to me like a potential disaster waiting to

happen as it is most exposed to the most economically vulnerable group there is right now – young people. These are the same young people who are seeing way higher unemployment levels than their elders and if there’s no money coming in, you do wonder what will happen when they can’t pay. This really needs to be monitored IMO. Payments processing company Worldpay says that buy-now-pay-later is the UK’s fastest growing online payment method – surely that can’t be good right now. Great in a growing economy no doubt, but when all sorts of 💩 is hitting the fan economically I just don’t think it’s good to see this kind of credit rising. 

Meanwhile, on the high street, Mulberry’s push into Asia bears fruit but sales drop by a third (The Times, Tom Ball) shows that sales at Mulberry (where a handbag will set you back £475 to £1,295) have fallen by almost a third in the last six months but its Asian expansion has helped stem the rot. Tiffany also saw a boost from its Asian (specifically, Chinese) operations – so it seems that a pattern may be forming here. It is currently a potential takeover target for Frasers Group, which will be compelled to make a formal offer by the middle of next month after building up a sizeable stake in the company.

Then in UK pubs announce heavy losses and job cuts as Covid curbs bite (The Guardian, Joanna Partridge) we see that companies including Mitchells & Butlers and Fuller, Smith & Turner have all announced major losses and cut about 1,700 jobs between them as the effects of the coronavirus continue to bite. * SO WHAT? * What with this latest tier system and uncertainty about when this is going to end, you can understand the gloom hanging over the industry. IMO, the government is really going to have to step up here because no-one else is going to be able to save them.

Social media faces more pressure, the UK introduces a new watchdog and Salesforce/Slack talk excites…

I think that Social Media’s liability shield is under assault (Wall Street Journal, Ryan Tracy) is really interesting because Section 230 of the Communications Decency Act – the law that has governed social media and other internet businesses and overseen their massive rise – looks like it could be under threat for the first time in its 24-year history. The law has been giving them broad immunity for user-generated content which critics say has resulted, over the years, in companies being allowed to ignore the spread of false and dangerous information. There seems to be a growing sentiment in Washington that this law needs to have a serious overhaul – but for different reasons. Republicans say it’s because it gives the outlets too much power to restrict free speech because they are not liable for removing content but Democrats say that it doesn’t do enough to stop the spread of false news. Tech companies themselves realise the need for better content moderation without admitting to having a major problem. * SO WHAT? * There is clearly a problem here and it’s not immediately obvious who is going to resolve it. Both Biden and Trump have called for its revocation, Congress COULD do it and although the Supreme Court has never really got involved in Section 230, some have said that it is about time it did. Major changes are highly likely to result in a massive and sudden need to employ armies of moderators – or they could stop hosting user posts completely. This is going to be VERY interesting to follow IMO and could have massive implications on all social media companies.

Britain tries to break Big Tech stranglehold (Daily Telegraph, Ellie Zolfagharifard) shows that the Britain has just created a new tech regulator – called the Digital Markets Unit – that will sit within the Competition and Markets Authority as a specialist division that will focus on the stranglehold that Big Tech has on the UK’s £149bn digital sector. It will also cover the news publishing industry. The new regulator will start work in April. * SO WHAT? * It seems to me that pressure is really building against Big Tech, what with the Section 230 thing I just mentioned and other moves to crack Big Tech’s dominance in so many areas. It will be interesting to see whether anything concrete comes of this – I certainly hope so!

Salesforce talks to buy Slack foreshadow showdown with Microsoft (Financial Times, Richard Waters) just builds on what I was talking about yesterday. It makes the interesting point that Salesforce looked at buying Slack last year when it floated last year, but the view at the time was that it would be prudent to wait until its share price got weaker. Salesforce’s share price has risen by 57% since Slack floated whereas Slack’s has fallen by almost 25% in the same time period. Slack has been continuously fighting against the “free” service offered by Microsoft as part of “Teams”. Salesforce/Slack: smells like Teams spirit (Financial Times, Lex) makes the point that a deal would be about broadening the product range rather than saving costs and Slack could definitely do with access to Salesforce’s client base!

…in other news…

I thought I’d leave you at the end of this week with something that will hopefully lift your spirits in Dad hilariously dances in daughter’s video – unaware it’s being sent to teacher (The Mirror, Luke Matthews). Gotta love a bit of dad dancing 🕺!

1. In TECH NEWS, France imposes the digital tax, Facebook makes an error, TikTok gets an extension, Salesforce eyes Slack and IBM announces job cuts
2. In M&A NEWS, Bertelsmann buys Simon & Schuster, Future buys GoCompare and AA agrees to takeover
3. In INDIVIDUAL COMPANY NEWS, Netflix ups the budget, De La Rue is in talks about a Covid passport and AstraZeneca’s vaccine faces criticism
4. In MACROECONOMIC NEWS, Sunak outlines the latest response to an “economic emergency”
5. AND FINALLY, I bring you a Tom Kerridge Christmas…

So France braves it against Big Tech, Facebook’s error costs, TikTok gains more time, Salesforce cosies up to Slack and IBM announces job cuts…

*** It’s THURSDAY today, which means that it’s ZOOM time! This is a Zoom call where I talk about the week’s key business and financial markets news and open it up to questions from YOU where you can ask anything you like. The call for PAYING SUBSCRIBERS starts at 5.30pm and finishes at 6.30pm [SO WE ARE BACK TO THE USUAL TIME]. In this call, I do the weekly roundup, Q&A and interactive group discussion. Joining details for this call are HERE. If you want to upgrade to be a paying subscriber, please click HERE. Hopefully I will see you later! Don’t be shy – say hello! IF you have any issues accessing this call, please e-mail to tell me on peter@seihaconsulting.com and I will set something else up ***

Prior to this call I will be doing an Instagram Live starting at 5pm on the Watson’s Daily Instagram channel where I will be picking out a few of this week’s big stories and telling you about the new monthly competition ***

France appears to be willing to brave it alone in France demands digital tax payments from US tech groups (Financial Times, Aime Williams, Hannah Murphy and Victor Mallet) as French tax authorities have decided to push on regardless of the consequences with Washington and demand 2020 tax payments from the likes of Facebook and Amazon. * SO WHAT? * This action is likely to trigger tariffs of 25% on $1.3bn worth of French handbags and make-up as Trump’s lot say that such taxes unfairly target American companies and threatened retaliation. Governments around the world argue that tech companies pay too little tax on the profits they make but not many have the balls to stand up to the tech giants and impose taxes more forcefully. The OECD tried to get some kind of blanket tax agreement across Europe last month but couldn’t get enough countries to agree so another vote has been booted into next year. We’ll just have to see whether Biden will be able to bridge the gap when he comes to office in January but even if we see these companies paying higher taxes I think they are unlikely to suffer! They will just make advertisers pay more and pass any other costs onto customers where they can.

Talking of Big Tech and advertising, though, Facebook’s latest error shakes advertisers’ confidence (Wall Street Journal, Alexandra Bruell and Sahil Patel) shows that the social media giant is offering millions of dollars in credits to some advertisers after discovering a bug in one of its tools (the “conversion lift”) that has shown the wrong

figures on how effecting their ads are. The tool has apparently overestimated ad success in some campaigns for 12 months leading to advertisers overspending. * SO WHAT? * This is not great and it will shake the confidence of advertisers, many of whom are cash-strapped and need to keep a proper handle on budgets. For instance, in retail, marketers are spending 5-10% more on Facebook and other performance-dependent sites in a bid to get more focused bang for their buck. Given the importance to Facebook’s of ad revenues, it will be imperative for the company to show that this is a one-off and not symptomatic of other problems. Ultimately, I don’t think this in itself will be disastrous for Facebook, but if there are more blunders like this to come things could get tricky. It will also play into the hands of those wanting to put more pressure on the company, saying that it’s systems are not reliable enough to handle sensitive data.

In the latest in this ongoing saga, TikTok granted extension on divestiture order (Wall Street Journal, John D. McKinnon) shows that the Committee on Foreign Investment in the US (aka “Cfius”) has granted TikTok and its parent ByteDance a one-week extension on the original deadline to finalise a deal with a buyer to next Friday. * SO WHAT? * There was no official comment from the companies involved, but as I have said before, I think TikTok/ByteDance will do all it can to drag things out for as long as possible so that it can force itself onto Biden’s agenda and potentially get more lenient treatment that it got under the Trump administration.

Salesforce is in advanced talks to buy Slack Technologies (Wall Street Journal, Cara Lombardo, Liz Hoffman and Dana Cimilluca) shows that CRM-supremo Salesforce is in advanced talks to buy Slack Technologies in a deal that could be announced within the next few days. Slack’s market cap is currently about $17bn and if this went ahead it would be Salesforce’s biggest ever acquisition (Salesforce’s market cap is about $230bn currently). * SO WHAT? * I think this would be a really powerful combination and will edge Salesforce ever closer to its goal of becoming a broader software provider, expanding out of its traditional niche. I really think that this acquisition could make the enlarged entity more of a serious competitor to Microsoft! Interestingly, Slack’s share price went up by 30% on the rumours whereas Salesforce’s dropped by 5% so it seems that investors may need convincing of the merits of a deal!

Elsewhere in tech, UK and Germany in firing line as IBM cuts jobs (Wall Street Journal, Morgan Meaker) shows that the company is expected to cut around 2,000 jobs in the UK and Ireland as part of a programme of 10,000 job cuts across Europe in a bit to slim down costs. This is the equivalent of 20% of the European workforce but the UK and Germany will suffer the most.

Bertelsmann buys Simon & Schuster, Future eyes Gio Compario and the AA agrees to a PE takeover…

In a quick scoot around M&A news today, Penguin owner adds Simon & Schuster to its bulging bookshelf (The Times, James Dean) shows that Bertelsmann, the company that owns Penguin Random House, is about to buy Simon & Schuster for almost $2.2bn that will confirm its position as the world’s biggest publisher, putting more distance between it and second-placed Harper-Collins, which is owned by News Corp. The deal now has to get past regulators.

Investors quit Future after surprise takeover bid for GoCompare (The Times, Ben Martin and Simon Duke) highlights a massive 16.7% fall in the share price of Future, the magazine publisher, as it announced plans for a £500m cash-and-shares deal to buy GoCo Group, the parent of GoCompare. This would be a big acquisition to swallow for the publisher as it continues to pursue its online strategy and provide customers with more services in finance, including price comparison.

Then in AA agrees £219m takeover deal with private equity investors (The Guardian, Jasper Jolly) we see that the AA has agreed to be taken private in the bid flagged earlier this week with private equity firms TowerBrook and Warburg Pincus. The new owners plan to upgrade the AA’s existing infrastructure and offer new products and services – but I imagine that, being private equity firms, they will also be doing a load of cost cutting as well.

Netflix spends, De La Rue tries to drum up business and AstraZeneca’s candidate faces criticism…

Britain is a jewel in the crown for Netflix filming (The Times, Tom Ball) shows that Netflix is to boost its production spend in the UK by 50% to £750m after successes of productions including The Crown and Sex Education. This news comes hot on the heels of last month’s announcement that the company would treble its office space. * SO WHAT? * This will be great news for an industry that has suffered tremendously under the pandemic. As productions have shut down for so long, content for the hungry streamers has been running down quite considerably – so investment in making more will come as very welcome news for many.

In other news, Banknote printer De La Rue reveals Covid passport talks (Daily Telegraph, Alan Tovey) shows that De La Rue is holding talks with governments and pharmaceutical companies about producing “Covid passports” with security seals and tracking systems that guarantee the authenticity of vaccines and tests. This all sounds great, but this is just talk for now. Worth bearing in mind, though…

Then in Doubts raised over AstraZeneca-Oxford vaccine data (Financial Times, Donato Paolo Mancini, Anjana Ahuja and Clive Cookson) we see that concerns are growing about the touted efficacy of the Brit vaccine as some say that there’s been a bit of manipulation on the data that has been made public so far. * SO WHAT? * IMO, this goes to show that the euphoria that follows these announcements should be tempered given how fluid the situation is. The search for effective vaccines continues…

Sunak gets real and does what he can…

Sunak warns of ‘economic emergency’ as borrowing hits record £394bn (Financial Times, Chris Giles, George Parker and Jim Pickard) highlights the dire economic circumstances that we find ourselves in as a country as Rishi Sunak announced his new Spending Review. He cut

government spending plans, froze public sector pay increases and cut overseas aid spending but promised to invest in schools and hospitals while continuing to support businesses. He also announced a new “levelling-up fund” of £4bn that councils will be able to apply for to get grants in addition to a new national infrastructure fund. * SO WHAT? * He has one tricky job. I would say that all these spending plans are probably causing opposition parties to scratch their heads as they always tend to tout the benefits of increased spending – but the Conservatives are (uncharacteristically!) having to do that anyway. It’ll be interesting to see whether they can do much to change their own policies to be markedly different.

…in other news…

I thought I’d leave you today with an idea for Christmas dinner (if you’ve got the money!) in Tom Kerridge leaves people divided over £350 Christmas dinner you cook at home (The Mirror, Rosaleen Fenton). It sounds great if you can do/afford it!

1. In MARKETS, CRYPTO & VACCINE NEWS, US stocks rise, Bitcoin breaks $19k and Sputnik is looking good
2. In RETAIL NEWS, we look at the problems faced by global retailers as well as the fortunes of Best Buy, Debenhams, AO World and Pets at Home while Sainsbury’s offers in-store Patisserie Valerie and I bring you the latest retail catchphrase
3. In CORONATRENDS NEWS, we look at Peloton frustration, Camelot’s triumph and Compass’ thoughts on the effects of WFH
4. In MISCELLANEOUS NEWS, India bans more Chinese apps while Accor and Hoxton cosy up
5. AND FINALLY, I bring you something you might not have known about biscuits…

So the Trump Bump gives way to the Biden Boost, Bitcoin smashes through new highs and Russia touts the superiority of its vaccine…

*** 📣 Watson’s Daily is going to start a monthly competition for SILVER members. The prize will be three weeks of commercial awareness sessions with me! More details to come…***

Biden boost pushes Dow past 30,000 for first time (The Times, Robert Miller) shows that US markets are shrugging off rising incidences of Covid as investors put their money on a rapid economic recovery in 2021. A combination of more positive vaccine news, Trump’s capitulation that paves the way for Biden to slide into office in January and the prospect of Janet Yellen (ex-Fed chief) helped sentiment. It certainly looks like there’s a lot of optimism priced in at these levels!

Meanwhile, Bitcoin price reaches three-year high of more than $19,000 (The Guardian, Julia Kollewe) highlights Bitcoin’s continue strength as it smashed through $19,000 for the first time in three years, coming within touching distance of its all-time high. Bitcoin has risen by almost 40% in November and by about 160% this year. PayPal has just launched a cryptocurrency trading platform and is rumoured to have bought about 70% of all new bitcoin in

circulation. In addition to this, Chinese authorities appear to be cracking down on cryptocurrency exchange, putting Bitcoin miners under pressure – thus restricting the amount of new bitcoin in circulation. * SO WHAT? * This is an incredible performance. However, one player buying 70% of new bitcoin sounds like a disaster waiting to happen to me. Still, momentum says otherwise and as long as bitcoin remains in short supply the rise looks like continuing! 

I’m sure that Russia says Sputnik virus vaccine more effective than Western rivals (Financial Times, Max Seddon and Donato Paolo Mancini) will come in for a lot of scepticism but Moscow’s state-run Gamaleya Institute said yesterday that interim results from phase 3 trials show efficacy rates of “above 95 per cent”, which is clearly better than what everyone else has come up with so far. The Sputnik V vaccine is being touted as an alternative to the Moderna, AstraZeneca/Oxford Uni and Pfizer/BioNTech candidates already on the table. Critics highlight its small sample sizes and rush to approve, but you know what – as a human being – I hope it really is that effective. It probably is a gamble, TBH, but better to be lucky than good, I think! * SO WHAT? * Russia has been busy on the vaccine front and it was the first country to register a Covid vaccine in August when it was approved BEFORE phase 3 trials. A second vaccine manufactured by Vektor was approved last month and a third is expected to get the government green light next month. What IS interesting, however, is that President Putin himself has not yet decided whether to take a vaccine himself! Talk about “Do as I say, not as I do!”!!! 

Retailers continue to enjoy mixed fortunes and I bring you the latest retail catchphrase…

In Tourism slump hits global retailers (Financial Times, Alistair Gray and Mamta Badkar) we see that international retailers are feeling the pinch of a lack of tourists. Abercrombie & Fitch is about to accelerate store closures in many major tourist destinations in London, Paris and five other places as the evaporation of tourist traffic has decimated sales that were already flagging before the outbreak. It argues that it is now seeing a much bigger rise in its online sales and that this will cushion any blow from closures. Although Tiffany reported much weaker sales in Europe and the Americas, China sales help Tiffany profits shine (The Times, Robert Miller) shows that a massive jump in sales of over 70% in China helped to bring quarterly profits in above market expectations. No doubt Tiffany’s owner, LVMH, will be purring with pleasure at its new toy 😁.

Best Buy continues Coronavirus-driven gains but warns they will taper off (Wall Street Journal, Dave Sebastian) shows that the consumer electronics retailer continues to benefit from people tooling themselves up over lockdown but it is currently facing supply problems and is concerned about how long the good times can last. Online sales almost tripled in the third quarter but higher supply chain costs are likely to bite if demand slows down. Talking of consumer electronics retailers, Lockdown provides key for AO World’s return to profit (The Times, Ashley Armstrong) highlights the stellar performance it has put in over the last six months. The company saw a massive 53.2% hike in sales as people shopped online in increasing numbers and even its problematic German division was in line to return to monthly profitability. The company is expecting a decent performance for Black Friday. Interestingly, AO World has recently been testing out concessions in Tesco’s larger Extra stores – its first adventure in physical retail – and it was all going pretty well until the second lockdown hit. The two parties appear to want to continue this arrangement on a longer term basis.

Puppy love revival gives lift to Pets at Home (The Times, Ashley Armstrong) shows that more pets have been bought during lockdown, which has done very nicely for Pets at Home as sales of pet supplies continue to climb. * SO WHAT? * Working from home has meant that more people can have a pet and an Ipsos Mori poll found that almost 50% of Britons who own a pet got at least one more during lockdown and 10% of households without intend to get one within the next six months! Despite increased overheads due to temp staff hire and the implementation of safety measures, the company expects full-year profits to come in as expected.

Elsewhere, Sainsbury’s offers a slice of Patisserie Valerie from today (Daily Telegraph, Oliver Gill) heralds a return of sorts of the posh bakery as its products will be on the shelves from today and be rolled out to 250 Sainsbury’s stores by Christmas but Debenhams may close up to 60 stores, putting thousands of jobs at risk (The Guardian, Sarah Butler) shows that Debenhams is now getting to the closing stages of being bought as it turns out that JD Sports is the only one left in the bidding. A deal could be announced before Christmas but it’s not all been finalised yet and could still fall apart. * SO WHAT? * I think that online retailing will continue to rule, lockdown or no lockdown, but physical stores could see an uptick in the run-up to Christmas as a bit of a novelty! The more used to online shopping we become, the more we will continue to use it in future IMO. For the longer term, I think it is imperative that retailers sort out a balance of online and offline presence and that they put more effort into customer experience at their physical stores to give people reasons to go there.

I also wanted to alert you to We’re all cyber now (Wall Street Journal, Aaron Black) as there is a new phrase in town – “Cyber 5”. It is a new term for the five-day shopping period from Thanksgiving to the following Monday and includes Thanksgiving, Black Friday, Small Business Saturday, Cyber Sunday and Cyber Monday. The fact that a Cyber 5 is now in existence highlights how shopping habits have changed. Research firm eMarketer reckons that e-commerce sales will rocket up by 50% on Thanksgiving as more stores will be closed on that day than in the past.

Peloton customers get frustrated, Camelot benefits hugely from lockdown and Compass tries to divine the future…

We all know that there have been major changes in consumer behaviour under lockdown as more people have been working from home. Some Peloton buyers are sick of waiting (Wall Street Journal, Sharon Terlep) shows that home exercisers desperate to get their fix are giving up on Peloton in increasing numbers due to long lead times and delivery delays – so rivals such as NordicTrack and Nautilus are benefitting from Peloton’s woes by customers buying their gear instead. * SO WHAT? * This is a bit of a disaster for lockdown winner Peloton, but there’s not really that much it can do as it is a victim of its own success. I would expect ALL such companies to experience major delays going forward and people will just have to grin and bear it. Mind you, if it gets that bad, maybe it will be good for gyms as people who are fed up of waiting for gear that never arrives will prefer to chance it and work out in public.

Camelot the big lottery winner after ‘seismic’ switch to online (Daily Telegraph, Oliver Gill and Russell Lynch) highlights another lockdown winner as punters switched in their droves from buying National Lottery tickets in shops to going online. * SO WHAT? * Although sales initially fell by 18% initially under lockdown they bounced back strongly as the public switch to playing online, leading to figures for the six months to September hitting record levels.

Compass expects office workers to stay at home (Financial Times, Harriey Clarfelt and Alice Hancock) shows that catering giant Compass is expecting long-lasting effects of lockdown as it expects white-collar workers to work about 2.5 days a week from home, which will cut its annual sales by about 5% as it is exposed to business in office canteens (this accounts for about 20% of revenues currently). In future it wants to concentrate more on businesses in schools, hospitals and care homes – which stay open.

India cracks down further on Chinese apps and Accor gets together with Hoxton…

In other news doing the rounds at the moment, India bans 43 more Chinese apps including AliExpress (Financial Times, Stephanie Findlay) shows that India’s crackdown on Chinese apps continues (it already banned over 200 since June) as Alibaba’s AliExpress gets swept up in the crossfire. India’s Electronics and Information Technology ministry ordered the block yesterday for “engaging in activities which are prejudicial to sovereignty and integrity of India”. The testy relationship between India and China continues…

Then in Accor and Hoxton hotel chain to merge boutique brands (Financial Times, Alice Hancock) we see that Europe’s biggest hotel chain, Accor, is merging 25% of its brands with Ennismore (which owns the Hoxton hotel

chain) into a new $1bn boutique hotel company that will operate under the Ennismore name and have a London HQ. * SO WHAT? * Supposedly, this is nothing to do with Covid (yeah right) but that it is more about moving with a trend of customers wanting to go to “destination” hotels (presumably rather than just using them as places to sleep and get a bit of breakfast). The hotels that will be in the new group have revenues of over 40% from food, drink and entertainment and it may be that this move is part of a longer term industry trend of trying to move away from relying on business travellers. I think that this is good, positive action and it will be interesting to see whether this pays off. FWIW, I think that this IS the way to go because if you just want somewhere to stay as a “base” you can save yourself much more money by using budget options whereas staying at a hotel may be increasingly seen as being an integral part of the holiday itself. It’s too early to tell whether this will be a long term trend or not as it is also possible that they will slide back into enticing business customers when behaviour reverts to previous norms.

…in other news…

I thought I’d leave you today with a useful trick if you like biscuits: Dad’s simple hack to reseal biscuit packet is blowing people’s minds (The Mirror, Luke Matthews). I think “blowing people’s minds” is exaggerating somewhat, BUT this is a useful thing to know!

1. In PHARMACEUTICAL NEWS, we take a closer look at the impact of AstraZeneca/Oxford University’s vaccine, Merck buying OncoImmune and Amazon’s recent foray into pharmacy
2. In RESCUE NEWS, Cineworld gets a lifeline, the AA gets a private equity offer and JD Sports is the frontrunner for Debenhams
3. In INDIVIDUAL COMPANY NEWS, GM does a big recall and Danone cuts jobs
4. AND FINALLY, I bring you dishwasher veggies…

So we look at the impact of AstraZeneca’s news, Merck buying OncoImmune and Amazon’s recent move into the pharmacy business…

*** 📣 Watson’s Daily is going to start a monthly competition for SILVER members. The prize will be three weeks of commercial awareness sessions with me. More details to come…***

Oxford-AstraZeneca vaccine results raise hopes for Covid fight (Financial Times, Donato Paolo Mancini and Clive Cookson) highlights yesterday’s good news about results of their late-stage trials. However, an analyst from SVB Leerink, a US investment bank that concentrates on the healthcare sector, criticised recent data releases from pharmaceutical companies and said of AstraZeneca’s effort that he did not think it would win approval in the US – which probably added to AstraZeneca and Oxford University vaccine data disappoints investors (Daily Telegraph, Julia Bradshaw and Tim Wallace) as investors appeared to be underwhelmed by its 70% efficacy rate versus rates in the 90s for Moderna and Pfizer/BioNTech’s candidates. How the Oxford-AstraZeneca vaccine works and why it matters (Financial Times, Clive Cookson and Donato Paolo Mancini) is an excellent article which goes into more depth, which I would really recommend you read if you can. The average efficacy of this vaccine is 70% on the first full shot and then 90% with a lower second dose. This is quite interesting when you consider that efficacy is actually 62% on two full doses! AstraZeneca’s solution is still very compelling for a number of reasons, though – it can be stored long term 2-8ºC (i.e. normal fridge temperature) versus much lower temperatures for Pfizer/BioNTech’s at -70ºC and Moderna’s at -20ºC, which means that this would be more universally useful – and is also pretty cheap to buy as AstraZeneca promised to sell at cost. Each dose costs between $3-4, which is way less than the others. * SO WHAT? * UK health secretary Matt Hancock said that vaccinations could start as early as next month and be rolled out more widely from January. Coronavirus/vaccines: safety in numbers (Financial Times, Lex) says that, along with Russian drugmaker R-Pharm, Brazil’s Fiocruz and India’s Serum Institute, up to 3bn doses could be made next year and the jab would be able to cover 34% of the world’s population if you also include the number of jabs being produced by Pfizer and Moderna. The first countries that will benefit will be those who have pre-ordered successful vaccines (the US, UK, Japan Canada and possibly the EU and Australia) and analysts at Deutsche Bank reckon they will have enough to immunise vulnerable citizens by the first quarter of 2021. Some say that countries like the US, UK, Canada and Japan could reach herd immunity by the middle of next year. Amazing, no?

Vaccination will be ‘a necessity’ for international flights, says Qantas chief (Financial Times, Philip Georgiadis) highlights the potential way forward for air travel and David Powell, medical adviser to industry body Iata, confirmed that this course of action was highly likely. Interestingly, a number of digital health passes have been developed to be able to prove that passengers have had been vaccinated, including the World Economic Forum-backed CommonPass, where a digital certificate is downloaded onto a mobile phone. Test runs have been carried out in places like New York, London and Singapore. Iata said yesterday that it was developing a health pass with IAG, the owner of British Airways but many airlines say that this system will take too much time to implement and that airport testing will be quicker. On a separate note it is interesting to see that in Testing times for employers in rush to offer staff vaccines (Daily Telegraph, Julia Bradshaw) companies won’t be able to “jump the queue” by buying up doses (well not for a while anyway) as all doses have been spoken for, but in future workplace vaccination could become a common occurrence as per the flu jab.

Elsewhere, Merck to buy OncoImmune amid race for Covid-19 treatments (Wall Street Journal, Dave Sebastian) shows that Merck & Co is buying OncoImmune, which has a coronavirus therapeutic candidate, for $425m as it bids to catch up with others in the coronavirus vaccine race. The deal is expected to close by the end of the year.

You may recall that I mentioned Amazon wading further into the world of pharmacies last week. Well Amazon’s drugs unlikely to prove fatal to pharmacies, say experts (Financial Times, Dave Lee and Alistair Gray) suggests that companies such as CVS, Walgreens, Cigna and United Health Group, who saw their share prices fall on the back of that news, will actually be OK. Industry figures have hit back, saying that people “like” going to the pharmacy (really??), that Amazon will not be able to deal with all drugs anyway and that customers won’t trust Amazon enough to go to them for everything (Walgreens Boots Alliance CFO James Kehoe said in a recent speech “When you want to go and get your Covid vaccination, are you going to call Amazon or are you going to call Walgreens or CVS?”). * SO WHAT? * This all sounds a bit like denial to me. OK, so Amazon doesn’t have the range and it may not have the discounts that other operators in this space currently have because their relationships aren’t as broad BUT Amazon has firepower and can very much afford to take over this space. I would be very worried if I was a smaller competitor…

We see that there are a few companies who are being rescued at the moment…

There’s a whole load of rescuing going on at the moment! In Cineworld shares soar 20% as lenders throw $750m lifeline (The Guardian, Mark Sweney) we see that the world’s second biggest cinema chain has managed to secure loans to weather the coronavirus storms. It had shut all of its 660 cinemas in the US and UK in October and said that it had enough liquidity to make it into next year, as long as cinemas were allowed to reopen by May. This will at least buy the company some time, a fact not lost on investors as they sent the share price northwards!

Elsewhere, AA says it would accept £218m private equity takeover offer (The Guardian, Julia Kollewe) shows that

the AA could return to private ownership as it is getting close to accepting a takeover proposal put forward by TowerBrook Capital Partners and Warburg Pincus. * SO WHAT? * A firm offer must be made by 5pm today under UK takeover rules. Given that the AA has had tons of debt for years, this injection could go some way to easing the stress.

Then in JD Sports in rescue talks to buy all of Debenhams (The Times, Ashley Armstrong) we see that the two retailers are in talks that will definitely anger Mike Ashley who has been rebuffed at least twice in his efforts to buy the ailing department store over three years. JD Sports is talking about buying the whole business and is particularly interested in the company’s website. * SO WHAT? * Nothing is finalised yet and it remains to be seen what JD Sports can really bring to the party here. I am sure that many investors will be worried about whether this could dilute JD Sports’ success.

GM announces a recall and Danone cuts jobs…

In other news doing the rounds at the moment, GM to recall about 5.9million vehicles with Takata air-bag inflaters (Wall Street Journal, Dave Sebastian) shows that the car company failed in its appeal to the National Highway Traffic Safety Administration not to go down this road as it was felt that the Takata inflators installed in GM vehicles are prone to deadly explosions in the event of a crash. Vehicles from 2007 to 2014 will be included. GM said that replacing the inflators would cost about $1.2bn, but it seems it will be fixing them itself. It could well do without this at the moment given what’s going on in the wider economy…

There’s bad news in Danone to cut up to 2,000 jobs (Financial Times, Leila Abboud) as the French food company has decided to wield the axe to 2% of its workforce as part of a company-wide reorganisation and cost-cutting exercise. The company’s share price has fallen by 30% so far this year, so the management is trying to turn things around. * SO WHAT? * This is quite interesting when you consider that rivals such as Nestle and Unilever are doing so well at the moment. It seems that investors have tired of Danone’s inability to deliver on numerous strategic plans in the past and are running out of patience.

…in other news…

I thought I’d leave you today with a weird (and pretty pointless) food “hack” in Woman shares “baffling” guide on how to cook Christmas dinner in the dishwasher (The Mirror, Rosaleen Fenton). Just. Why??

1. In CORONATRENDS NEWS, propane demand explodes in the US but in the UK, office projects stall, moves towards railway nationalisation continue, covid prompts reshoring, motor insurers await a nice bump, there’s an elephant in the room regarding house prices and Regeneron gets the green light
2. In ALTERNATIVE FUEL NEWS, Ineos signs a hydrogen deal with Hyundai as the UK EV charging network proves to be very skewed
3. In RETAIL NEWS, Black Friday is going to be even more crucial than usual and Sainsbury’s quits financial services
4. In CHINA TECH NEWS, regulator crackdown prompts an investor rethink on tech
5. AND FINALLY, I bring you a novel way of flirting for baristas…

So the coronavirus continues to change our behaviour…

Are YOU a SILVER subscriber? If so, there’s something new coming for you very soon! I’ll tell you more later this week 👍…

Propane supplies feel heat as Covid drives dining outdoors (Financial Times, Gregory Meyer) shows that propane supplies are running down in the US as demand has risen by a whopping 75% over the year as the coronavirus has forced everyone to socialise outside under patio heaters! Hardware stores, petrol stations and large retailers have no stocks of portable steel containers. UGI, one of America’s biggest propane retailers, said that its AmeriGas cylinder exchange service hit record highs in the fiscal year to December. * SO WHAT? * This is just one example of how the coronavirus is affecting our behaviour. Clearly environmentalists will be concerned about how this sudden spike in demand for heaters that just, basically, heat the sky but proponents of propane say that it’s more efficient than electric heaters (which are powered by fossil fuels ultimately) and therefore greener. Yeah right – but then again the economic benefits to businesses who are allowed to stay open, for instance, are probably more immediately pressing.

In the UK, Covid is shaping behaviours in all sorts of ways. ‘Seismic’ shift to work from home shakes office projects (The Times, Louisa Clarence-Smith) shows that the construction of new offices in London has halved in six months, according to a survey by Deloitte Real Estate. This drop is particularly acute given that the volume of new office space under construction was at record levels at the beginning of the year. Developers are getting increasingly concerned about longer term weak demand for office space as more people work from home, especially in the City, and funding for projects is getting increasingly expensive. Having said that, though, Deloitte Real Estate director Mike Cracknell added that the construction pipeline for the next three years was still solid and the current rate of decline isn’t yet as bad as the levels experienced in 2008 and 2009. * SO WHAT? * Although office attendance is clearly going to be hit for the short-to-medium term, I still believe that people are gradually going to be returning. We’ll just have to wait and see how fast that return will be – but in the meantime, it’ll create a headache for the construction industry as it HAS to make key decisions years in advance. There is a danger here that this won’t be a short-term blip (for instance, I would argue that the financial crisis which resulted in the last dip was more “contained” in terms of sector than the universal effect of the coronavirus this time around), but it is going to take some time before we see what the real situation is going to be. In the meantime, tenants seem to be busy subletting their space…

The effect of working from home has been disastrous for our transport industry as a whole as far fewer people are now commuting to work and so Rail nationalisation goes full steam ahead, strategy reveals (Daily Telegraph, Oliver Gill) is a very interesting article which reflects the new reality that momentum towards railway nationalisation is continuing to build. Ministers have asked Network Rail to put together a 30-year strategy for the railway called “The Whole Industry Strategic Plan” (WISP) which makes it look very much like the private sector will have very little/no say in railway reform. An update on the situation on railways is expected in the Spending Review, which is due to be announced later on this week. * SO WHAT? * This is going

to be really bad for the likes of FirstGroup, Arriva and Go-Ahead Group because they are now too weak to fight an encroachment on their turf by the government. It will be interesting to see how this turns out because nationalisation really goes against the Conservative mindset – but then again if the government doesn’t do anything drastic now there may be no railway industry left. Long-time critics of the railways will no doubt see this as a golden opportunity to put things right (or at least on the right footing).

Covid and Brexit could see UK manufacturers bringing it all back home (The Guardian, Sarah Butler) cites a report by Alvarez & Marsal and research group Retail Economics which suggests that UK factories could be making up to £4.8bn-worth of more goods for British retailers (equivalent to the UK’s entire clothing manufacturing output at the moment) as supply chain worries due to covid and Brexit push British businesses to keep things domestic. Consumers are also getting more interested in sustainability, meaning there is more pressure to source product closer to home. * SO WHAT? * This trend of reshoring is pretty interesting and, given that it’s not easy to do, it would suggest that if demand was not out there it would not be happening. I don’t think this is necessarily just a case of businesses having to pivot – it’s a sign that they are taking a longer term view.

In news on other covid-related trends, UK motor insurers on the road to pandemic profit boost (Financial Times, Oliver Ralph) shows that reduced traffic levels and accidents have meant that motor insurers are like to benefit from the coronavirus. Having said that, they will probably lose out in other areas of their business such as travel, meaning that premiums won’t necessarily come down. They will also be wary of giving away too much because they may have to continue to pay out more on whiplash claims due to the delayed introduction of a new system to cut the cost of such claims and they will also have to stop charging existing customers higher rates than new ones for the same products.

House prices soar but beware the slide of March (Daily Telegraph, Russell Lynch) highlights increasing concern from the real estate industry that the end of the stamp duty holiday on purchases up to £500,000 in March next year will result in a massive dive in activity. As things stand right now, the end of March is going to bring three things: the end of the stamp duty holiday, the end of the current Help To Buy Scheme to be replaced by a much less generous plan, and the end of the furlough scheme. * SO WHAT? * This is a very painful-sounding triple whammy – and I would imagine that Sunak will have to do something about that confluence of three major schemes – vaccine, or no vaccine.

Meanwhile, in vaccine-related news, FDA authorises Regeneron’s Covid-19 antibody cocktail drug (Wall Street Journal, Joseph Walker) shows that a treatment that president Trump recently hailed as “unbelieveable” and made him feel good “immediately” was authorised this weekend by the FDA for emergency use for those with mild to moderate Covid over the age of 12. AstraZeneca, Oxford Covid-19 vaccine up to 90% effective in late-stage trials (Wall Street Journal, Jenny Strasburg) highlights more good news on vaccine development BUT that the average efficacy rate was about 70% depending on the dosage given. * SO WHAT? * It’s great that a third potential vaccine – in addition to Pfizer/BioNTech’s and Moderna’s candidates – is on the scene. It is also notable in that it is likely to be distributed more widely as both AstraZeneca and Oxford University have committed to selling it at cost during the pandemic.

Ineos and Hyundai sign a hydrogen deal while the UK’s EV charging network continues to look inadequate…

Ineos and Hyundai strike hydrogen deal (Financial Times, Peter Campbell) highlights a deal where Ineos will be buying Hyundai’s fuel cell technology for its own entry to the car industry while Ineos will supply Hyundai with hydrogen. Ineos has developed its version of the Land Rover Defender, the Grenadier. * SO WHAT? * It’s interesting to see that the shift from internal combustion engines to EV and hydrogen power has led to carmakers to rejig their own supply chains, especially to get lithium directly for their own batteries. Car makers such as Hyundai, Toyota and GM are all bringing out their own hydrogen models and need to make sure they get enough supply. Like most things, hydrogen is not perfect. Charging stations are more expensive to install than battery charging points because the fuel has to be kept at the right conditions and the production process that goes into it is not particularly environmentally friendly.

Then in Regional disparities in electric car-charging points revealed (The Guardian, Jasper Jolly) we see that London and the south-east have taken the lion’s share of newly-installed car charging points over the last year, according to analysis by The Guardian. Those regions received 45% of new charger capacity in the year to October compared to the area representing 27% of the population. * SO WHAT? * This is clearly unfair at first glance, although I would say it would be interesting to see these statistics compared to a national heat map of EV owners to see whether this all coincides. In terms of EV demand I would say that if you are in the market for such a vehicle a big consideration will be how easily you will be able to charge it under normal circumstances. If this is true, charging stations need to be built and the customers will come, but I also suspect that pay levels will also need to be considered because EVs are still pretty expensive. If wage levels and unemployment outside London and the south east are markedly different then it doesn’t matter how many charging stations you install – EV sales aren’t going to go up by the same amount. 

All eyes are on Black Friday and Sainsbury’s quits financial services…

We all know that this run-up to Christmas is crucial for many a retailer’s survival but It’s make-or-break on the blackest of Fridays (The Times, Ashley Armstrong) highlights the logistical difficulties that are going to become more problematic over the next few weeks and there are concerns that revenues from online shopping will not be enough to replace usual Christmas takings. * SO WHAT? * Clearly, the whole lockdown situation has taken its toll on bricks-and-mortar retailers on the one hand and played massively into the hands of online specialists such as Amazon on the other. France has actually gone as far as postponing Black Friday due to pressure brought by small shopkeepers who say that Amazon was stealing their business, so now the giant has agreed to postpone it until shops are allowed to reopen. Interestingly, some retailers such as M&S and Next are avoiding Black Friday – the

former will be extending opening hours to absorb hoped-for pent-up demand and the latter says that its logistics capabilities are already stretched and that it wants to prioritise full-price sales.

Then in Sainsbury’s quits financial services after supermarket banks challenge fails (Daily Telegraph, Lucy Burton) we see that the supermarket giant has decided to call it a day on financial services since buying out its joint venture partner, Lloyds Bank, back in 2013. The business has been put up for sale and NatWest is one of many bidders looking at buying it. * SO WHAT? * Supermarkets thought that their trusted status would rake in the customers in the aftermath of the financial crisis, but it seems that things proved to be rather harder in the execution as the Co-op Bank, for instance, cut ties with the Co-operative Group back in 2017 and is itself also up for sale. Tesco sold its mortgage business to Lloyds last year. It seems that supermarkets failed in their endeavours because costs of running a bank have risen considerably – but they have also suffered because it is still very difficult to change banks.

The Chinese regulator’s crackdown is starting to affect investor perceptions…

I have been talking about this subject since the whole Ant Group IPO cancellation debacle but China regulations spur investors to reassess tech sector (Financial Times, Primrose Riordan and Mercedes Ruehl) shows that initial actions are starting to trickle through to Chinese investors’ outlook on tech as a whole given that new regulations are

likely to clip the wings of the sector rather dramatically. Companies such as Tencent, Alibaba and Meituan-Dianping have all benefited from investor interest under lockdown but that appears to be wavering due to last week’s introduction of draft rules designed to limit their power. * SO WHAT? * This is definitely going to put the brakes on Big Tech’s progress for now but I think that these companies are smart enough to evolve past this particular setback. I also believe that the Chinese government will not want to REALLY hobble a sector that is powering its economy. A good example of when a regulator got involved and

…in other news…

I thought I’d leave you today with an enterprising/creepy (depending on which way you look at it) way of flirting in Starbucks customer finds cheeky secret message ‘written on coffee cup by barista’ (The Mirror, Luke Matthews). Whoever this is needs to work on their spelling for next time…

1. In CONSUMER/GOODS/RETAIL NEWS, UK consumer confidence weakens, the PS5 launch crashes sites, Frasers increases its stake in Mulberry, Peacocks and Jaeger go under and Naked Wines toasts more subscriptions
2. In CORONAVIRUS DRUG NEWS, the WHO dismisses Remdesivir but an arthritis drug looks promising
3. In CORONATRENDS NEWS, Royal Mail delivers more parcels and Cineworld seeks out a CVA
4. In INDIVIDUAL COMPANY NEWS, GM pledges more money for EVs and Roblox heads for an IPO
5. AND FINALLY, I bring you a very clever dog…

So UK consumer confidence wanes, the PS5 launch causes chaos, Frasers takes a bite of Mulberry, Peacocks and Jaeger fail and Naked Wines racks up the subscribers…

UK consumer confidence at six-month low as restrictions tighten (Financial Times, Valentina Romei) cites the GfK consumer index which shows that coronavirus restrictions have taken their toll on consumer psyche as concerns increase about jobs and business survival. Consumer spending powered the rebound in Q3 but cracks are showing at a time when shops are bustling. The results were based on interviews carried out between November 2nd and 13th which encompasses lockdown but, crucially, does not include the recent good news on the vaccines. Separately, Fable Data (a company that monitors credit card transactions) reported that UK consumer spending contracted by 8.8% in the week ending November 15th versus the same period last year. Although spending was weak across the board, the main drag was from spending in bars and restaurants. * SO WHAT? * This is not great – but it will be interesting to follow the same data points in the coming weeks as vaccine news filters through and shops open up once more in the run-up to Christmas.

Playstation 5 launch overwhelms retailers (The Times, Ashley Armstrong) shows that Tesco, John Lewis, Currys and Game websites all crashed yesterday as they were unable to cope with the deluge of interest for Sony’s latest console. Some eBay users were selling their consoles for £800 versus the actual price of £449! * SO WHAT? * This always happens with a console launch – but the difference this time is that high street retailers aren’t able to get involved, putting even more strain on online retailers. This is going to be a massive hit under lockdown!

Elsewhere, Frasers Group increases stake in Mulberry (The Guardian, Zoe Wood) shows that the-company-formerly-known-as-Sports-Direct is pondering a potential takeover of Mulberry after it increased its stake in the brand to 37%. Interestingly, companies normally have to make a bid for the whole company (“put up or shut up”) when they own 29.9% of the shares, but the Takeover Panel made an exception this time because Mulberry’s biggest shareholder owns a 56% stake. Under the current rules, Frasers has

until 17th December to make a full offer. * SO WHAT? * Mulberry has really been through the wars due to Covid. It has not only been hit by the closure of its own stores – the closure of department stores has also been devastating. You do wonder whether any of the brand’s cachet will be tainted by being associated with Mike Ashley, but then again he is good at sniffing out a bargain and he does seem to be carving a path towards taking his retail empire upmarket – he is also building up his stake in Hugo Boss, for instance. One thing you can count on – if Ashley buys it, it will be for a very reasonable price!

Peacocks and Jaeger businesses collapse into administration (The Guardian, Sarah Butler) shows that Peacocks, Jaeger, Austin Reed and Jacques Vert have all fallen into administration as they come under the umbrella of entrepreneur Philip Day’s Edinburgh Woollen Mill, which had recently warned of imminent collapse. Administrators said that the businesses would continue to trade whilst considering options for the future. Day is thought to want to rescue Peacocks and Jaeger, but has been looking for a buyer for Austin Reed and Jacques Vert. Funnily enough, Mike Ashley’s Frasers Group is among those in the mix for buying them. * SO WHAT? * Although it looks like there are brands here that will be available for fire-sale prices I would have thought that buyers will need to be very wary because there are reasons why those brands are not firing on all cylinders and the retail landscape looks unlikely to recover any time soon. Whoever ends up owning them will at least have to sort out their poor online presence to at least get that base covered.

Talking of online, Naked Wines toasts surging mail-order subscriptions (Daily Telegraph, Hannah Uttley) shows that the company unveiled 80% growth in half-year sales which prompted it to lift its full year sales growth forecasts to between 55% and 65%. Naked Wines parted company with Majestic Wines last year to concentrate on growing its US business. It seems that it has been pretty successful in this endeavour as the US now accounts for about 50% of sales with the UK coming in at 35% and Australia 5%. The share price has almost doubled since the start of the year. * SO WHAT? * It’ll be interesting to see how the company fares going forward, but if the trend for home drinking continues after lockdown is lifted, I don’t see there being any reason why the party can’t continue. They are arguably in a better position than Majestic because they don’t have a massive tail of stores to worry about.

The WHO sticks the boot into remdesivir and an arthritis drug offer hope…

WHO advises against prescribing remdesivir to Covid patients (Financial Times, Donato Paolo Mancini and Hannah Kuchler) deals a blow to Gilead, who produces the treatment that is currently the only antiviral approved to treat Covid – and was one of the treatments given to Trump when he recently fell ill with the virus. This recommendation is based on four randomised trials comprising over 7,000 patients. The WHO said “Remdesivir has no meaningful effect on mortality or on other important outcomes for patients” but in WHO recommends

against use of Gilead Covid-19 drug remdesivir (Wall Street Journal, Joseph Walker) we see Gilead hitting back by saying that the WHO’s study was not as good as the others which showed that there was a benefit. * SO WHAT? * This is clearly a blow for Gilead and I expect that it will increase efforts to show its efficacy. In the meantime, this is bound to hit sales.

Conversely, Arthritis drug offers hope for severely ill Covid patients (Financial Times, Anna Gross) shows that the administering of a drug used to fight rheumatoid arthritis, Tocilizumab, results in much-improved outcomes for severely ill Covid-19 patients. It is the first immunosuppressant drug to have an effect on hospitalised Covid patients. Many will hope that this could add to the growing array of coronavirus treatments that are becoming available.

Royal Mail benefits from more parcels and Cineworld seeks a CVA…

As the prevalence of online shopping continues to grow thanks to the coronavirus outbreak, Big losses show Royal Mail’s delivery duty ‘must change’ (The Times, Robert Lea) highlights the importance of increased parcel traffic as the Royal Mail announced losses of £180m over the spring and summer due to having to meet its obligation to deliver nationwide six days a week for one price. The company said that the “universal service obligation” it made as part of its privatisation seven years ago now has to change. It reported a 33% drop in letter volumes but a 31% rise in parcel volumes. * SO WHAT? * Overall, parcels helped Royal Mail to post a 5% increase in revenues, but it is clear

that it is operating with one hand tied behind its back compared to the likes of Amazon, DPD, UPS and DHL. It now deals with more parcels than letters for the first time ever! I would have thought it will be tricky to back out of this universal agreement though because who else is going to offer to do it?

Cineworld eyes CVA amid shortage of blockbusters (Daily Telegraph, Hannah Uttley) shows that Cineworld, the world’s second biggest cinema chain, is thinking about pursuing a CVA in order to stop the continued outflow of money. It hired AlixPartners last month to negotiate with lenders about its $8.1bn debt, much of which was due to the company’s reverse takeover of Regal in 2017. Cineworld is also in negotiations with individual landlords about rent cuts. * SO WHAT? * This is a tricky turn of events for a major operator, but maybe it should think about signing deals with movie studios to at least get some money coming in. Surely some money is better than none, no?

GM pledges more for EVs and Roblox gets closer to an IPO…

GM ups bet on EVs as investors swoon for electric cars (Wall Street Journal, Mike Colias) shows that GM announced plans to increase its spend on developing electric and driverless vehicles by $27bn up to 2025 ($7bn more than it pledge back in March). * SO WHAT? * Electric vehicles still only make up 2% of global car sales but pressure continues to increase on car makers to make their fleets more environmentally friendly. This sounds like a big spend on stuff that may or not pay off in the end. I have to say that surely driverless is an even bigger money pit than EVs because the regulatory/insurance/moral hurdles involved will continue for years IMO whereas at least EVs are on most people’s radars currently.

Then in Roblox files to go public amid surge in videogaming spending (Wall Street Journal, Sarah E. Needleman) we see that videogame company Roblox has filed to go public in documents submitted yesterday. * SO WHAT? * Sales and revenues have been stellar under lockdown, so I think it is highly understandable that the company would want to take advantage of its currently strong position and float with a nice fat valuation. Although it is still loss-making, it’s not like other game developers or publishers because Roblox is more of a platform which players use to develop their own games and the company makes its money by getting users to make in-game purchases with virtual currency called Robux. It has been incredibly popular under lockdown as a way to connect with friends and have a bit of fun at the same time. I would have thought its IPO would be very well received under current circumstances!

…in other news…

I thought I’d leave you today with a video clip that I think I could watch all day in ‘Genius’ dog figures out how to steal treats without its owner ever knowing (The Mirror, Luke Matthews). Superb!

1. In CONSUMER/RETAIL-RELATED NEWS, Inflation rises, wages freeze, Halford peddles well and British Land offloads retail while in the US, Target hits the spot and TK Maxx’s parent makes an online push
2. In ELECTRIC VEHICLE NEWS, Arrival aims for NY and Panasonic has European battery plans
3. In TECH NEWS, Nvidia sees higher demand and Apple relents
4. In INDIVIDUAL COMPANY NEWS, the Pfizer/BioNTech solution looks even more promising, Norwegian Air files for bankruptcy protection and RSA accepts the takeover bid
5. AND FINALLY, I bring you an unusually specialised estate agent and a life lesson…

So inflation rises, wages go sideways, Halfords benefits and British Land disposes of retail assets while Target and TK Maxx make progress Stateside…

*** It’s THURSDAY today, which means that it’s ZOOM time! This is a Zoom call where I talk about the week’s key business and financial markets news and open it up to questions from YOU where you can ask anything you like. The call for PAYING SUBSCRIBERS starts at 6.30pm and finishes at 7.30pm [NB THIS IS ONE HOUR LATER THAN THE USUAL TIME AND IS A ONE-OFF THIS WEEK]. In this call, I do the weekly roundup, Q&A and interactive group discussion. Joining details for this call are HERE. If you want to upgrade to be a paying subscriber, please click HERE. Hopefully I will see you later! Don’t be shy – say hello! IF you have any issues accessing this call, please e-mail to tell me on peter@seihaconsulting.com and I will set something else up ***

Prior to this call I will be doing an Instagram Live starting at 5pm on the Watson’s Daily Instagram channel where I will be picking out a few of this week’s big stories, talking about how and why I pick the articles I do in Watson’s Daily (it’s a mixture of science AND art!) and answering your questions ***

Inflation rises on back of increase in clothing and secondhand car prices (The Guardian, Richard Partington) cites the latest figures from the Office for National Statistics (ONS) which says that inflation rose above expectations in October. The cost of food also increased a bit last month and analysts expect this trend to continue into November as the forced closure of restaurants is likely to fuel demand for goods sold in supermarkets. Despite the unexpected rise, the rate of inflation is still way below the Bank of England’s 2% target.

Then in Fifth of firms freeze wages despite resurgence of GDP (Daily Telegraph, Tim Wallace) we see that data from XpertHR shows that 20% of companies imposed pay freezes in the three months to October – which is way more than the 5% that would do so in a “normal” year. Average pay rises came in at 2%, which is smaller than the 2.5% average offered in 2018 and 2019. * SO WHAT? * As things stand right now, this does not bode well for the consumer as their collective spending power has been chipped away during this year. I do wonder whether we are going to be seeing sharp rises in household debt going into Christmas and New Year as consumers concentrate on pushing the boat out, but then again this could be blunted by others who have been quietly paying down their debts over lockdown (because they are not going on holidays, going to restaurants etc.).

Hardcore cyclists put Halfords on right track (The Times, Ashley Armstrong) shows that worsening weather is not slowing down customers’ appetite for cycling and that people are actually buying more expensive bikes, which would suggest that they are going to continue cycling longer term. At the moment, online orders account for over half of its sales and it posted pre-tax profits for the half year that were 116% higher than the same time period last year. Sales rose by 184% over the period as the company struggled to keep up with demand for adult bikes, electric bikes and scooters. Demand is such that the company said that it would be increasing the number of in-store bike and scooter technicians from 400 to 1,800 to keep up! It’s also training more electric car mechanics. * SO WHAT? * This is a quite incredible performance and I must say that my pre-covid prediction of peak gin and peak cycling (and questioning of the logic of Peloton!) were woefully misguided! I stand by this prediction in a pre-covid world, but the disease has given all of them a catalyst that no-one expected. Well done to Halfords for surfing the wave! If the momentum continues through the winter months, I would expect things to get even stronger again in the summer.

British Land ditches retail properties as pandemic inflicts £1bn hit (Financial Times, George Hammond) reflects further gloom in the retail sector as it said yesterday that it has sold over £400m of retail properties since the beginning of the pandemic. It said that the value of its retail portfolio had fallen by 15% over the period. On the plus side, its office properties fared better as British Land said that office tenants had paid 97% of the rent they owed versus retail tenants who only paid 62% of rent owed. * SO WHAT? * It seems to me that British Land and Landsec are going in the same direction as they are concentrating more on their office properties in the hope that revenues from segment will be more robust over the long term. They may well be, but it will also depend on how long the working from home trend continues IMO.

Meanwhile, over in the US, Target grabs sales from rivals amid pandemic (Wall Street Journal, Sarah Nassauer) shows that Target had a great quarter with sales rising on demand for household goods and home office supplies. Online sales were also strong. I guess the question is whether this momentum can continue, as Walmart said yesterday that it was slowing down. Then in TJ Maxx parent launches online platform as coronavirus persists (Wall Street Journal, Renata Geraldo) we see that the owner of TK Maxx (TJX) has announced that it would be launching an e-commerce platform in the second half of 2021. * SO WHAT? * It’s interesting to see that TJX is rather belatedly catching up with the times but then again, in the past, discounters like TJX, Burlington Stores and Ross Stores have avoided too much emphasis on e-commerce as they have argued that their customers want to go to physical stores. I guess that covid has given TJX an almighty kick up the backside, hence the announcement…

Arrival heads to the States and Panasonic reveals battery plans…

UK electric vehicle group Arrival to list in US through Spac deal (Financial Times, Peter Campbell) shows that UK electric bus and van maker Arrival, which is backed by Hyundai, said yesterday that it will list on the NASDAQ via a reverse takeover with CIIG Merger Corp, a special purpose acquisition company (SPAC). This will pit it against Ford with its soon-to-be-revealed electric Transit van and other start-ups like Rivian. The company wants to produces electric buses and vans from “microfactories” and will raise $660m from the listing which will help it to increase factory openings in the US and Europe. Arrival/Spacs: coming to America (Financial Times, Lex) points out that at least five American electric or autonomous vehicle companies have listed their shares via Spac mergers and although this is clearly a hot area, the fate of electric truck maker Nikola will be something to keep in mind. Expectations are high – and so are the valuations – so Arrival will have a lot to prove. A £4bn ‘mini Tesla’ choosing to list stock in US is worrying (The Guardian, Nils Pratley) takes an interesting

spin on the story as it acknowledges Arrival’s logic of going stateside to surf the EV wave that investors love at the moment, but points out that this is a slap in the face for the London Stock Exchange, given that Arrival is a British company. It makes the point that SPACs can move quickly because there is not so much oversight to contend with for the companies involved versus a traditional listing, but I guess the implication here is that American Spacs are hoovering up exciting (but risky) companies while we just look on. If we don’t act quickly to change the laws on listing, we may well miss out on more such developments.

Then in Tesla supplier Panasonic to make big battery bet in Europe (Financial Times, Kana Inagaki and Richard Milne) we see that Panasonic has announced plans to expand in Europe, with initial plans to make a battery factory in Norway. It is engaging with state-controlled oil and gas major Equinor and aluminium company Norsk Hydro in a feasibility study that will take six months. As things stand currently, Panasonic runs the world’s largest battery factory with Tesla in Nevada, but has noticeably little presence in Europe. * SO WHAT? * When you consider that battery demand is likely to increase considerably over the next few years AND the expertise that Panasonic has picked up by working with Tesla, this rollout in Europe sounds like a great idea. It’ll be a while before we see actual factories, but we are moving in the right direction.

Nvidia see higher demand and Apple relents…

Nvidia benefits from sustained pandemic-era remote work, videogaming demand (Wall Street Journal, Asa Fitch) shows that graphics chip maker Nvidia doesn’t expect any slowing of momentum as it expects continued demand for its chips in home computers, videogames and big data centres will power even better results. * SO WHAT? * It posted strong sales in Q3 but there are a few potential flies in the ointment. One is the continued Huawei-bashing, which will put downward pressure on orders – and the other is the discomfort that its offer to buy Arm Holdings is causing as the chip industry appears

to be sceptical of Arm’s continued neutrality under Nvidia. There is a danger that this discomfort may lead to many digging their heels in and scuppering the deal. If Nvidia can get the deal through, though, growth potential could be huge.

There’s good news for little guys like me in Apple gives up a slice of sales charge (The Times, James Dean) as the company announced that it will halve fees to 15% for small software developers for using its App Store. It will cut sales commissions next year from 30% to 15% for developers who get less than $1m of annual revenues via the platform. * SO WHAT? * Critics say that this is just window dressing and that it is a cynical move designed to take the wind out of the sales of the growing campaign against “Apple Tax” that is being fronted by the likes of Spotify, Netflix and Epic Games. I guess time will tell. It will be interesting to see if Google does something similar.

There’s good news for Pfizer/BioNTech, bad news for Norwegian Air and and acceptance by RSA…

In other news doing the rounds today, Pfizer-BioNTech trial data show vaccine to be even more effective (Financial Times, Hannah Kuchler, Joe Miller and Donato Paolo Mancini) shows the latest development in coronavirus vaccines as the companies announced they would submit their vaccine for US and EU emergency approval “within days” and that it has proved to be even more effective than originally thought. Superb news!

Elsewhere, Norwegian Air files for bankruptcy protection in Ireland (The Guardian, Joanna Partridge) shows that low-cost airline Norwegian Air is on the rack – not surprising considering its own government recently rejected appeals for another bailout. Then in Insurer RSA accepts £7.2bn bid from Intact and Tryg (Financial Times, Oliver Ralph) we see that the proposed acquisition of RSA by Canadian insurance group Intact and Danish insurer Tryg has been accepted by the company.

…in other news…

I thought I’d leave you today with a highly unusual collaboration between a fast-food outlet and a real estate company serving an incredibly niche customer base in Burger King opens a rental site to help fast food lovers find an apartment in Japan (SoraNews24, Oona McGee). This is just plain weird 🤷‍♂️. Then there is a very pertinent life lesson to be had in Man instantly rejected from job interview after failing trick test at reception (The Mirror, Rosaleen Fenton). This is something that I 100% agree with!

1. In BITCOIN & FINANCIALS NEWS, Bitcoin reaches new highs, Santander buys Wirecard’s European business and Co-Op Bank gets an approach
2. In CONSUMER/RETAIL NEWS, we look at US and UK sales trends and Walmart’s slowing rise
3. In INDIVIDUAL COMPANY NEWS, Amazon takes on pharmacies, Airbnb marches towards its IPO and Nio sales shoot up
4. AND FINALLY, I bring you taekwondo vs judo…

So Bitcoin continues its rise, Santander gets opportune with Wirecard and the Co-Op Bank gets an approach…

*** 📣 JUST A HEADS-UP FOR TOMORROW’S ZOOM CALL. THE TIME WILL CHANGE – FOR TOMORROW ONLY – FROM THE USUAL 5.30-6.30pm TIMESLOT TO 6.30-7.30pm. SEE YOU THERE! ***

Bitcoin closes in on record price after topping $17,000 (Daily Telegraph, Sam Benstead) highlights the fact that Bitcoin has now reached a three-year high (and I’m getting a sense of déjà-vu here as we approach Christmas!). Its value versus the dollar has skyrocketed by a whopping 70% since September and it is only now 10% off the historic $20,000 high it reached in December 2017. Apparently, investors have increasingly been betting that it will overcome a “credibility hump” and become more mainstream and that they are using it as a hedge against higher inflation and continued government stimulus. * SO WHAT? * I personally think that it really IS moving towards the mainstream, whereas back in 2017 people were just saying it. The fact that Paypal recently started to accept Bitcoin payments goes to show that it really seem to be knocking on the door of acceptability. That said, I think that it may well be increasingly on the radar of governments and central banks as a result of this and you saw how quickly they torpedoed Facebook’s Libra. If they see it as a threat (because it could effectively take away one tool that governments and banks use to control/calm economies – trading currencies), things could happen quite quickly I would imagine.

Meanwhile, Santander buys Wirecard’s core European business for €100m (Financial Times, Olaf Storbeck and Daniel Dombey) heralds an important step in the dismantling of the hero-to-zero German payments provider. Around 500 Wirecard employees will join Spain’s biggest bank, which is buying the company’s European tech platform that processes all the electronic payments.

Britain’s Lycamobile was the only other company in the running to buy, but it obviously lost out in the end. Santander was very clear that the acquisition did not include Wirecard companies or any legal liabilities related to Wirecard AG and Wirecard Bank. * SO WHAT? * This sounds like a decent enough acquisition for Santander on a strategic front, as it will help to expand its payment solutions in Europe and broaden their product development capacity. It sounds like they’ve got the good stuff without all the baggage.

Then in Co-op Bank reveals takeover talks with US private equity buyer (The Guardian, Kalyeena Makortoff) we see the beginnings of what could be a wave of M&A within the UK banking sector as the Co-op Bank said it had received an approach – and it turns out that this was from Cerberus Capital Management. The Co-op Bank is currently 85% owned by Invesco and a group of US hedge funds including Silver Point Capital, GoldenTree, Anchorage Capital, Blue Mountain and Cyrus Capital. * SO WHAT? * The Co-op Bank sounds like an absolute basket case as it has lurched from disaster to scandal (remember former chairman Paul Flowers, nicknamed “The crystal Methodist”?!?), has had six chief execs in nine years and hasn’t been profitable in at least six years. It sounds like it is ripe for a major shake-up and maybe Cerberus is the one to do it (although you wonder why the others have been so spectacularly unsuccessful). Maybe it’s just a coincidence, but the fact that this follows closely on the heels of another approach (Sainsbury’s Bank was approached by NatWest last week) could suggest that there is an imminent wave of M&A about to hit our shores. TSB, for instance, could be another target as merger talks between BBVA and Sabadell could result in non-core assets being put on the chopping block. Bank valuations have been weakened as investors shun them for fear of a potential tsunami of loan defaults that will undoubtedly result in the wake of the coronavirus. If you combine this with the fact that the larger lenders came into the outbreak as profitable and well-capitalised (even better capitalised at the moment as they have been banned by regulators from paying out dividends), you can see that there are buyers out there.

We look at sales trends in the US and UK, Walmart’s momentum and the immediate prospects for UK retailers…

US retail sales climbed at a slower pace in October (Wall Street Journal, Harriet Tory) cites the latest figures from the US Commerce Department which showed that retail sales rose by a seasonally adjusted 0.3% in October versus the previous month – way below the 1.6% growth seen in September and the smallest monthly rise since May. This slowdown in growth was echoed in Walmart’s sales gains slow as pandemic drags on (Wall Street Journal, Sarah Nassauer) as Walmart said that its quarterly sales are still rising but at a slower pace. Interestingly, footfall dropped by 14.2% but the value of the basket rose by 24% as online spend increased.

Talking about online, Lockdown and Black Friday set up ‘record-breaking month’ for UK online sales (The Guardian, Zoe Wood and Sarah Butler) cites a report by the internet

industry body IMRG (so it’s probably going to be a bit biased 😁) which predicts that a combination of Black Friday discounts and coronavirus movement restrictions will result in a bumper month for online spending in the UK just as online sales for the first week of November went up by a chunky 61%. Shoppers stock up early on Covid Christmas essentials (The Times, Ashley Armstrong) highlights strong sales at Asda of frozen turkeys, Christmas trees, Christmas puddings and mince pies as people prepare for a lockdown Christmas but Retailers ‘losing £2bn a week’ in lockdown (Daily Telegraph, Tim Wallace and Russell Lynch) paints an altogether gloomier picture as the Helen Dickinson, head of the British Retail Consortium, puts a figure on the losses retailers are currently suffering. Pressure is increasing on the Chancellor to review business rates relief and grants to mothballed companies. * SO WHAT? * I maintain my belief that we will see a final hurrah from the British consumer when the pre-Christmas lockdown eventually lifts because people will just want to get out and support shops if they can. If the lockdown is extended, I think that spending will still go up (but maybe not by quite as much) as consumers will just want to do what they can to have an enjoyable Christmas.

Amazon takes on pharmacies, Airbnb heads towards IPO and Nio sales rise…

It’s bad news for pharmacies in the US as Amazon prescription drugs launch is a bitter pill for pharmacists (The Times, James Dean) shows that the e-tailing giant announced yesterday that it will be launching Amazon Pharmacy, which will offer Americans swift delivery of prescription drugs and major discounts on generic and branded medicines. Pharmacists elsewhere will no doubt be praying that Amazon will stay firmly in its own backyard…

For those of you following the whole Airbnb thing, Five takeaways from Airbnb’s IPO filing (Financial Times, Dave Lee and Miles Kruppa) takes a look at Airbnb’s IPO filing and what it means. The IPO prospectus showed that revenue growth had been slowing down before the pandemic, that it had to make drastic cost cuts after years of spending money on staff and marketing, that its new

businesses (e.g. “Experiences”, that paired tourists up with local guides) may not be doing that well, that the number of hosts may decrease and that there is regulation risk (i.e. some big cities and hotel groups have been resisting Airbnb – and this resistance could well increase). Airbnb: room with a view (Financial Times, Lex) says that now may be a good time for Airbnb to have an IPO to surf a wave of optimism that things will return to “normal” but that there is a danger that a slowdown in revenues may be a reflection that the best years of Airbnb growth are behind it.

Then in Tesla rival Nio posts sharply higher sales (Wall Street Journal, Kimberly Chin) we see that the Chinese purveyor of super-cool electric cars has reported that sales have increased by 146% in the latest quarter. It seems that Nio’s brand is catching on in China and investors are increasingly hopeful that it will meet aggressive sales targets. * SO WHAT? * EV sales continue to account for just 2% of total car sales globally, but they are rising. Eco-friendly policies around the world are likely to increase the momentum, but ubiquity is going to take a lot of time as they are starting from a very low base.

…in other news…

I thought I’d leave you today with some impressive martial art videos. On the one hand, you have a feelgood taekwondo/dance mash-up (some of the moves are incredible!) but then on the other, I thought I’d show you some really impressive moves in judo. Some of you may know that I am a black belt in judo but you might not know that I got it at a prison in Tokyo 😁. Although I would like to say that I was dropped in and had to fight my way out (what a great story that would be), it just so happens that a lot of prisons have dojos and my grading just happened to be at Fuchuu prison!

1. In VACCINE-RELATED NEWS, Moderna’s news boosts markets
2. In CORONATRENDS NEWS, Home Depot splashes out, the birth rate falls, Cinemark signs a historic deal and UK Lockdown 2.0 has less impact
3. In ELECTRIC VEHICLE-RELATED NEWS, Tesla is to join the S&P while EVs in the UK lag
4. In MISCELLANEOUS NEWS, Walmart pulls out of Japan, Airbnb looks good ahead of its IPO, BBVA targets a smaller rival and UK house prices fall
5. AND FINALLY, I bring you a dodgy birthday cake and a busy Christmas tree…

So Moderna’s vaccine hopeful gets everyone excited…

Moderna’s Covid jab shows 94.5% efficacy in clinical trials (Financial Times, Donato Paolo Mancini, Sarah Neville and Hannah Kuchler) highlights another promising-looking candidate to fight the coronavirus and the company said that it is aiming to submit the vaccine for approval by the FDA “in the coming weeks”. The European Medicines Agency said that it had begun an accelerated review of the vaccine. Easier distribution may make Moderna’s vaccine much more valuable (The Guardian, Nils Pratley) emphasises the fact that this vaccine could be more valuable than the one announced by Pfizer/BioNTech last week because it can be transported and stored for up to six months at -20ºC and then remain stable for 30 days in conventional fridges. Pfizer/BioNTech’s vaccine has to be stored at around -75ºC and can only last for five days at fridge temperature. On a side note, AstraZeneca invested in Moderna back in 2013 and then again in 2016 – a total of about $380m – and Moderna’s share price has quintupled since floating in 2018! Moderna/vaccines: getting warmer (Financial Times, Lex) points out that this development

could bring Moderna the vindication that it has long sought out and that its belief in messenger RNA is now paying off. * SO WHAT? * It could be many months before we see a jab from either Pfizer or Moderna and it is not yet clear how long any protection lasts BUT each successful vaccine will not only make mass immunisation possible, it will also reduce the risks of relying on a single solution. The fact that Moderna’s solution is easier to transport and store certainly makes it very compelling as things stand at the moment because it doesn’t matter how great a vaccine is – if you can’t get it to the people who need it then it is of limited use.

Funnily enough, Markets get shot in the arm from vaccine trial (The Times, James Dean and Alex Ralph) shows that global markets once again got a “shot in the arm” (hoho) from positive news on Moderna’s vaccine. Once more, bombed-out sectors like travel, transport and leisure shares were the best performers. * SO WHAT? * I suspect that we are going to see a lot of this sort of movement on news of new vaccine candidates. Even if they don’t all work, I would imagine that every instance is going to give investors increasing confidence in the face of rising coronavirus cases that an end is in sight. Fingers crossed 🤞🤞!

Home Depot goes shopping, slowing birth rates could be problematic, Cinemark makes a historic deal and the UK’s Lockdown 2.0 doesn’t look as bad…

Home Depot pays $9.1bn for building materials wholesaler HD Supply (Financial Times, Alistair Gray) shows that the world’s biggest DIY chain announced a deal to buy its former subsidiary HD Supply (which supplies building materials to maintenance and repair contractors) for a 25% premium to Friday’s closing price. This is very much an example of a company that has done well in lockdown splashing the cash. HD Supply was sold to private equity investors in 2007, just before the US housing market meltdown. * SO WHAT? * This deal broadens Home Depot’s offering and the apparent underinvestment in HD Supply gives it an opportunity to add some value and get some growth. It’ll be interesting to see whether we get anything similar going on in the UK.

I thought I’d mention A Covid baby bust is bad news for these businesses (Wall Street Journal, Saabira Chaudhuri) because it refers to a potential problem a few years from now – that birth rates are likely to fall dramatically because people put off having families during the pandemic (although you could argue that there will be a “relief boom” when the vaccines start coming). The birth rate had already been weakening for a few years prior, but a dramatic fall is likely to hit companies that make related products like baby formula and nappies, such as Reckitt Benckiser, Nestle and Danone. Stats from the Brookings Institution think tank expect there to be 300,000 to 500,000 fewer births (talk about hedging your bets – that’s a massive margin 😂!) in 2020 versus 44,172 fewer in 2019, although official government figures won’t be released until summer next year. It is basing its forecast on what happened in the 2007-2009 recession and uses the hypothesis that weaker job prospects equate to fewer births. * SO WHAT? * Interestingly, although birth rates are weakening, it seems that parents are spending more on their children so efforts are being made by companies to introduce more expensive baby food.

Cinemark, Universal usher in more change to movie-theater distribution (Wall Street Journal, R.T.Watson) heralds what could be a historic moment for movies as Comcast’s Universal Pictures has just signed a deal with America’s 3rd largest cinema chain, Cinemark Holdings, which will allow Universal titles to go to streaming after just three weekends – or 17 days – in theatres. AMC Entertainment, the world’s biggest cinema chain, already agreed a similar deal with Universal in July. * SO WHAT? * This is potentially AMAZING as, currently, moviegoers have to wait about 2½ months from a film’s cinema debut before being able to watch it at home. This move is definitely a sign of the times as movie theatres have been trying to make money under lockdown and a multi-year deal will give it some much-needed cash flow certainty, albeit at a cost to its theatre revenues. Mind you, given that most films and cinemas earn the bulk of their box-office revenues in the first few weeks of release, theatres have been jealously guarding their 2½ month window. However, now that the power has swung back very much in the studios’ favour, cinemas are having to be a bit more humble otherwise they may not survive. Under the Cinemark-Universal deal, films that gross over $50m in their first weekend can continue to have theatre-exclusivity for five weekends – or 31 days. Once that is reached, they can still screen the film but it will also be available for streaming (and the cinemas can get a share of the digital-rental revenue). I think that this is an excellent idea for all concerned and it will be interesting to see how much of an impact this will have on box office receipts.

New restrictions less damaging to UK economy than spring lockdown, data show (Financial Times, Valentina Romei) cites a number of unofficial data sources which show that Lockdown 2.0 isn’t proving to be as damaging to the economy as the first one. Stats on the volumes of people travelling to work and HGV traffic levels remain largely unchanged (which implies that factories and building sites are still mostly open) although consumer confidence took a recent hit, according to the latest data from PwC. * SO WHAT? * Clearly, the first lockdown was a major shock to the system but it seems that households and businesses have had time to adapt. Given that this is also a lockdown with a deadline (we hope!), plus growing optimism about a vaccine, I would expect there to be a smaller hit on the economy than last time although I would concede that there will be more businesses shutting down for good the longer restrictions are in place.

Tesla aims for the S&P but EVs still lag in the UK…

Tesla to be added to S&P 500 Index (Wall Street Journal, Heather Somerville) heralds the imminent promotion of Tesla to the “big boys’ club” as S&P Global announced yesterday that Tesla would join the S&P 500 Index on December 21st. The company did not make the cut in September despite having now had five consecutive quarters of net profit (you need four to get into the index) and brings with it official recognition. * SO WHAT? * This is great news for the company – and the share price has already shot up on the back of this news. Tracker funds will have to buy into it now and so I would expect more upside

from here. This will give investors a feeling of vindication but it still doesn’t alter the fact that the company’s car sales are still miniscule versus the whole.

Meanwhile, Is Britain’s electric vehicle journey moving too fast? (Daily Telegraph, James Cook) shows that we are still way behind in terms of charging network in the UK for electric vehicles despite the government is to bring forward the ban on the sale of new petrol or diesel cars from 2035 to 2030. Currently, 73.6% of new car sales so far this year are petrol and diesel, 5.5% are put electric and the rest are hybrids. Mind you, it’s not just the network that’s the problem – Johnson plays catch-up amid world’s gigafactory charge (Daily Telegraph, Michael Cogley) shows that we will need massive battery production capacity as well and that we are currently falling way short! The move to EVs sounds great, but success will all be in the execution.

Walmart exits Japan, Aibnb has good news, BBVA eyes a smaller rival and UK house prices fall…

In a quick scoot around some of today’s other key stories, Why Walmart’s might couldn’t crack Japan (Financial Times, Kana Inagaki and Leo Lewis) shows that Walmart has finally decided to call it a day in Japan after 18 years as it sold its majority stake in Seiyu. * SO WHAT? * Japan has been the graveyard of many a western retail hopeful – just ask Boots, Carrefour, Tesco and Ikea – mainly because suppliers are so strong and a foreign interloper just can’t seem to break it no matter how big they are. This means that they are unable to leverage any buying power. The new owners of the Seiyu stake, Rakuten and KKR may well be able to do more to grow the online business than Walmart ever could. Walmart will still retain a 15% stake in Seiyu, so still has skin in the game – which might be a good thing given that Seiyu is likely to have an IPO next year.

Elsewhere, Airbnb IPO filing shows profitable quarter after deep cuts (Wall Street Journal, Preetika Rana and Maureen Farrell) highlights the company’s profit in Q3, which will be very useful as it heads towards an IPO. Deep cost cuts and rising revenues since the lowest point of the

pandemic have combined to boost profits in time for a (probably) successful flotation. Nice timing – although it did warn that further movement restrictions in the fourth quarter may dampen things a bit.

Elsewhere, Spanish bank BBVA in merger talks with smaller rival Sabadell (Financial Times, Daniel Dombey) shows that Spain’s second largest bank, BBVA (with a market cap of €24.5bn) is in merger talks with TSB owner Sabadell (which has a market cap of €2.3bn). * SO WHAT? * There’s a spate of M&A going on in the Italian and Spanish banking sector at the moment as banks try to get scale in  difficult markets. Spain’s CaixaBank announced its purchase of Bankia in September, making the enlarged entity the biggest lender in the country, for instance. Sabadell’s shares rose by 25% on the news (but they were down by over 50% over the past year) and BBVA’s rose by 15%. I suspect that investors are looking at this as a potential cost savings story where both banks cut overlapping branches and reduce costs.

Then in Prices fall as sellers seek deals before duty cut-off (Daily Telegraph, Melissa Lawford) we sees that house prices weakened last month, according to Rightmove, as sellers continue to rush to make the stamp duty holiday cut-off. I suspect that the frenzy will continue with renewed vigour in the new year as the deadline gets closer!

…in other news…

I thought I’d leave you today with an unintentionally amusing birthday cake in Woman orders surprise birthday cake for friend – but baker makes embarrassing blunder (The Mirror, Courtney Pochin) and a very busy-looking Christmas tree in Pixar fans are going wild over family’s incredible Toy Story Christmas tree (The Mirror, Courtney Pochin). Wow!

1. In MACROECONOMIC NEWS, a historic Asian trade deal is signed, Japan’s economy rebounds and BoJo self-isolates
2. In CORONATRENDS NEWS, Simon Property and Taubman agree on a lower price, the Supreme Court readies itself for an insurance battle and Johnson & Johnson launches a UK trial
3. In CONSUMER & UK HIGH STREET NEWS, US consumers pay down debt, Arcadia wobbles, Mitchells & Butlers cuts venues, the Post Office distances itself from Royal Mail and Nando’s rescues Wahaca
4. AND FINALLY, I bring you an idea for super-quick roasties and a blue dog…

So Asia strengthens trading ties, Japan’s economy grows and BoJo has to self-isolate…

China and 14 Asia-Pacific countries agree historic deal (The Guardian, Jasper Jolly) shows that one of the biggest free trade deals in history was signed over the weekend. The Regional Comprehensive Economic Partnership (RCEP) was signed yesterday via video link after eight years of negotiation and covers China, Japan, South Korea, Australia, New Zealand, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – who are collectively responsible for 30% of the world’s GDP. The deal outlines terms of trade, cross-border investment and new rules for e-commerce and intellectual property. India is a notable absentee from the agreement as it pulled out last year, saying that it thought that the agreement would not provide adequate protection from its domestic industry and agriculture but it will still be possible for other countries to sign up. Huge Asian trade pact increases Beijing’s influence (Daily Telegraph) reflects opinion that the agreement favours Chinese interests and could help it to draft the rules of trade in the region and Huge Asia-Pacific trade agreement is challenge for Biden (The Times, James Hurley, Richard Lloyd Parry, Bernard Lagan) suggests that it may make things a bit harder for the Americans, who pulled out of their own trade deal with the region (the Trans Pacific Partnership) a few years back under Trump. * SO WHAT? * This deal cuts out 90% of tariffs but it does not include anything on environmental protections or labour rights. It is, however, a good start to getting some coherence in the region.

Meanwhile, Japan’s economy rebounds 5% in the third quarter (Financial Times, Robin Harding) highlights Q3 GDP growth that came in above market expectations. Taking everything into account, Japan’s economy grew by 21.4% on an annualised basis, which is in the ballpark of other advanced economies as they bounced back strongly from the lows of the outbreak. Yoshihide Suga, Japan’s PM, is about to unveil a new spending package that could be worth around $95.5bn. * SO WHAT? * Japan’s economy was already struggling before the coronavirus as a hike in consumption tax last autumn tipped it into recession. Any hopes of an Olympic-fuelled boost were clearly snuffed out by the outbreak, but who knows – maybe a combination of stimulus, a desire for people to travel and a renewed opportunity to see live sports at a postponed Olympics could give the economy a decent boost in 2021…

Then in Blow to Johnson plans for reboot as PM forced to self-isolate (Financial Times, George Parker, Sebastian Payne and Sarah Neville) we see that Boris’s plans for a “re-set”, after some high-profile departures over the last few days, have had a set-back as he has been told by NHS Test and Trace to self-isolate after meeting a Conservative MP who later developed symptoms of  Covid-19. He does not have any symptoms at the moment and will continue to work from Downing Street.

Simon Property and Taubman renegotiate, the insurance battle goes to the Supreme Court and Johnson & Johnson launches a UK trial…

Simon Property, Taubman agree to revise merger deal (Wall Street Journal, Cara Lombardo) shows that high-end mall developer Taubman has agreed to accept a lower takeover price from Simon Property ($43 a share versus the original $52.50) in order to avoid a costly legal battle. The deal was first announced in February just before the pandemic really started to kick in and its original structure will be unchanged. The deal is expected to close either later this year or the beginning of next. * SO WHAT? * This has shades of LVMH/Tiffany about it as both sides got together to come to a compromise in that case too. You only want to bring the lawyers in if you absolutely, positively have to 😜

Talking of court cases, Supreme court case looms as insurers battle firms over Covid cover (The Guardian, Julia Kollewe) reminds us that the latest stage of the test case brought by the Financial Conduct Authority on behalf of business owners who had business interruption insurance will be heard over the next four days. According to the Association of British Insurers, about £900m-worth of claims is at stake. The FCA won the last round against the insurers, but the insurers refused to pay out and appealed the decision, which brings us here. Timing of any ruling is currently unknown.

Then, in the week after Pfizer announces its vaccine news, J&J to launch UK trial of its Covid-19 vaccine (Financial Times, Donato Paolo Mancini) shows that US pharmaceutical giant Johnson & Johnson is to launch its UK Phase 3 trial this week via its Janssen subsidiary. It will be the third experimental vaccine to go into late-stage trials in the UK after one developed by Novavax and the other one being developed by AstraZeneca and Oxford University. According to government forecasts, if the J&J trials go well, 30m doses could be ready for use here by mid-next year.

US consumers pay down debt and we take a look at the UK high street in tricky times…

Bank credit card profits in question as US consumers pay down debt (Financial Times, Robert Armstrong) shows that American consumers are paying down their credit cards as a lack of opportunity to spend elsewhere affects consumer behaviour. According to stats from the Federal Reserve, there were $755bn-worth of card loans held by US banks as at the last week of October. This was $100bn lower than at the start of the pandemic and it is continuing to trend lower in the last three out of four weeks. TransUnion stats also showed that the number of new card accounts fell by 50% in Q3 versus the same time last year – and all of this combined will hit banks as high interest cards are a key profit driver. * SO WHAT? * On the one hand, it’s good that households are paying down debt, but if they don’t spend on anything other than essentials this will be bad for the economy in the long run. It could also be a double-whammy for banks as they could end up getting hit by more loans going bad AND a lack of profit from their lucrative cards business.

Back in the UK, Arcadia in talks over possible £30m loan after Covid sales loss (The Guardian, Jasper Jolly) shows that the Arcadia fashion group – which owns brands including Topshop, Burton and Dorothy Perkins – is currently in talks with lenders about loans in order to help out with the damage done from lost sales under lockdown. Arcadia currently operates about 500 sites in the UK employing about 15,000 staff. All of the staff in England have been furloughed. * SO WHAT? * Arcadia was already having problems before the coronavirus and the outbreak has just compounded them. As things stand, Arcadia could be put into administration to protect company assets while

directors try to sell individual brands but this is still risky at the current time. The company denies that it is even considering administration at this point. For now I guess they just have to cross their fingers and hope for online sales success!

The gloom continues in All Bar One owner axes up to 20 venues as Covid bites (Daily Telegraph, Ben Woods and Hannah Uttley) as Mitchells & Butlers, owner of brands such as All Bar One and Harvester, has decided to cut up to 20 pubs and restaurants out of its estate of around 1,700 establishments – but it is currently unclear as to how many of its 44,000 staff will be affected by this decision. * SO WHAT? * Rivals including Marston’s, Fuller’s, Young’s and Greene King have all had to cut thousands of roles following the impact of the 10pm curfew and Lockdown 2.0. It is hardly surprising that M&B has had to do the same thing given what’s going on at the moment.

End for Post Office tie to Royal Mail (The Times, Robert Lea) shows that the historic link between the Royal Mail and the Post Office is about to end, resulting in the state-owned Post Office handling the packages of rivals such as Amazon. * SO WHAT? * Many believe that once this tie is broken, outlets could have a freer hand to do other activities like click-and-collect or pick-up/drop-off of parcels, which could be particularly useful in the run-up to Christmas. The two were formally separated ten years ago, but they signed an agreement at the time whereby the Post Office agreed to exclusively handle Royal Mail post, parcels and packages. This has now come to an end and future arrangements are currently being discussed. Clearly the Post Office is keen to free itself to work with rivals.

Then in Nando’s serves up rescue for Wahaca (The Times, Ben Martin), we see that the South African businessman behind Nando’s has just rescued Wahaca by buying a majority stake in Wahaca’s parent company, Oaxaca and given it a loan to help it through the pandemic. At least that’s one less restaurant chain biting the dust (for now, at least!).

…in other news…

I thought I’d leave you today with a tip on how to do speedy roast potatoes in Chef shares trick to make ‘perfectly crispy’ roast potatoes in just 20 minutes (The Mirror, Luke Matthews) and a hilarious and very cute dog in Freshly-groomed dog left ‘looking like Smurf’ after biting into ink cartridge (The Mirror, Luke Matthews). Nice!

1. In CORONATRENDS NEWS, WeWork burns even more cash, Emirates announces its first loss in over 30 years and Tui faces criticism
2. In RETAIL NEWS, WH Smith announces cuts and closures, Burberry wants tax-free to continue and B&M announces big profits
3. In MEDIA-RELATED NEWS, Disney is a mixed bag, ITV says ads are turning a corner, TikTok gets a reprieve and Roblox considers an IPO
4. AND FINALLY, I bring you a highly controversial cheesecake…

So WeWork keeps burning the cash, Emirates hits major turbulence and Tui annoys with late payments…

WeWork burns through another $500m in third quarter (Financial Times, Eric Platt) highlights the fact that the office space provider managed to burn $517m in the latest quarter as demand for office space in central locations continued to fall. This means that it “only” has $3.6bn left in the kitty, having now burnt through a staggering $1.7bn since the start of the year! Chief exec Sandeep Mathrani sticking to his target of being cash flow positive next year is looking increasingly like he is living in fantasyland as sales continue to fall. OK, so the company has cut thousands of jobs, closed poorly-performing buildings and rid itself of its narcissist (yet highly successful!) founder Adam Neumann but sales dropped by 13% in the latest quarter. * SO WHAT? * WeWork has been an absolute disaster and investors who even considered taking part in the abandoned IPO last year must be thankful that they dodged the mother of all bullets. Being an office space provider in a world where more people are working from home and who are therefore not commuting and doing more videoconferencing, not to mention the fact that commercial property prices in central locations are falling – means that WeWork is facing massive headwinds. Cashflow positive next year? My @rse. And there was me thinking the last CEO was full of 💩!

Emirates swings to first half-year loss in more than 30 years (Financial Times, Simeon Kerr) shows that the airline has hit a serious air pocket as it announced revenues fell

by about 75% due to coronavirus travel restrictions. Headcount has been cut by 24% as of September 30th and the company has been raiding its cash reserves and using a $2bn injection from the Dubai government to keep going. On the positive side, Emirates managed to switch to cargo operations as passenger traffic declined but in overall terms passenger numbers were down by 95% on the previous year and cargo volume fell by 35%. * SO WHAT? * This is unsurprising given what’s going on elsewhere in the world – and in the aviation industry – at the moment but I really think that those who can hang on and weather this extreme turbulence will see major upswings when vaccines become widely adopted. I believe that many people will be desperate to travel abroad after being locked down for so long!

Then in Tui under fire as delayed payments put businesses at risk (Financial Times, Alice Hancock and Kerin Hope) we see that Europe’s biggest tour operator is being targeted by Greek hoteliers for not paying its bills on time, which is putting hundreds of businesses at risk. Tui has issued a number of contract amendments in the last week or two which require hotel owners to wait until March 2021 to get 75% of the money owed to them for stays made this year. Usually, these payments are made 60 days after departure dates, so you can imagine the frustration and anger this is causing. * SO WHAT? * Everyone is doing their best to survive and Tui clearly does not want to become the next Thomas Cook. However, doing this by putting hoteliers in the lurch is not a good look and if this continues you wonder whether there will be some significant reputational damage that could prompt would-be holidaymakers to shop elsewhere.

WH Smith cuts, Burberry fights for tax-free and B&M puts in a strong performance…

WH Smith to shut 25 high street stores after it reports £280m loss (The Guardian, Sarah Butler) shows that the high street stalwart is going to make cuts, including about 200 jobs, after coronavirus has pushed it into loss. Sales in its high street outlets dropped by 19% but its previously successful outlets at stations, airports and hospitals suffered even more as they saw a 43% fall in sales to the year to 31st August. Interestingly, sales via its main website shot up by over 240%! The 200 job cuts here are in addition to the 1,500 announced in August. * SO WHAT? * I’ve probably said this before but WH Smith has seen an absolutely massive upheaval. Until the pandemic hit, its strategy of being in places with captive consumers was widely praised and was its major cash cow. That has completely changed with the advent of the coronavirus as the “boring” high street business kept it limping through while its outlets at airports and railway stations had to shut down. I think that it is high time for yet another overhaul at the retailer (it’s had its fair share of these over the years) to sort out its stodgy high street business and maybe this virus is going to give it a bit of negotiating power as it is in the throes of renegotiating the terms of leases on 120 stores this year and another 300 over the next three years. Lower rents would be a start, but I think WH Smith needs to reinvigorate its high street business while the former “cash cow” business regroups.

Burberry warning over end to tax-free shopping (Daily Telegraph, Hannah Uttley and Simon Foy) shows that the luxury retailer is trying to hang on to any advantages it can

get as it announced a 62% fall in half-year pre-tax profits. It warned that ending tax-free shopping for overseas tourists would make it more expensive versus the rest of Europe and therefore end up turning visitors away. Ministers have suggested a “shop-and-ship” alternative where international visitors would be allowed to send goods overseas to take advantage of VAT relief but industry has said that this is unworkable. In Burberry’s case, two-thirds of their customers in the UK are tourists, so you can understand why they are fighting tooth-and-nail to keep the VAT relief. * SO WHAT? * At first glance, Burberry’s objections sound a lot like whingeing but when you consider the importance of tourists to their business you can understand. The thing is that there just aren’t any tourists at the moment and there are unlikely to be for the foreseeable future, so I think that the argument is somewhat academic at the moment. You would have thought that the government should throw Burberry a bone in this regard and keep the current duty-free thing in place. Mind you, Chinese consumers are starting to spend more and luxury goods groups have reported strong sales – so maybe Burberry can fight to get more of a slice of that action.

At the other end of the scale, B&M bosses set for £44m as lockdown profits soar (The Times, Ashley Armstrong) shows that the billionaire brothers behind B&M are about to get a £44m payout as the discount retailer unveiled profit numbers that more than doubled under lockdown! Bobby and Robin Arora have a 14.9% stake in B&M via their offshore vehicle SSA Investments and will get the money due to the company paying a £250m special dividend. * SO WHAT? * Although this is clearly rather nice for the brothers, they are facing criticism from those who object to massive payouts from companies who have benefited from taxpayer support during lockdown and just paid them away to shareholders. I suspect that this is a subject that will drag on for quite some time.

Disney’s story is mixed, ITV is positive about ads, TikTok gets a reprieve and Roblox eyes an IPO…

The pandemic has been “a whole new world” for Disney, which has largely suffered badly from a case of the coronavirus. At Disney, streaming soars as other businesses struggle (Wall Street Journal, Erich Schwartzel) shows that the company’s Disney+ streaming service is the only thing that’s going well for Disney at the moment as the company announced its second consecutive quarterly loss yesterday. Subscriptions to Disney+ hit 73.7m as at October 3rd versus over 60m in August. * SO WHAT? * The streaming business is where it’s at at the moment for Disney and some are arguing that it needs to be rated like a tech stock because of this, but the fact is that it is still highly exposed to tourism and moveigoing which are both in the doldrums at the moment. I think that sunny days will return for Disney but in the meantime I think it’s sensible to put more resource towards Disney+ to build it up while it is particularly relevant to all of our lives.

Elsewhere, Advertisers’ clamour for Christmas TV airtime boosts ITV recovery (The Guardian, Mark Sweney) highlights a bit of a turnaround as advertising revenues have bounced back strongly after a disastrous first half going into Christmas (nice, but I have to say I think this is a bit of a one-off as I would expect ad budgets to continue to be squeezed going into next year), US backs down on TikTok (Wall Street Journal, John D. McKinnon and Georgia Wells) shows that the US Commerce Department has decided to delay the implementation of an order that would have banned companies from providing internet-hosting or content-deliery services that would have made it impossible to operate in the US (great for TikTok/ByteDance as it buys them time to see how Biden will treat them) and Roblox/games: multiverse nurse (Financial Times, Lex) shows that Roblox is thinking about an IPO via the direct listing route which could give it an implied valuation of $8bn. Although this sounds expensive, Roblox’s advantage is that it’s more of a game engine rather than a developer. I say that because developers tend to be characterised by being one or two-hit wonders (e.g. Rovio Entertainment with Angry Birds etc.). As it is a hub for users to share games it acts more like YouTube and given that apparently 2/3 of all US children between nine and twelve use the platform it looks like a decent prospect IMO.

…in other news…

I thought I’d leave you today with the highly controversial Pigs in blankets cheesecake is driving people wild as it’s ‘so wrong it’s right’ (The Mirror, Courtney Pochin). Wait, whaaaaattt??? 😱😱😱 Having said that, I’m erring on the side of “I think I would try that”…

1. In CONSUMER/RETAIL NEWS, we see rising household debts, a hot residential property market into the end of the year and worries about retailers coping with extra demand
2. In TECH NEWS, China tech suffers, Alibaba has a stellar Singles Day and TikTok tries another delay
3. In PHARMACEUTICAL NEWS, we look at potential vaccine hurdles and Pfizer’s chief exec makes a handy bonus
4. In MISCELLANEOUS NEWS, we look at the effects of BoJo’s takeover rules and Flutter’s US success
5. AND FINALLY, I bring you one of my favourite ever music videos…

So household debts rise, residential property is hot but retailers worry about meeting demand…

*** It’s THURSDAY today, which means that it’s ZOOM time! This is a Zoom call where I talk about the week’s key business and financial markets news and open it up to questions from YOU where you can ask anything you like. The call for PAYING SUBSCRIBERS starts at 5.30pm and finishes at 6.30pm. In this call, I do the weekly roundup, Q&A and interactive group discussion. Joining details for this call are HERE. If you want to upgrade to be a paying subscriber, please click HERE. Hopefully I will see you later! Don’t be shy – say hello! I had a problem with the call last week, so IF you have any issues please e-mail to tell me on peter@seihaconsulting.com and I will set something else up. I think I’ve fixed it, but I just thought I would have a back-up plan just in case!

Prior to this call I will be doing an Instagram Live starting at 5pm on the Watson’s Daily Instagram channel where I will be interviewing Emily, who has been a subscriber to Watson’s Daily for the past three years. She’ll be answering questions about how she has used Watson’s Daily and the benefits it has brought her. If there is time, I will also open things up to a Q&A as usual! ***

Debt crisis warning as UK reports steep rise in emergency borrowing (The Guardian, Phillip Inman) cites research by debt charity Stepchange which shows that household borrowing and arrears have shot up by 66% since May and the number of people who are in severe debt has risen to 1.2m. It warns that inaction by the government could result

in these numbers continuing to rise – something that it should be taking into consideration particularly as unemployment numbers increase.

Having said that, Property market booming but will slow after support ends in new year (The Times, Gurpreet Narwan) cites the Royal Institution of Chartered Surveyors (RICS) as saying that although the number of buyer inquiries, agreed sales and instructions to sell are still on the rise, this rate of growth was unsustainable given that Rishi Sunak’s stamp duty holiday will end in March next year. RICS members said in a survey that they expected that the end of this relief – as well as an uncertain economic backdrop – would herald a cooling off. * SO WHAT? * No 💩, Sherlock. The current residential property boom is being largely powered by Sunak’s stamp duty measure and if he sticks to a hard deadline, I would have thought that the housing market will fall off a cliff. Buying property isn’t a swift process – especially at the moment – and so there is a danger that some buyers will miss the benefits if there are delays in the housing chain. I think that the government needs to come up with more guidance about how it will address this problem and tell people whether it’ll be a hard deadline or whether stamp duty will come back in staggered phases so people can plan now.

Then in Christmas gift warning as retailers face supply chaos (Daily Telegraph, Laura Onita) we see that retailers are expecting chaos in December due to a combination of supply chain issues, movement restrictions, staff absences and nervous customers. Stores are seeing a huge uptick in online demand and are moving stock from shops back to warehouses in order to keep up. The Entertainer’s CEO, Gary Grant, warned that delivery capacity would fall short if the current lockdown period is extended. Tough times. Great if you are a delivery driver, though!

China tech gets the blues, Alibaba has a great Singles Day and TikTok tries to delay…

Fear of Beijing curbs wipes billions from value of tech firms (The Guardian, Rupert Neate) follows on from what I was saying yesterday about Chinese authorities cracking down on tech companies as their share prices continued to fall for a second day. Alibaba saw its share price fall by 9.8%, but many others also had a bad day as Tencent fell by 7.4%, JD.com by 9.2%, Xiaomi by 8.2% and Meituan Dianping by 9.7%. This was despite Alibaba sets ‘Singles Day’ sales record (Wall Street Journal, Liza Lin and Xie Yu) being a cause for celebration as the world’s biggest online shopping event went even crazier than usual – it saw $75.1bn in sale in one day but Alibaba: trust issues (Financial Times, Lex) hightlights the fact that Alibaba has a lot to lose under the new rules as it has a whopping 60% market share of Chinese e-commerce market. If you then add in JD.com’s share, then you have almost 75% of the market dominated by two players! * SO  WHAT? * The danger here will be what the authorities decide to do about restrictions of the use of customer data from online search

and what they buy. Such data helps to power Alibaba’s ad revenues as it know who to target for the most effective return. If tighter controls are brought in for data usage, Alibaba’s supremacy could dent its lead over rivals. As always, the devil will be in the detail of any regulations, so everyone will be watching with interest when they see the final draft. Are the regulators just trying to scare tech, or will they really clamp down on it??

TikTok challenges Trump order ahead of US divestment deadline (Financial Times, Miles Kruppa and James Fontanella-Khan) shows that ByteDance, TikTok’s parent company, has filed a legal challenge against the White House order that will force a sale of TikTok’s US operations. The company is saying that Trump’s divestment order is a violation of the company’s constitutional rights and it is also applying for a 30-day extension for the deadline with the Committee on Foreign Investment in the US (Cfius). * SO WHAT? * ByteDance has got an agreement with Oracle and Walmart to control its US business but there are disagreements over who is actually going to be top dog in the deal. I would imagine that it is in ByteDance’s interest to keep dragging this thing out as long as possible in the hope that Trump will just get bored and that Biden may be less aggressive towards it.

We look at potential vaccine problems and the Pfizer chief sells into strength…

I am as hopeful as the next person that the Pfizer/BioNTech vaccine works wonders BUT I also believe in the saying “Hope for the best but prepare for the worst”. Seven factors that could pop bubble of elation over Pfizer (Daily Telegraph, Hannah Uttley) is an excellent summary of some of the issues that could get in the way of a vaccine and its swift distribution. It says that safety data will have to be of a decent standard to get emergency use authorisation from the FDA (although it could release this data as soon as next week, apparently), that the level of efficacy can fall even in the latter stages of a trial, that manufacturing it fast enough could be problematic, that

logistics could prove to be a sticking point (Pfizer’s vaccine has to be stored at -70ºC and there’s not enough dry ice knocking around to keep it at that temperature) and that the public may not trust something that has been developed so quickly. What is particularly interesting, though, is that the challenges faced by the Pfizer/BioNTech solution (cold transportation) may hand rivals such as AstraZeneca/Oxford University an advantage if their vaccine is as effective but less problematic to transport. Still, that said, fingers crossed for a successful vaccine candidate!

Meanwhile, a lot of newspapers have picked up on Pfizer chief sold $5.6m of shares as promising vaccine was revealed (The Times, Alex Ralph) given that it obviously looks a bit dodgy at first glance. However, he did apply to sell about two-thirds of his shareholding on August 19th at a certain price before he knew the news – and managed to make a tidy $5.6m on it. Not bad!

We see who BoJo’s new rules are aimed at and how Flutter’s American bet is going well so far…

I did talk about these new takeover rules yesterday and who they were really aimed at but UK takes aim at China with revamp of takeover rules (Financial Times, Jim Pickard, Daniel Thomas, Arash Massoudi and Tom Mitchell) goes into more detail about why it is aimed at China and says that yesterday’s move brings the UK into line with other Western allies such as the US, Australia, Canada and New Zealand. * SO WHAT? * When you consider that Jingye owns British Steel and that China Investment Corporation owns stakes in Heathrow, National Grid and Thames Water while other Chinese entities own a stake in Hinkley Point C, you can see why there is an increasing need to at least keep a closer eye on the situation. UK M&A: intervening before elevenses (Financial Times, Lex) suggests that a fine line will have to be trodden

by politicians between protectionism, nurturing home-grown expertise and attracting inward investment. The new rules could also mean that less venture capital funds will be available for UK start-ups who won’t have the prospect of a Chinese buyer to fall back on. 

Flutter’s US bet wins as it aims for $1bn in revenues (Daily Telegraph, Oliver Gill) shows that the company behind Sky Bet, Paddy Power and Betfair is close to smashing through the $1bn revenues barrier in the US as firms slug it out to win in gambling as sports betting is legalised across the US. There will continue to be a lot of M&A activity across online gambling as companies seek out scale and expertise but Flutter Entertainment: betting on America (Financial Times, Lex) heralds a note of caution as the UK still accounts for about 40% of revenues and says that it is unclear as to how online gambling growth will continue when lockdown is lifted and how sustainable the current uptick in the US will be. Still, all’s good in the ‘hood for now…

…in other news…

I didn’t find anything particularly exciting in the newspapers today regarding “alternative” stories, so I thought I’d leave you with what I think is probably my favourite ever music video! It’s a few years old now but it is just astounding. There is no CGI and it’s a one-shot video. Just keep watching to the end – it is mind-blowing! Anyway, HERE is “I won’t let you down” by OK Go. If you like this, have a look at their first viral video which is lower tech but just superbly simple. Maybe this is something you could recreate when gyms come out of lockdown 😁…

1. In REGULATION NEWS, China draws up antitrust rules, the EU accuses Amazon and UK takeover rules tighten
2. In VACCINE NEWS, we look at who’s in the race as well as Pfizer and potential logistical challenges
3. In TECH NEWS, the sector gets sold but it can still win and Apple announces a new chip
4. In INDIVIDUAL COMPANY NEWS, Spotify continues to invest in podcasts and Premier Foods benefits from more home-cooking
5. AND FINALLY, I bring you an apologetic tooth fairy and Bake-Off outrage…

So China, the EU and the UK get feisty…

China draws up first antitrust rules to curb power of tech companies (Financial Times, Ryan McMorrow, Nian Liu and Mercedes Ruehl) shows that China’s market regulator, fresh from taking Jack Ma down a peg or two, is now moving towards putting together antitrust rules that have sent shares in China’s Big Tech companies – including Alibaba, Tencent and food delivery specialist Meituan – down between 4% and 11% in trading yesterday. The State Administration for Market Regulation will define, for the first time, what antitrust behaviour is. This constitutes a considerable departure from its previous light-touch approach but will address issues concerning function portability (e.g. users can’t use WeChat Pay to shop in Alibaba’s Taobao store). * SO WHAT? * The new rules are likely to hit exclusivity clauses and the bundling of products, which will presumably hit margins and potential revenues. To give you an idea of scale, Alibaba sells almost 20% of all Chinese consumer goods versus 5% market share of Amazon in the US. Draft regulations targeted the likes of Tencent, Alibaba, Meituan and JD.com specifically. The regulator is currently awaiting public feedback before the deadline of November 30th. It is going to be fascinating to see how far it is willing to go to get its own Big Tech under control.

Amazon charged with abusing EU competition rules (The Guardian, Daniel Boffey) shows that Margrethe Vestager is at it again as Amazon has now been formally charged by the European Commission with using sales data from third party sellers on its website to gain advantage in the European marketplace. EC vice-president Vestager says that Amazon used “big data” to skew competition in France and Germany. There will also be a second investigation looking into Amazon’s alleged prioritisation of its own

offers and independent retailers who use its logistics and delivery services. * SO WHAT? * I really hope that Vestager manages to win this time around. Her bruising encounter with Apple – which she lost – was a major blow to the credibility of the EC and she needs to win this otherwise, in my opinion, she might as well resign and not bother because no-one will take her, or the EC, seriously.

No 10 toughens takeover laws to lock out ‘back door’ security risks (Financial Times, Jim Pickard, Helen Warrell and Daniel Thomas) shows that Boris Johnson will today announce the biggest overhaul of British takeover law in twenty years in order to prevent foreign companies taking over key assets in the form of the National Security and Investment Bill. Potential foreign buyers of UK companies, large shareholdings or intellectual property in 17 specific industries will have to alert a new government body or face personal fines of up to £10m or corporate fines of up to 5% of annual turnover. The screening process should be completed within 30 working days. Sectors covered by the new bill include defence, transport, energy, AI, computing hardware etc. The powers will be active from when the Bill is introduced today in order to head-off a deluge of deal-making before a deadline. * SO WHAT? * The proposals had been drawn up three years ago under Theresa May but implementation had been on the backburner in the meantime. This will bring the UK in line with similar practices adopted in other Five Eyes partners including the US and Australia and reflects growing concerns about takeovers via the backdoor from China and sovereign wealth funds eager to take advantage of covid-induced vulnerability. While this sounds reasonable in theory, in of itself it won’t really help companies that need the funding. By cutting out potential partners, unless other measures are introduced to help these sectors, I would expect a number of companies to fall by the wayside in the name of “national security”.

We look at what’s going on elsewhere in vaccines and some of the challenges…

Leaders in race to develop jab (The Times) is an excellent infographic which shows you where other players are in the race to bring out a vaccine. Specifically, it shows you where the likes of Moderna, AstraZeneca/Oxford University and Sanofi/GSK are in relation to BioNTech and Pfizer. It’s certainly good to have options! Vaccines/Pfizer: calling the shots (Financial Times, Lex) shows that Pfizer and BioNTech will be benefitting from a vaccine because they have used their own money (not government) for

development. Some estimate potential sales of $13bn next year – way more than their current bestseller, a pneumonia vaccine that made $5.8bn last year. There are some potential logistical problems with Pfizer/BioNTech’s vaccine as it has to be kept at -70ºC – and Fears dry-ice shortage could delay Pfizer vaccine rollout (Daily Telegraph, Lizzy Burden) shows that dry-ice weight restrictions on aeroplanes are prompting fears that distribution may be restricted – but then Moderna’s candidate only needs to be stored at -20ºC.  * SO WHAT? * While it’s clearly brilliant to hear about Pfizer/BioNTech, it’s also fantastic to see that others are not far behind. Hopefully, sufferers – and those exposed to the virus regularly – will have options.

Tech gets sold, but it can still win and Apple announces a new chip…

Tech sell-off continues after Covid vaccine breakthrough (Financial Times) highlights the fact that the sell-off of tech stocks continued yesterday as investors crystallised their gains after a prolonged rally but then Tech stocks: tails they win, too (Financial Times, Lex) shows that this is not likely to be permanent given that we are still going to be working from home for some time yet. What lockdown has done is to accelerate Big Tech’s profitability and an uptick in memberships tying users to services is unlikely to drop off a cliff. * SO WHAT? * Of course the likes of Zoom and Peloton have experienced massive gains during the pandemic, but given that that some form of lockdown has

been prolonged, people have become accustomed to new services and new ways of doing things. OK, so the growth rate is probably going to slow down but there will still be growth to be had IMO. It is also way too early to get excited about aviation and travel agents, for instance.

Meanwhile, Apple Mac line, once dubbed ‘dinosaur’, gets new life in pandemic, in-house chips (Wall Street Journal, Tim Higgins) shows that Apple has unveiled a new in-house designed chip called that M1 that will make its Macs faster and more energy efficient (and possibly more profitable). The MacBook Air, MacBook Pro and Mac Mini will be the first to get the chip. * SO WHAT? * This development brings its Mac line-up more in-line with its other products and also heralds the end of a 15-year relationship with Intel. This is all part of CEO Tim Cook’s efforts to manufacture more of its own components.

Spotify continues to invest in podcasts and Premier Foods benefits from home cooking…

Spotify continues podcast push with Megaphone deal (Financial Times, Anna Nicolaou) shows that the music-streaming giant is continuing to beef-up its podcast capabilities by buying Megaphone for about $235m. This is the latest acquisition following those of Gimlet Media, Anchor, The Ringer, Parcast and individual deals with stars such as Joe Rogan and Michelle Obama. Megaphone does ad technology for podcasting, which will be useful to podcasters and perhaps attract more of them to the Spotify platform as they continue to aim to monetise

content. * SO WHAT? * There seems to be a lot of action in the podcast world at the moment – Amazon added podcasts to its music services in September, Apple recently bought Scout FM, which curates podcasts and SiriusXM agreed to buy the Stitcher platform this year. It certainly seems like podcasts are the way to go content-wise at the moment!

Then in Home cooking boom is all gravy for Premier Foods (Daily Telegraph, Hannah Uttley) shows a continuation of the theme for consumers buying familiar brands as the owner of Bisto Gravy and Mr Kipling, among others, announced rising profits and sales as more people are eating at home under lockdown. No doubt this will continue for at least the next quarter as we all have a homely Christmas!

…in other news…

I thought I’d leave you this week with the quick-thinking mum in Mum forgets tooth fairy visit but saves the day with clever note (The Mirror, Paige Holland) and something that I also noticed last night when I watched TV in Bake Off fans outraged by Paul Hollywood’s snub to Hermine after ‘stunning’ jelly cake (The Mirror, Rose Hill). It was an INCREDIBLE cake if you haven’t seen it…

1. In CORONAVIRUS NEWS, Pfizer’s revelation sparks a rally, optimism is tinged with caution and Eli Lilly gets approval
2. In MACRO & TREND NEWS, the EU starts to impose tariffs on the US and the Turkish lira jumps while
3. In M&A NEWS, VF buys Supreme and Countrywide gets an approach
4. In INDIVIDUAL COMPANY NEWS, Ant Group faces hurdles, Norwegian Air is refused a bailout and Nikola’s losses deepen
5. AND FINALLY, I bring you a tough coffee exam question…

So Pfizer sparks joy and Eli Lilly gets approval…

Covid vaccine breakthrough fuels broad global equity rally (Financial Times) highlights yesterday’s market euphoria in the wake of the announcement by Pfizer and BioNTech that their vaccine had been found to be over 90% effective in a late-stage trial. This added to the Biden win rally and Winners and losers on day of sudden reversals (The Times) identified a reversal of fortunes for sectors that had been in the doldrums due to Covid. The breakthrough sparked optimism that the aviation industry may be saved – so Rolls Royce (maker of jet engines and servicer of aircraft) and IAG (owner of British Airways) share prices shot up by 43.8% and 26% respectively. It also prompted the hope that people may be able to congregate in numbers once again – so Informa (the world’s biggest events company) was up by 22.2% – and that office life may return – meaning British Land was up by 21.9% and Compass Group was boosted by 21.7%.  Losers included recent strong performers such as Ocado – whose share price fell by 11.% – and Reckitt Benckiser, which saw its share price fall by a more modest 5.5%. The market frenzy had consequences as per Millions miss out as trading sites collapse (The Times, Ali Hussain), which shows that investors using firms such as Hargreaves Lansdown, AJ Bell and Fidelity were unable to trade as their respective websites crashed due to the sudden spike in activity. Trading 212 also crashed.

The whole vaccine thing is undoubtedly a great and uplifting story. HOWEVER, Market must show a healthy dose of realism, say experts (Daily Telegraph, Julia Bradshaw) highlights the fact that we are not home and dry yet given that drugs that reach stage three (like this one) have an 80% success rate and the trial is still only half way through, with safety data yet to be released. Other

candidates with drugs at the same stage include AstraZeneca, Moderna and Janssen. A first glimmer of hope for a Covid vaccine (Financial Times) points out that the end of the fight against the disease – even if these vaccines are successful – will take many months yet despite the US, UK, EU, Japan and other countries pre-ordering huge numbers of doses of the Pfizer vaccine. In this particular case, there are problems with logistics and distribution as Pfizer’s vaccine has to be stored below 80°C. Pfizer/BioNTech vaccine: a new hope (Financial Times, Lex) echoed a note of caution as there are other challenges as well – let’s not forget that Denmark is culling its mink population at the moment due to a new strain, which may scupper vaccine effectiveness and that scepticism abounds as per the findings of a Pew Research Center survey which showed that almost 50% of American respondents said they may not get a Covid vaccination if it were available right now. Staying on the subject of Covid-related things, Eli Lilly receives authorisation for Covid-19 antibody treatment (Financial Times, Hannah Kuchler) shows that the FDA has just given Eli Lilly an emergency use authorisation for its antibody treatment, called bamlanivimab, that is designed to boost patients’ immune systems with artificially-engineered antibodies. * SO WHAT? * There are some really encouraging developments here, but I think that markets got overheated with buying into bombed-out sectors like airlines (even if there is a vaccine, I don’t think there’s going to be any mass move to travelling abroad for some time yet) and selling off companies and sectors that are doing well now and will continue to do so for the foreseeable, like Zoom and Reckitt Benckiser, for instance. People aren’t just going to stop videoconferencing and washing their hands on the back of this news. This indicative, however, of what COULD happen when a vaccine really does get approved for mass usage. BTW, isn’t it interesting that all this news came out the day AFTER Biden won!

The EU doles out the tariffs, Turkey gets dramatic and we see the rush before the calm on UK retailing…

In EU hits US goods with tariffs in Airbus-Boeing dispute (Financial Times, Jim Brunsden) we see that Brussels is slapping punitive tariffs on American imports following the recent granting of the right to do so by the World Trading Organization. Tariffs will apply to around $4bn worth of US goods in the long-running (16 years!) transatlantic spat regarding the US government giving too much state aid to Boeing. Your move next, Mr Biden…

Elsewhere, Turkish lira jumps as Erdogan looks for a way out of crisis (Daily Telegraph, Tom Rees) shows that the Turkish lira shot up from historic lows yesterday as President Erdogan sacked the country’s central bank

governor (the fourth one in five years!) and the finance minister (Erdogan’s son-in-law, no less!) for not doing enough to save the lira. * SO WHAT? * Interest rate rises are usually expected in such cases in order to rein in high inflation, but Erdogan hates such moves, so it’s not a given. It seems that the markets are currently reflecting the hope that radical steps will be taken to address economic concerns.

Meanwhile, back in the UK, Stockpiling and Christmas shopping boost UK retail sales in October (Financial Times, Valentina Romei) shows that there was a major boost in retail sales before Lockdown 2.0 hit, according to the latest figures from KPMG and the British Retail Consortium but Footfall down 75% as England’s lockdown takes toll on shops (The Guardian, Larry Elliott) shows that there is a quiet few weeks in prospect, according to data from the British Retail Consortium and ShopperTrak. Unsurprising, given that most places are now on shutdown!

VF buys Supreme and Countrywide attracts interest…

Supreme streetwear brand sold to VF in $2.1billion deal (Wall Street Journal, Dave Sebastian) heralds the purchase of the cultish brand by VF Corp, the parent company of Vans and Timberland. Founder James Jebbia and a load of private equity firms will be getting a nice payday as a result! Fans are hoping that Supreme’s exclusivity won’t be sacrificed to sales under a more conventional owner.

Back home, Rival takes aim at Countrywide with £82m offer (The Times, Katherine Griffiths) shows that the troubled real estate agent which owns Hamptons and Bairstow Eves, among others, has received an £82m takeover bid from Connells, a smaller rival. Shares in Countrywide shot up by 41.4% on the news. Connells has 600 branches to Countrywide’s 850. It will be interesting to see how this goes and whether they can benefit as one in the event of continued strength in the housing market.

Ant Group faces hurdles for its return, Norwegian Air gets disappointing news and Nikola’s losses worsen…

In a quick look at some of today’s other key stories, Ant faces tortuous path back to market as Beijing tightens rules (Financial Times, Hudson Lockett, Primrose Riordan and Yuan Yang) shows that things could get even worse for Ant Group as the banking regulator suggested it would treat fintech like banks in a move that could have a dramatic effect on valuations. * SO WHAT? * As things stand currently, Ant takes on minimal risk for maximum profit but new regulations could force it to put more loans on its own books rather than shift the risk to someone else. At the moment it only has to fund 2% of its consumer loans book, but under new regulation it may have to hold up to 20%, which could potentially halve the company’s valuation. Ant’s near term fate hinges on being able to convince authorities that it is just an intermediary and not a bank. I would have thought that the authorities and fintechs will have to come to some kind of compromise because if Ant is going to suffer I would have thought it would be far worse for rivals – and does China really want to have to kill off something that it’s been doing rather well in at a time when they could do with more lending?

Elsewhere, Norwegian in a battle for survival after Oslo rejects second bailout (Daily Telegraph, Oliver Gill) shows that not all governments are willing to bail out failing state airlines as Norway’s transport ministry turned down an appeal for assistance. To give you an idea of the scale of the demise of the airline that was Gatwick’s third biggest airline pre-pandemic, the 10,000 staff working for the airline have now been cut to just 600 over the next few months. Brutal. Nationalisation was on the cards, but things are looking pretty shaky at the moment…

Then in Nikola’s losses widen as executives try to regain momentum, develop first truck (Wall Street Journal, Ben Foldy) shows that things continue to get worse for the embattled and controversial electric truck start-up as it reported bigger losses in Q3. This is largely due to the costs involved in developing its first semi-truck model and growing its workforce. * SO WHAT? * Will this thing survive?? At least when Tesla went through its “dodgy” phase, it could rely on Elon Musk wowing investors and blinding them with fairy dust to extract more money from them. I’m not sure whether Nikola will be given as much of a free rein. GM announced a JV with the company just days before a damning report came out about the latter and terms are still being negotiated at the present time. It may be a bit punchy to say this but I think that if GM walks away, Nikola will go down the toilet.

…in other news…

I thought I’d leave you this week with the tricky question in Coffee exam question bemuses students – and even baristas can’t agree on answer (The Mirror, Courtney Pochin). Hmm 🤔

1. In TRUMP/BIDEN NEWS, Trump kicks and screams his way out of the White House and we see what Biden has in store
2. In FINANCIAL NEWS, Buffett benefits, fund raising is about to increase, Scottish Widows gets a conscience and there’s a rush on UK bank loans
3. In MISCELLANEOUS NEWS, China drives demand for European luxury goods and private equity targets Reebok
4. AND FINALLY, I bring you a must-have Aldi product…

So we take a look at the White House loser and winner and what’s in store for America and the rest of us…

I don’t want to dwell on the result of the American election too much because we are all going to be bored to death with this by the media in the coming weeks and months but I’ll try to bring you some of the key bits and pieces 😁. Reality TV presidency cancelled after 4-year run (Financial Times, Demetri Sevastopulo) actually does quite a good job of summarising the main bits of Trump’s presidency starting from his tumultuous entry to office until the current time where “Adiós Trump” T-shirts were being promoted by Democrats. He’s not going without a fight, though. Election 2020: What are the Trump legal claims (Wall Street Journal, Deanna Paul, Brent Kendall and Corinne Ramey) looks at what Trump meant when he said that he would contest the result through the courts. Lawsuits have been filed in various states and Rudy Giuliani, one of Trump’s lawyers, said that they would be focusing on three areas: allegations regarding restrictions on observing the mail-in ballot count, allegations over votes being cast by dead people and allegations over backdated ballots. No evidence backing any of those claims has been provided as yet, however. It is likely to be an uphill battle. The last time when the election was contested like this was in 2000 when it was George W Bush versus Al Gore in 2000 when they were fighting over a few hundred votes in one state. This time around, the fight is going to be over tens of thousands of votes in at least four states.

On the other hand, Biden set to unwind Trump agenda after winning US election (Financial Times, Courtney Weaver) has a stab at guessing what Biden is going to do in office: re-enter the Paris climate accord, reverse back into the World Health Organization, reinstate the “Dreamer” path to US citizenship and announcing a new coronavirus task force. What does a Biden presidency mean for the world (Financial Times, Katrina Manson, Aime Williams and Michael Peel) suggests a more conciliatory and less

confrontational relationship with countries outside America (especially with its allies), which will probably mean it will rebuild bridges that were being burnt by Trump, a harder line on Russia, more support for Nato, potentially letting Iran back into the fold and a less confrontational approach with China. Europe and the UK will want to talk about things like aircraft subsidies, digital taxation and ending tariffs on products including wine and cheese. Interestingly, For business, Biden bodes a less hospitable but more predictable presidency (Wall Street Journal, Greg Ip) shows that the election result could be a dream scenario for business as it will get a more moderate Democratic president whose more “extreme” plans won’t be able to pass the Senate – and it won’t have the unpredictability that Trump’s presidency had. That said, What can Silicon Valley expect from Joe Biden (Financial Times, Kiran Stacey and Richard Waters) suggests that although a Democrat will be back in office, it will not enjoy the same cosy relationship it had with Obama as Big Tech companies have evolved and grown considerably in the intervening years. In the past, Biden has talked about the possibility of splitting them up, but hasn’t followed up any of this chat up with detail. Some say that he could take a less aggressive approach and start by changing some rules rather than reaching for the sledgehammer from the off. He is also expected to raise corporate taxes – and it is thought that a higher tax on profits generated by intangible overseas assets could be more acutely painful for Big Tech, but then again, without a majority in the Senate it is likely that this will fail to see the light of day. * SO WHAT? * Overall, once all the dust has eventually settled, I think that America will be left with a president who is more conciliatory, less unpredictable and less Twitter-friendly than Trump. It doesn’t sound like he is going to hit reverse on everything that Trump has done – for instance, he is unlikely to be particularly friendly with China – but he I would expect him not to be able to do anything too radical policy-wise given his lack of majority in the Senate. I would have thought that may not necessarily be a bad thing, though, as it could mean that the US economy’s rise could be steady as opposed to the potentially very volatile ride that Trump seems to prefer.

Buffett wins, a fund-raising spree is expected, Scottish Widows gets all moral and bank loan applications rise…

Stock market surge hands a $30bn boost to Buffett (The Times, Tom Howard) shows that Warren Buffett’s Berkshire Hathaway made a whopping $30bn profit in Q3 due to the value of its investments rising in the summer rally. His 5.8% stake in Apple alone shot up in value by $20bn since the end of June! If you were thinking of buying into the thoughts of the “Sage of Omaha”, you will have to scrape together a rather hefty $313,885 to buy just ONE of its shares! * SO WHAT? * OK, so paper gains like this don’t really mean that much because a gain ain’t a gain until you’ve sold it BUT it is interesting to see this as a reflection of what markets have done since their lows as Buffett invests in big companies.

Talking about investment, Scottish Widows dons green cloak with move to drop risky business (The Times, Tom Howard) shows that Scottish Widows, one of Britain’s biggest pension providers, has started to sell off £440m of its holdings in businesses that it reckons pose “the most severe investment risk”. It has said that this could grow if company boards don’t improve the way they do business. Portfolio managers now have six months to re-jig their portfolios according to the new rules or face fines or termination! * SO WHAT? * It’s interesting to see a serious investor taking proper measures to make its funds more ethical. The problem for the fund managers on the ground, though, is that everyone now knows the rules and can therefore work out which stocks they are going to sell – which could be great news for hedge funds looking for a “shorts” shopping list. Doing things like excluding commodities companies or those with questionable

practices (e.g. Aberdeen Standard Investments selling off most of its stake in Boohoo after the summer scandal in Leicester) sounds great, but is often much more difficult to execute in practice because most companies are not 100% “evil”. When, for instance, commodity prices are weak it is easy to take the moral high ground and sell off anything to do with fossil fuels. However, if prices suddenly rise on a world economy going crazy for trade in the event of mass Covid-vaccination, ethical funds risk getting left behind. Fund managers get paid on performance and if they continually underperform because of ESG restrictions, the temptation to increase exposure to “unethical” winners will only rise. Interestingly – and perhaps unsurprisingly – managers can still invest in such companies if they can show that they can influence the companies they hold to improve their business practices.

City braced for rush of last-minute fundraising (The Times, Miles Costello and Ben Martin) highlights a potential rush of fundraisings as companies look to shore up their balance sheets before a November 30th deadline. Listed businesses in the UK have been raising money from the stock markets since April under more relaxed rules that enable them to raise money from specific institutions rather than all investors at the same time. This will stop at the end of this month and if companies want to raise money after that date, they will have to engage in a more expensive and laborious process of doing things like rights issues. * SO WHAT? * It is likely that companies in retail and hospitality will be most likely to want to raise cash given the current lockdown. Companies aren’t just coming to markets to raise money though – Banks creak under pressure of new loan applications (Daily Telegraph, Lucy Burton and Michael O’Dwyer) shows that banks are already seeing a run on loan applications under the government’s coronavirus loan schemes. Although banks are being encouraged to lend, you would have thought that the longer all this goes on, the higher the likely incidence of loans going bad. Still, everyone is doing what they can to survive…

China rides to the rescue and Reebok is targeted…

We’ve all seen the latest figures which show that China’s economy is recovering and that spending is trending upwards on things like cars, and China demand for Europe’s luxury goods lifts virus-hit economy (Financial Times, Valentina Romei and Thomas Hale) shows that this phenomenon is now powering a recovery in the European luxury sector. According to data published over the weekend, Chinese imports from Germany rose by an annualised 24% and by 21% for Italy and companies like Kering and Salvatore Ferragamo have been seeing stronger sales from China. This upswing will definitely be welcome in countries and companies who are still wrestling with the coronavirus.

Private equity firms circle Reebok (Financial Times, Sara Germano and Kaye Wiggins) shows that private equity companies Permira and Triton are among those looking to make a move for Reebok as its current parent, Adidas, is looking to sever ties. Adidas bought Reebok over ten years ago but Reebok has not really made much ground in this time. * SO WHAT? * No-one has officially commented on this, but given Reebok’s anaemic performance over the years you would have thought that it needs a bit of a revamp. Permira has more form in footwear with investments in Dr Martens and Golden Goose – whereas Triton appears to be less plugged in to this area. Adidas has been considering a sale off and on for years, so no reason to get too excited just yet.

…in other news…

I thought I’d leave you today with another Christmas gift idea in Shoppers stockpile Aldi’s fur throw after it returns to stores for first time in a year (The Mirror, Paige Holland). I just had a look and it appears to have sold out online already! Get yourself into those stores!

1. In MACROECONOMIC NEWS, uncertainty continues over the US election while Sunak and the Bank of England give support
2. In FINANCIALS NEWS, Ant Group looks at a long delay, SocGen profits on trading and RSA announces a takeover bid
3. In CORONATRENDS NEWS, AstraZeneca nears an announcement and Nintendo hikes up its profit targets while a Chinese escooter-maker, Peloton and pizza trend up and fast food breakfasts crash
4. In INDIVIDUAL COMPANY NEWS, Uber and Lyft could set the example, Sainsbury’s cuts down on Argos and storm clouds gather over Ocado
5. AND FINALLY, I bring you Santa’s Yumnut and some tips on how to win Monopoly under lockdown…

So uncertainty in the US continues while Sunak and the Bank of England join forces…

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Things just drag on and on in the wake of the presidential election and US cities brace for protests with election result still unclear (Financial Times, Katrina Manson, Hannah Murphy and Claire Bushey) reflects widespread disquiet across America as Trump continued to stir things up by calling a halt to vote counting in some swing states while US stocks build on rally as election shakes up market calculus (Financial Times, Richard Henderson, Eric Platt, Colby Smith, Naomi Rovnick and Tommy

Stubbington) shows that the Nasdaq and S&P500 were on track for their best week since April as a tech driven rally broadened to include industrials and banks. * SO WHAT? * With the prospect of a president winning by a slender margin and a divided Congress, investors were manoeuvring out of positions reflecting a clear Biden victory (big stimulus, investment in green infrastructure etc.) into positions that reflect expectations of lower growth and less rocking of the boat regarding business regulation and taxation because whoever wins will be unlikely to have the clout to push anything radical through on the legislation front.

Meanwhile, in the UK, BoE and Sunak join forces to support UK’s Covid economy (Financial Times, Chris Giles) shows that the Bank of England announced a £150bn stimulus package while chancellor Rishi Sunak also announced an extension to the government’s furlough scheme paying up to 80% of wages until the end of March next year. * SO WHAT? * Both of these measures should ease the potential economic pain and be a source of relief for many in the run-up to Christmas. In effect, this just kicks the can down the road – so in the meantime, let’s hope for a vaccine. Extreme disaster has been averted for the moment although critics will argue that this is a sticking plaster measure to a gaping economic wound and is just delaying the inevitable job losses and company failures.

Ant Group faces a long delay, SocGen is the latest to profit from trading and RSA announces a takeover bid…

Ant Group IPO faces at least 6-month delay after Beijing intervention (Financial Times, Hudson Lockett and Primrose Riordan) shows that Ant’s IPO could be delayed for quite some time – with a reduced valuation – after Chinese authorities intervened earlier this week to stop an IPO that would have gone ahead yesterday. The company will have to submit a new prospectus in Hong Kong, which could take at least six months. * SO WHAT? * Ant Group will be forced to adhere to the new regulations regarding lending, which makes up 40% of the company’s sales. The rules require internet platforms to finance at least 30% of their loans themselves – a big increase from the current 2%. Ant says that it is possible that there could be changes to these requirements on funding, but this is unclear at the moment. As things stand currently, Ant Group 0 – Chinese authorities 1.

SocGen swings back to profit as equity trading rebounds (Financial Times, David Keohane and Owen Walker) shows that the French bank bounced back into the black in Q3 thanks to a rebound in performance from its equity derivatives business and equity trading. * SO WHAT? * It seems that banks with trading capabilities are all benefiting – as per BNP earlier this week and then Goldman Sachs and Morgan Stanley a couple of weeks back. Trading revenues can be volatile and they rebounded from lower levels in the initial stages of the outbreak, but they are riding high for the moment! 

Then in Insurer RSA reveals £7bn takeover bid (The Times, Ben Martin) we see that Britain’s oldest insurer could be broken up after receiving a joint takeover approach from Canada’s Intact Financial Corporation and Denmark’s Tryg. RSA’s share price shot up by almost 46% on the news yesterday. * SO WHAT? * If this deal went ahead, Intact would take control of the UK operations and Tryg would take on RSA’s Swedish and Norwegian business in addition to co-owning with Intact RSA’s Denmark business. A share price hike of 46% is particularly impressive and makes me wonder whether the market is expecting another potential bidder to come out of the woodwork and throw their hat in the ring. Zurich almost bought RSA in 2015 but had to pull out due to incurring big losses in an industrial accident in China, so who knows?!

AstraZeneca hints at an announcement, and we look at more coronavirus winners…

There’s some potentially heartening news in Astra vaccine results ‘within weeks’, says drug maker (Daily Telegraph, Simon Foy) as the pharmaceutical giant said that it expects to announce results of late-stage trials for its Covid vaccine by the end of the year. It posted strong results for Q3 but all eyes were on its Covid announcement because if things go well, it could start mass-injections in early 2021. Wouldn’t that be great! Its pre-tax profits more than doubled in Q3 and product sales came in above expectations. The outlook is also pretty good as two of its main drugs, cancer treatment Lynparza and diabetes drug Forxiga, have won approval for wider use in Europe.

In terms of interesting consumer trends, Nintendo raises profit target by 50% (Financial Times, Leo Lewis and Kana Inagaki) shows confidence by the Japanese games and console-maker, which is known for being overly conservative about its forecasts. * SO WHAT? * Although the Switch is three years old, it will no doubt see another boost under lockdown despite Sony and Microsoft’s respective consoles’ imminent launch.

China’s escooter maker’s stock accelerates 400% on Covid boom (Financial Times, Christian Shepherd) highlights the incredible success of Niu Technologies, a Chinese maker of electric scooters, as it outlined plans to broaden its presence in Europe and the US due to increased demand for socially distanced methods of transport under Covid. The company is the the fastest growing escooter brand in

China and its escooter sales were up by a whopping 68% year on year in Q3. Its share price has shot up by over 400% since March! * SO WHAT? * Doesn’t this sound interesting?? If regulations ease, I wonder whether e-scooters will replace bikes as a popular mode of commuter transport in major cities? Given that there is an impetus to give people alternative ways of getting to work, I would have thought that any regulatory developments will be faster than they would otherwise have been.

Peloton, pizza and videogames grow in stay-at-home world (Wall Street Journal, Kimberly China and Sarah E. Needleman) shows how some companies are set to benefit further under new lockdown restrictions as Peloton said that its revenues more than tripled over the September quarter, Papa John’s saw 17% sales growth and Take-Two Interactive (which publishes Grand Theft Auto) saw higher net bookings and better profits on new game releases.

On the other hand, it is interesting to see Fast food’s bet on breakfast goes bust during Covid-19 pandemic (Wall Street Journal, Julie Wernau) because working from home has decimated the demand for breakfast as people make their own at home. McDonald’s and Burger King say that sales of breakfast items are weak and breakfast-specialists such as IHOP and Dunkin’ are closing hundreds of restaurants as a result of less foot traffic. Conversely, those who make breakfast items that people will eat at home are doing rather well – Kraft Heinz makes Oscar Mayer bacon, Maxwell House coffee and Philadelphia cream cheese, for instance. * SO WHAT? * It’s interesting to see this happening and although there will inevitably be a bounce back once commuters return, if more people are working from home and getting used to having their own breakfasts again you do wonder whether there demand levels for breakfast items will be depressed for some time.

The Uber/Lyft thing could have longer term implications, Sainsbury’s ditches Argos stores and Ocado faces what could be a major headwind…

In a quick scoot around other news stories this morning, Uber and Lyft in driving seat to remake US labour laws (Financial Times, Dave Lee) shows that the vote to classify gig workers at these companies as contractors and not employees could have broader implications on other gig economy companies given that up to 17 states are currently debating how to regulate the industry. * SO WHAT? * If anything, this looks like a brief reprieve because the rapid growth of the gig economy in the last few years has increased the need for a proper framework regarding the proper definitions of an employee and a contractor. It will not go away and it is possible that some legislation, such as the Fair Labor Standards Act could actually take precedence over state law. This is most definitely not the end, but I am sure that companies dependent on gig workers will want to spend less time in court in future and so proper clarification is necessary.

In the UK, Sainsbury’s to cut 420 Argos stores and 3,500 jobs (Daily Telegraph, Laura Onita) sounds another ominous note for jobs as Sainsbury’s, Argos’s owner, announced that it will not be reopening the 120 Argos

outlets that have been closed since March and will instead be increasing efforts to shift the brand into Sainsbury’s stores. The 420 closures of stand-alone Argos stores are to happen over the next three-and-a-half years. J Sainsbury/Argos: super saver shares (Financial Times, Lex) points out that in a world that is increasingly dominated by Amazon, something needs to be done about Argos which is often criticised for running out of stock. Offering click-and-collect at every Sainsbury’s supermarket and building 30 new fulfilment centres should go some way to addressing this in a more efficient way.

Amid all the e-tailer high-fiving we are seeing at the moment, Ocado says robot patent case ‘could harm public health’ (Financial Times, Jonathan Eley) highlights something that could be a real problem for Ocado as the case being brought against it for alleged patent infringements from Norwegian warehouse automation company AutoStore could end up stopping the rollout of Ocado’s platform rollout at Kroger in the US, Ocado’s biggest customer. * SO WHAT? * Ocado is in the midst of fitting out 20 automated distribution centres across America so an enforced stoppage could be a complete nightmare not only for its deal with Kroger, but it could also make other potential customers think twice. Ocado seems to be downplaying this at the moment, but it looks to me like this could develop into something pretty major if it doesn’t get something sorted with AutoStore. Great timing by AutoStore to create maximum pressure on Ocado, though!