Category: Uncategorized

1. In MARKETS NEWS, we see that global stocks fell on second wave fears
2. In PLANES, TRAINS & AUTOMOBILES NEWS, Airbus promises zero emission aircraft, UK railways get a massive shake-up and VW is in talks to sell Bugatti
3. In TECH NEWS, Microsoft buys the owner of Doom, Facebook considers leaving Europe in a huff and TikTok’s ownership causes confusion
4. In INDIVIDUAL COMPANY NEWS, Nikola just gets worse, HSBC is hit by scandal and Illumina buys Grail for $8bn
5. AND FINALLY, I bring you a pizza hack…

So markets take a tumble on coronavirus nervousness…

World markets slide over fears of more lockdowns (The Times, Tom Howard and James Dean) highlights the FTSE100’s worst day of trading since June 11th and lowest close since September 4th as fears of a second wave of coronavirus hit investor sentiment. Airlines, hotels and pubs took a major hit – The Restaurant Group, which owns Wagamama, saw its shares slide by 17.7%, Marston’s fell by 16% and IAG, which owns British Airways fell by 12.1%. Bank shares were hit by the whiff of scandal at HSBC and

market weakness was also apparent in Europe.

HSBC and StanChart sell-off worsens as virus concerns hit markets (Financial Times, Hudson Lockett) highlights the knock-on effects in Asia as a bad day for scandal-hit HSBC and Standard Chartered was made worse by wobbles over the prospect of more coronavirus lockdowns. Hong Kong’s Hang Seng, China’s CSI300 and Australia’s S&P/ASX200 all fell – Japan’s markets didn’t because yesterday was a market holiday. * SO WHAT? * Markets are hyper-sensitive to any coronavirus news these days and so the prospect of curfews, more cases and the start of cold/flu season appears to have filtered through to investor sentiment – for the moment at least.

Airbus makes nice promises, UK railways get a jolt and VW looks to offload Bugatti…

Amid all the airline industry carnage going on at the moment, Airbus reveals plans for zero-emission aircraft fuelled by hydrogen (The Guardian, Jillian Ambrose) shows that European aerospace company Airbus has announced plans to produce the world’s first zero-emission commercial aircraft models that run on hydrogen and could be in the air by 2035. It unveiled three concept aircraft which all look lovely. * SO WHAT? * What-evs. The fact is that the whole industry is facing calamity at the moment so talking about zero-emission aircraft that won’t be produced until God-knows-when (because, let’s face it, 2035 might as well be light years away!) is a bit like someone offering out cushions to people sitting in deck chairs while the Titanic is sinking 😂. On a more positive note, I would imagine that EVERY effort will be made to ensure Airbus’ survival because without this “local” European hero, we’ll all be flying on Boeing planes. Funding that without being accused of over-subsidising will be tricky, however…

UK railway rescue spells end of franchising system (Financial Times, Jim Pickard, Bethan Staton and Josephine Cumbo) highlights a major rethink of the UK’s train system as the government yesterday unveiled a massive multibillion pound rescue deal to ensure the survival of train operating companies for the next 18 months. The Emergency Recovery Management Agreements (ERMAs) will cover losses until March 2022 and will help to move the UK towards a contracts-based

system as the current system of franchises ends. * SO WHAT? * This is the biggest shake-up of the rail transport system since it was privatised around 25 years ago. Given that major problems had been emerging anyway with some of the train operators before Covid hit (e.g. Virgin Trains East Coast and Northern), now would seem to be a good time to start with a clean sheet. Operators will pay a fixed annual fee for running the service rather than the previous system which meant that a train company’s income rose and fell according to passenger numbers. How the end of the rail franchise system will affect Britain’s trains (The Guardian, Gwyn Topham) gives an interesting view of what the new deals will look like from the passengers’ point of view – not much difference apart from emptier trains (as part of the new deal, operators will have to provide near-enough the full normal timetable), possibly less confusing fares and maybe less disruption as well if track manager Network Rail and the operating companies were forced to work more closely.

Then in Volkswagen in talks to sell Bugatti brand to Croatian upstart (Wall Street Journal, William Boston) we see that VW is in talks to sell luxury brand Bugatti to Croatia’s Rimac Automobili, which is an electric performance car maker. * SO WHAT? * This is interesting from the point of view that it indicates that VW may well be thinking of pruning its existing portfolio which currently includes the likes of Audi, Bentley, Lamborghini, Porsche, SEAT and Skoda. Divesting marques has been something that has been on the table in the past, but has always been met with very stiff resistance with the unions, but I suspect that the unions will not be quite so aggressive now given the current state of the car market. Of the marques they currently own, Bugatti and Lamborghini are the ones that look most vulnerable to sale given their marginal impact on VW’s bottom line.

Microsoft goes shopping, Facebook considers leaving Europe and TikTok’s ownership causes confusion…

Microsoft to buy Doom owner in $7.5billion videogames deal (Wall Street Journal, Aaron Tilley and Sarah E.Needleman) shows that Microsoft is back in shopping mode after failing to secure TikTok as it plans to buy the owner of the popular Doom franchise, ZeniMax Media (which, in turn, owns Bethesda Softworks) as home gaming continues to be a hot area under lockdown. Bethesda is also known for other hit franchises The Elder Scrolls and Fallout. * SO WHAT? * Sounds decent enough, especially with the launch of the new Xbox gaming consoles around the corner. I suspect that content will be increasingly important as time goes on a more devices are able to play increasingly complex games over 5G networks. Fun fact: Microsoft has form in buying developers – it bought Mojang AB, owner of Minecraft, back in 2014.

Facebook warns it could pull out of Europe over data row (Daily Telegraph, Margi Murphy) sounds like clickbait – but it isn’t. Basically, the company has threatened to exit

Europe (“Fexit?”) if it is forced to stop sending user data to the US. This follows a suggestion from the Irish Data Protection Commissioner (DPC) that it could support (and enforce) a European Court of Justice decision that such data transfers are illegal. * SO WHAT? * I don’t think anyone has the balls to face down Facebook – and maybe the company will take heart from Apple’s recent win over the European competition authorities. Equally, I think that Facebook’s threat is empty – I just don’t think they’d pull out. Maybe some compromise could be reached but I don’t think it will happen anytime soon

Following on from yesterday’s news, TikTok deal hit by confusion over who will own and control the app (Financial Times, Yuan Yang, Nian Liu, Miles Kruppa and James Fontanella-Khan) shows that confusion still reigns over who will own TikTok, subject to final approval. TikTok Global: victory gap (Financial Times, Lex) thinks that any gains for US national security are modest (US data is already stored on domestic servers) and ByteDance will own the majority of TikTok unless you count for the American shareholders of ByteDance. * SO WHAT? * As things stand, the Chinese company has come out from this very well – it has avoided a US ban and kept control of TikTok whilst also avoiding having to give up its algorithm. However, you never know if Trump will drop another bombshell – so watch this space! 

Nikola just gets worse, HSBC gets pummelled and Illumina buys Grail…

The whole scandal surrounding Nikola, and the Hindenburg Research report that sparked it all off, seems to be gathering as much pace as a truck rolling down a hill with no engine as Nikola founder Trevor Milton steps down after fraud allegations (Financial Times, Peter Campbell, Harry Dempsey and Claire Bushey) – something I mentioned in a “newsflash” yesterday – to be replaced by board member Stephen Girsky, who was a former vice-chairman of General Motors and Nikola: escape velocity (Financial Times, Lex) contends that there will an uphill (with a working engine and no video editing?) task in getting the company back on track without Milton’s apparently silky sales skills. Other tech start-ups will need to watch out as investors are likely to be looking more closely at what they are putting their money into. Separately, Nikola taps outside supplier to provide batteries in contrast with earlier company statements (Wall Street Journal, Ben Foldy) shows that the company is now going to a third party supplier for batteries despite previous statements that it had developed its own battery tech!

HSBC shares hit 25-year low on reports of alleged suspicious transfers (Financial Times, Hudson Lockett) highlights more scandal – this time in the banking world – as HSBC was named in media reports of being central in laundering dirty money. The Global Times, a state-run Chinese tabloid, said over the weekend that HSBC could be included in Beijing’s first “unreliable entities” list. HSBC: time warped (Financial Times, Lex) says that the potential blacklisting is the most serious threat that the bank is now facing because if it makes the list, it could be banned from investing in China and see employees’ work permits revoked. Uncertainty will continue here as HSBC is in a very precarious position as it has alienated US and UK support for supporting Beijing’s new security legislation and it is now alienating China. Tough times.

Elsewhere, Illumina agrees $8bn deal for cancer screening group Grail (Financial Times, Hannah Kuchler and Ortenca Aliaj) highlights a chunky acquisition of Grail, which specialises in liquid biopsy – taking blood samples to test for cancer. This could be huge in the future as it is less invasive than current tests and detects cancers early. Sounds like a good strategic deal.

…in other news…

I thought I’d leave you today with a very good idea that might help you out: Mum shares tip to fit three pizzas on one oven shelf to make family cooking easy (The Mirror, Luke Matthews). Simple, yet effective!

1. In MACROECONOMIC NEWS, China exports power up while Rishi Sunak aims to extend business support loans
2. In TECH NEWS, the WeChat ban hits California-shaped buffers but TikTok moves forward
3. In CORONATRENDS, US meat is plentiful, family homes prices in the UK hit new highs and the government looks at gambling reform
4. In INDIVIDUAL COMPANY NEWS, HSBC faces dirty money allegations
5. AND FINALLY, I bring you Britain’s dullest man 🥱…

So China exports strengthen and Sunak aims to boost businesses…

China’s export machine comes roaring back to life (Financial Times, Thomas Hale, Kathrin Hille, Edward White and Qianer Liu) cites data from Oxford Economics and Haver Analytics which shows that although overall export volumes have actually fallen, China’s share of global exports versus other large exporters have climbed by more than 18% in April and settled to 15.9% in July. Exports in the Asian region have been doing quite well due to lower reported coronavirus infections since the second quarter which has meant that exports of tech (think electronic components, IT and communications products etc.) and medical equipment are among the categories to have put in a strong performance. Interestingly, China’s trade surplus with the US reached its highest level since November 2018!

Sunak to extend business support loans as Covid-19 spread worsens (Financial Times, Daniel Thomas and George Parker) shows that chancellor Rishi Sunak is planning extend UK business support loans in order to get the economy through “a very challenging winter”. He is to extend four loan schemes this week which have already lent £53bn to companies via government guarantees as one way of mitigating expected corporate and employment carnage. Three of the four schemes were due to end this month and the fourth was scheduled to close at the start of November. * SO WHAT? * We are facing difficult times currently as fears increase that we will shortly be experiencing similar problems to France and Spain who have recently seen increases in coronavirus cases. The government is having to make difficult decisions at the moment because even though these extensions may be made, it is by no means guaranteed that the companies who are borrowing the money will survive the pandemic.

The WeChat ban gets delayed but TikTok manages to move forward…

*** NEWS JUST IN – NIKOLA FOUNDER RESIGNS AS CHAIR AMID ALLEGATIONS, SEC PROBE (BLOOMBERG, ED LUDLOW). This just makes things even more interesting IMO. Admission of guilt, perhaps?? ***

In WeChat ban blocked by federal judge in ruling against Trump administration (Wall Street Journal, Sebastian Herrera and Katy Stech Ferek) we see that a Californian federal judge potentially blocked Trump’s recent move to ban usage of the massively popular Chinese WeChat as it upheld the objections by user group WeChat Users Alliance, a non-Tencent affiliated group who rely on the app for business and personal reasons. The ban was meant to go into force at 11.59pm on Sunday night. * SO WHAT? * The Trump administration tried to impose the ban because it argued that the data that Tencent-owned WeChat has on users could potentially be shared with the Chinese government, although Tencent strenuously denies this. This is a temporary reprieve and appeals are likely, that could delay any ban. The app has 19million regular users in the US and over 1.2bn globally. The judge in the case acknowledged government concerns but questioned the lack of evidence to prove it.

China has reasons to like TikTok’s Trump-approved shotgun deal (Wall Street Journal, Liza Lin) shows that Trump has given his approval for a deal that would allow TikTok to partner up with Oracle and Walmart to form a new business called TikTok Global that would service the US and most of the world ex-China. TikTok’s owner ByteDance would own about 80% of the new company – but then some will say that because ByteDance is itself 40% owned by American investors, the company could be described post the deal as being majority American-owned. There was no mention of a transfer of TikTok’s valuable algorithms in a statement released over the weekend. * SO WHAT? * Trump’s approval is a major step forward for all concerned, but the administration still has to sign off on the finer details as per TikTok deal faces questions over security, ownership (Wall Street Journal, John D.McKinnon, Alex Leary and Kate Davidson). The new company plans to create over 25,000 jobs in the US and potentially finance a $5bn online education initiative. So it looks like “job done” as Trump can claim some kind of victory, as can China and ByteDance. IMO this whole posturing episode has really not achieved that much apart from ensure that the US won’t be able to buy anything Chinese with important AI tech and possibly putting a lid on the purchase price that probably would have reached stratospheric levels had an element of danger not been injected into the proceedings.  

US meatpackers face difficulties, family home prices rise in the US and the government looks at clamping down on gambling…

Meat was once in short supply amid pandemic. Now, it’s on sale (Wall Street Journal, Jacob Bunge and Jaewon Kang) is an interesting article that highlights falling meat prices at grocery stores in the US as shortages at the height of lockdown (due to factory workers going down with the coronavirus) have now turned into surplus as weakness in exports have resulted in a rise in domestic supply. Gordon Food Service, which is one of America’s biggest distributors to restaurants is now selling some beef cuts for half the price they were a few months ago and Midwest grocery chain B&R stores which had to ration the sale of minced beef at the height of the pandemic is now selling it at a discount. Tyson Foods, which is the largest US meatpacker by sales, says that there is still a backlog of cattle and pigs due to slaughterhouse and processing plant closures. * SO WHAT? * Given the labour-intensive nature of meat processing, you would have thought that any further outbreaks will result in more disruption in the industry. If I was an American consumer, I’d be stocking up on meat and putting it in the freezer! All the more reason to put more resource into meat alternatives, perhaps?

Back in the UK, Family home prices at all-time high as buyers go in search of space (Daily Telegraph, Marianna Hunt) cites the latest figures from Rightmove that show that asking prices of family homes have hit new highs as buyers look for more rooms (and gardens) as increasing numbers work from home. * SO WHAT? * An interesting trend, but Sunak’s stamp duty holiday is surely the overriding driver for this. Also, remember that Rightmove records ASKING prices – not actual sale prices – so it is possible that properties sell for less. We’ll see what the real state of affairs is when that holiday comes to an end…

Then in Downing Street to spearhead reforms, say insiders (The Guardian, Rob Davies) we see that the Department of Digital, Culture, Media and Sport (DCMS) is about to launch a long-awaited review this autumn with additional impetus from the PM who is keen to overhaul the 2005 Gambling Act which liberalised regulation of the industry. * SO WHAT? * This could spell the end for good times in a sector that has benefited hugely in some areas from lockdown (although those with more exposure to sports betting, for instance, have suffered). It’s possible that we could see stake limits and a slowdown in the speed of online casino games, but we’ll have to see what comes out of any review.

HSBC faces criticisms of dirty money…

HSBC hit by ‘dirty cash’ allegations (The Times, Louisa Clarence-Smith) shows that the UK’s biggest bank has been accused of ignoring the transfer of millions of pounds

of dirty money around the world by a BBC Panorama documentary. Leaked documents, referred to as the “FinCEN files” contain over 2,500 suspicious activity reports filed with the US Department of the Treasury’s Financial Crimes Enforcement Network. This sounds like a serious scandal – and HSBC have been accused of lax controls before.

…in other news…

OK, so it’s still a few months off, but what about this Christmas gift idea for that someone in your life who has everything: ‘Britain’s dullest man’ unveils the International Roundabout Of The Year (The Mirror, Alexander Brock and Joseph Wilkes). Nice 👍 Sounds like a great guy to get stuck in a lift with 😂

1. In TECH-RELATED NEWS, Oracle and Walmart aim for chunky TikTok stakes, the Nvidia/Arm deal continues to have China niggles, Sony readies itself for console wars, a Tesla co-founder gets Amazon funding for batteries and Cornish lithium is looking good
2. In RETAIL NEWS, Unibail-Rodamco-Westfield has problems, John Lewis axes the bonus, Next upgrades and LVMH makes denials
3. In INDIVIDUAL COMPANY NEWS, Trainline sales suffer, Moderna slows things down and a 90-minute covid test looks good
4. AND FINALLY, I bring you some interesting curtains…

So Oracle and Walmart target decent TikTok stakes, Nvidia/Arm continues to rankle, Sony braces for the final battle, Tesla’s co-founder gets Amazon money and Cornish lithium is looking good…

Oracle, Walmart aim for big stakes in TikTok (Wall Street Journal, Sarah Nassauer, Michael C.Bender and Andrew Restuccia) shows that Oracle and Walmart are working away in the background to create an ownership structure that would give the Americans (including other investors such as Sequoia Capital, General Atlantic and Coatue Management) a majority interest in the deal – because at the moment, current owner ByteDance still retains a majority stake. Walmart is interested in getting involved in TikTok because it wants to increase its online presence and generate more new revenue streams. * SO WHAT? * Talks are very fluid at the moment and a deal would require ultimate approval from Donny T and the Chinese authorities. On a separate, yet related, note TikTok courts Instagram’s founder to lead US spin-off (Daily Telegraph, Laurence Dodds) shows that TikTok’s owner ByteDance is trying to get Instagram founder Kevin Systrom on board to lead the US company that would result if the deal was approved. There is currently speculation that the new company would be called TikTok Global and could float on a US exchange within a year. This is quite interesting in that it could potentially pit him against his own creation as he will have to compete against Instagram Reels!

Following on from what I said yesterday about the Chinese chip industry objecting to the Nvidia/Arm Holdings deal, Nvidia/China: Armed and dangerous (Financial Times, Lex) suggests that the sale of Arm to an American chipmaker could end hopes of China’s tech dominance and so it is unlikely that it will stand by and watch. The deal requires regulatory approval from the US, UK, Europe and China. If the deal goes ahead without Chinese approval, this would be bad for both Nvidia and Arm because the country accounts for 25% of sales for Nvidia and almost 30% of Arm’s total licensing revenue. They would also lose access to a valuable growth market just as the smartphone market is maturing and the data centre market is booming globally. This is going to get interesting…

In Sony gears up for ultimate round of gaming wars with Microsoft (Financial Times, Leo Lewis, Kana Inagaki and Patrick McGee) we see that Sony is getting ready to battle Microsoft once more in what could be the last of the console wars as both companies are due to launch their

latest offerings in November. Sony’s PS5 and Microsoft’s XBox Series X will cost $499, meaning that all eyes will be on the games lineup. The fight will matter more to Sony than it will to Microsoft as the gaming division is Sony’s biggest revenue driver – it expects its gaming business to account for 30% of its revenues and almost 40% of its operating profits in the fiscal year to March 2021. * SO WHAT? * This will be the fourth time that the two companies have battled it out head-to-head in consoles, but the success of these devices – especially in terms of digital downloads – matters more to Sony. Given the advent of 5G and much faster upload speeds, game streaming is likely to get much bigger in years to come and so I would have thought that the need for a console to play ever more complex games will diminish over time. This is why I think this will be the final console war.

Elsewhere, Tesla co-founder wins Amazon funding for electric battery project (Financial Times, Patrick McGee and Dave Lee) shows that JB Straubel, who was Tesla’s tech chief from 2003 to 2019 and founded Redwood Materials in 2017, has just won funding from Amazon to continue in its work to extract lithium, cobalt and nickel from old smartphones. It’s part of Amazon’s $2bn Climate Pledge Fund which aims to invest in green tech. Straubel started Redwood to try to minimise damage from mining as demand for electric vehicles increases. * SO WHAT? * What a fantastic initiative! Given that a huge number of mobile phones are just discarded after use, it really would be amazing for the recyclable materials in them to be used again for batteries, don’t you think? He said that “If we recover 98 or 99 per cent of those materials and reuse them, we don’t need very much new material to keep that whole process running”. Straubel declined to say how much Amazon was investing. Sounds great, no? He sounds like he’s a guy that knows what he is doing.

Talking about batteries, Cornish lithium in ‘globally significant’ find (Daily Telegraph, Rachel Millard) shows that lithium explorer Cornish Lithium has discovered “globally significant” grades of the metal under Cornwall! * SO WHAT? * Lithium is currently a key ingredient in electric car batteries but China, Australia and Chile are currently the dominant suppliers. Cornish Lithium got some government funding last year to see whether it could develop a UK supply – but this latest find could mean that the project goes into commercial production in the next three to five years. This would probably coincide quite nicely with the ongoing uptick in interest in electric vehicles. On the flipside, lithium prices are at record lows at the moment, so funding may be more difficult than usual to come by at the moment. Still, it’s early days but quite an exciting development, no?

Mall-owner URW experiences tough times, John Lewis cuts the bonus, Next triumphs and LVMH denies asking for government help…

Unibail sets out €9bn plan to pay down debt (Financial Times, Leila Abboud and George Hammond) shows that Europe’s biggest mall owner – Unibail-Rodamco-Westfield – announced a big plan to bolster its balance sheet as the French company continues to battle against the headwinds of the coronavirus. It owns 89 high-end malls in 12 countries and is looking to sell assets to raise funds as well as cut capex as part of a bid to make a dent in its €24bn debt mountain, much of which was incurred when it bought Australian mall player Westfield for $24.7bn. * SO WHAT? * This latest attempt at raising funds just confirms the currently tricky conditions for retailers. URW/Hammerson: mauled (Financial Times, Lex) highlights the fact that the financials were a bit iffy before the outbreak and says that although it’s trying to raise funds now by disposing of assets, it’ll be doing so in a market where everyone else is trying to do the same thing!

Elsewhere, there are contrasting fortunes in John Lewis to axe staff bonus as it sinks to loss (Daily Telegraph, Laura Onita) where the famous bonus will be axed for the first time in over 60 years (but then again it’s hardly surprising given current circumstances) and Next raises profits forecast again as sales rise (The Guardian, Zoe Wood),

which shows that the apparel retailer has managed to raise its profit guidance for the second time this year on recovering sales. It did, however, warn that Christmas may get more difficult with the introduction of the “rule of six” which will limit gifting and family get-togethers. * SO WHAT? * I don’t think the John Lewis thing was surprising given what chairman Dame Sharon White has been doing recently (closing stores, cutting jobs etc.). The bonus had been trending down anyway. As for Next, it’s impressive to see the company’s recovery – and it seems that recent announcements by Inditex and H&M have reflected this as well. Still, an uncertain Christmas awaits and so I think it is prudent for retailers to rein in expectations at this time.

I thought I’d include LVMH sought French government help in dropping Tiffany takeover (Wall Street Journal, Noemie Bisserbe and Matthew Dalton) for a bit of entertainment value as it seems that France’s top trade negotiator with the US, French Finance Minister Bruno Le Maire, was approached by LVMH for a bit of help with trying to help it in negotiations with Tiffany! * SO WHAT? * Both Le Maire and LVMH refuted this but I think that LVMH is full of 💩. I suspect that LVMH is using the coronavirus as an excuse to force the price down of its proposed acquisition of Tiffany. At the end of the day, I think that both businesses are a good strategic fit and that Tiffany needs LVMH more than LVMH needs Tiffany. I suspect that the agreements are pretty watertight – hence the need to get the French government involved – but that ultimately the logical choice for both parties is to go ahead with the deal but at a lower price. After all, who else is going to buy Tiffany at the moment?

Trainline suffers, Moderna slows and a 90-minute covid test emerges…

In a quick scoot around other news stories today, Trainline sales hit the buffers (The Times, Tom Ball) shows that ticket sales have fallen sharply (hardly surprising though!) – down 85% in the half-year to August versus the year before – although things are starting to improve.

In Covid-related news, Moderna signals slower timeline for Covid-19 vaccine (Financial Times, Hannah Kuchler) shows that Moderna may have to wait until December to analyse data from its vaccine trial – way later than Trump had been hoping (he’d sought an emergency approval before the US election). Then in Positive results for 90-minute Covid-19 test (Financial Times, Anna Gross) we see that a test that will get you results in 90 minutes that the UK government poured £161m into has had positive results. The test is produced by medical company DnaNudge. Nice! Still early days, though…

…in other news…

Today, I thought I’d bring you something that made me laugh immediately: Argos shoppers spot huge design flaw on pair of bargain £6 curtains (The Mirror, Luke Matthews). Love this 😂!

1. In RETAIL NEWS, Inditex returns to profit and The Hut Group has a smokin’ IPO
2. In FINANCIALS NEWS, the FCA targets Klarna while Handelsbanken shuts a ton of branches
3. In TECH NEWS, Beijing expresses concerns over the Arm deal, Snowflake’s share price goes bananas and Sony unveils two consoles
4. In INDIVIDUAL COMPANY NEWS, Kodak’s share price recovers, Zwift gets new backers and is the 20-second Covid test company real??
5. AND FINALLY, I bring you a high-flying restaurant…

So Inditex gets back on track and The Hut Group has a successful debut…

*** TODAY IS THURSDAY, WHICH MEANS THAT IT’S ZOOM CALL DAY! This is where I talk over Zoom about the week’s main business and financial markets news and open it up to questions from YOU! You are welcome to ask me whatever you want to. For FREE subscribers, the call will start at 5pm and finish at 5.30pm (the link to join this call is HERE). For FULL/PAYING subscribers, the call will start at 5.30pm and finish at 6.30pm and will cover the week’s news – but we will also have discussions as well as Q&A (the link to join this call is HERE) ***

Fashion retailer Inditex returns to profit (Financial Times, Sarah Provan) shows that the world’s biggest clothing retailer, which owns the Zara and Massimo Dutti brands among others, has returned to profit over the summer after the lows it experienced in April. It managed to do so thanks to strong growth in online sales as well as physical stores reopening. Online and retail sales in April were just 28% of what they were in the same month of the previous year, in June they hit 72%, in July it was 83% and in the month to September 6th they hit 89%. * SO WHAT? * This is positive news – and comes only a day after Swedish rival Hennes & Mauritz said that it expected to return to profitability.

Inditex has managed to maintain a tight rein on margins by continuing to improve inventory control (using the stock in its stores to fulfil online orders) and has also benefited from a big surge in online orders during lockdown. The company believes that the third quarter will see even more progress towards normality, adding that it has now reopened 98% of its stores.

Hut Group shares jump in value by quarter on first stock market day (The Guardian, Jasper Jolly and Sarah Butler) highlights a massive 25% jump in value for the Manchester-based e-tailer on its first day of trading on the London Stock Exchange. The Hut Group (also known as “THG”) floated due to pressure from private equity backers wanting to crystallise their investments, but despite the exit of many early investors the flotation was a roaring success. Although the company is now big enough to be in the FTSE100, it does not qualify because of the way it is structured. Founder Matthew Moulding is joint chairman and chief exec and has a controlling “founders share” for at least the next three years. This was the biggest London Stock Market debut since 2013! * SO WHAT? * Clearly this listing was a great success. Although the structure of the company is actually not that unusual in the US, it tends to be frowned upon over here because too much power is concentrated in one person. Let’s hope that Moulding is the right person otherwise the company will be in a whole load of trouble! He’s done a pretty good job up till now, though…

The FCA wants to look at Klarna and Handelsbanken closes loads of sites…

FCA targets Klarna as it launches a crackdown on unsecured credit (The Times, Kenza Bryan) shows that the Financial Conduct Authority (FCA) is about to do a review of “buy now, pay later” companies such as Klarna as part of a broader inquiry into lending practices in the unsecured credit market. Sweden’s Klarna is the dominant player in the UK deferred payments market and its market valuation has doubled in the last year. It has just become the highest value fintech in the European Union. * SO WHAT? * As things currently stand, the FCA does not regulate the products that Klarna and rival Clearpay provide but campaigners have been calling for tighter rules to prevent 

vulnerable customers get in more debt. I think that this is an overdue move by the FCA given the rapidity of the expansion of this sector. Given the user demographic and current unemployment profile, I would have thought that this is highly pertinent to current circumstances. I’ll be talking more about this in the Watson’s Daily podcast later today (you can find it on Spotify, Google Podcasts and Apple Podcasts – as well as a whole load of other sources!).

Handelsbanken to close almost half of Swedish branches (Financial Times, Richard Milne) highlights tough times for the Swedish bank that has been a longtime advocate of physical branches. It announced yesterday that it would close 180 of its 380 branches in Sweden, axe 1,000 jobs and invest $115m in its digital offering to customers. Handelsbanken: the screaming spires (Financial Times, Lex) says that this will save the bank a decent slug of money and, painful though it may be, it will ultimately make the bank stronger. I guess this is just a sign of the times!

Beijing doesn’t like the Arm deal, Snowflake’s share price shoots up and Sony unveils two consoles…

In a quick scoot around some of today’s tech news, Beijing’s concerns loom over Nvidia’s $40bn Arm deal (Financial Times, Ryan McMorrow, Henry Sende and Qianer Liu) shows that China’s chip industry is objecting strongly to Nvidia’s deal to buy Arm as Zhu Jing, vice-chairman of the Beijing Semiconductor Association, said that a US company can’t be trusted with owning Arm – especially considering that Arm’s chip designs are used in 95% of chips designed in China! * SO WHAT? * Although there is likely to be major resistance from the Chinese, Nvidia could threaten to pull out of the Chinese market – although that would be an extreme option as this could preclude it from ever doing business in China again. I expect more objections given the sheer importance of Arm’s products.

Elsewhere, Snowflake’s stock price soars in IPO (Wall Street Journal, Corrie Driesbusch) shows that share of the data-warehousing company almost doubled from its flotation price yesterday of $120 a share in the biggest tech IPO of the year. The closing price of $253.93 implied a valuation of three times what the company had initially estimated a week ago! Snowflake isn’t profitable, but it has grown very quickly.

Then in Sony to launch two PlayStation 5 models this fall (Wall Street Journal, Sarah E.Needleman) we see that the console race is hotting up! Sony announced that it will be releasing a $400 and $500 consoles, slated to go on sale in November. This echoes Microsoft’s tactic of releasing both a “cheaper” and premium model of its own new consoles – also thought to be hitting the shelves in November. I expect them to fly off the shelves as households prepare for more potential lockdowns with Christmas just around the corner!

Kodak recovers, Zwift gets backer and is there really a 20-second covid test??

In other news today, Kodak shares soar as chief cleared of insider trading (Daily Telegraph, Hannah Uttley) highlights Kodak’s massive 80% share price gain yesterday as an independent review cleared its chief exec of insider trading. Chief Jim Continenza and Philippe Katz, a board member, were handed stock option the day before the company was awarded a $765m US government loan to produce pharmaceutical ingredients – so you can see why alarm bells were ringing!!! Hmmm. What an amazing coincidence!

Elsewhere we see Zwift pedals past $1bn value after attracting new backers (Daily Telegraph, Michael Cogley) shows that the company which operates an online platform for cyclists and runners managed to raise a chunky $450m in its latest funding round that gives it an implied value of over $1bn. Given Peloton’s success, you can understand why investors are keen to get a piece of Zwift’s action!

Then in Is the company with a 20-second coronavirus test for real? (Financial Times, Anna Gross and Jemima Kelly) we see that a Toddington-based company with four employees is developing a saliva test for detecting coronavirus that will take 20 seconds to process. British tech company iAbra unveiled its “Virolens” test last week and it involves taking a mouth swab that you then drop into a box. Inside the box is a digital camera and a microscope and the result will be displayed in mere seconds. This is in the early stages, but if it works out it will surely be massively popular!

…in other news…

Today, I thought I’d leave you with an unusual dining experience in Fifty meters up and two apart – Belgium’s dinner-in-the-sky relaunches (Reuters, Bart Biesemans). Wow 😱😱😱!

1. In SOCIAL MEDIA & TECH NEWS, we look at the TikTok deal, how the FTC is gearing up for an antitrust suit with Facebook, Spotify’s plans for livestreaming concerts, Nvidia/Arm shockwaves and Apple’s new stuff
2. In RETAIL NEWS, China sales are up, Ocado/M&S goes well, New Look survives and Thomas Cook reappears online
3. In INDIVIDUAL COMPANY NEWS, Nikola faces a DoJ investigation, the FCA rules on Covid insurance claims and Carnival Cruises announces a loss
4. AND FINALLY, I bring you an interesting WFH desk option and a CIA observation test…

So TikTok tries to satisfy the White House, the FTC appears to be about to launch an antitrust lawsuit against Facebook, Spotify homes in on concert streaming, the Nvidia/Arm deal ruffles feathers and Apple unveils new gadgetry…

*** NEWS JUST IN – JAPAN’S GOT A NEW PRIME MINISTER. Yoshihide Suga will be taking over from Shinzo Abe, who is stepping down due to ill health. Suga was Abe’s preferred successor. ***

In China’s ByteDance to keep majority TikTok stake in Oracle deal under US consideration (Wall Street Journal, Kate Davidson, Georgia Wells and Michael C.Bender) we see that the proposed structure of the TikTok US deal with Oracle is now with the Committee on Foreign Investment in the US (aka “Cfius”), who have yet to announce a recommendation. As the deal currently stands, Oracle will be TikTok’s US technology partner whilst still allowing the Chinese parent company ByteDance to have a majority stake in the business. TikTok’s global business will be headquartered in the US and the deal would create around 25,000 new jobs. * SO WHAT? * If this deal goes through in its current form, it’s hard to see what all the posturing over the last month or so has actually been about – especially considering that ByteDance gets to keep a majority stake! From where I’m standing, this looks like a result for ByteDance as only days ago it was probably fearing shutdown!

FTC preparing possible antitrust suit against Facebook (Wall Street Journal, Brent Kendall, John D. McKinnon and Ryan Tracy) shows that the Federal Trade Commission (FTC) is thought to be preparing to file an antitrust lawsuit against Facebook by year-end, challenging its hugely powerful position in social media. * SO WHAT? * I don’t think that this is going to come as a huge surprise given that it comes shortly after the conclusion of an investigation of over a year into concerns that it had used its near-monopolistic position to snuff out any competition. It’s not a given that it will go ahead with suing the company as it has had form in the past of walking away from things after preparing to file – take Google, for example. Precise details of this have yet to be released and for a case to go forward a majority of its five-member panel would have to agree to do so.

Spotify to push live streaming concerts in response to Covid-19 (Financial Times, Anna Nicolaou) highlights a deal that Spotify has just struck with Songkick, a ticketing platform owned by Warner Media, to promote live streaming events as it makes moves in the alternative concerts business. This business surged in popularity during lockdown and Spotify will now add a feature for musicians to list their upcoming events on their page to promote cirtual concerts. * SO WHAT? * This is a very hot business right now and when you consider that K-Pop stars BTS made almost $20m in June from just one virtual show called “Bang Bang Con”, you can see why Spotify is itching to get a piece of the action. Given that most tours have been postponed until at least 2021, you would have thought that this is going to be a massive business. Having said that, it has not decided to launch a live streaming function in its app – unlike Amazon, which did so via Twitch. Still, this could get quite exciting I think!

Nvidia sends shockwaves through chip industry with Arm deal (Financial Times, Richard Waters) shows that the proposed Nvidia purchase of Arm Holdings is ruffling some feathers as customers are worried that they will be “disadvantaged” by one of their competitors (Nvidia) gaining control and will go to the back of the queue as a result. Customers including Apple, Qualcomm and Broadcom have not publicly backed the deal. * SO WHAT? * If the deal goes through, it will be the biggest one ever done in the field of semiconductors and the enlarged company will attempt to succeed at the very different businesses of selling chips (Nvidia’s speciality) and licencing intellectual property for other companies to use (Arm Holdings’ speciality). Qualcomm is the only other major chip business that has ever succeeded at combining both.

Apple unveils new Watch, fitness service, bundled subscription options (Wall Street Journal, Tim Higgins) gives us details of the new gadgetry unveiled last night by Apple. The unveiling was online-only and new trinkets included a new Watch that can measure blood oxygen, a new virtual fitness service and some bundled subscription options for its services. It also announced a new iPad Air, starting at $599 with a new touch-ID button on the side but it seems that investors greeted the announcements with a resounding “meh” as the company’s share price fell in trading although they later recovered to close slightly up on the day. * SO WHAT? * It’s interesting to see that “services” now makes up 20% of Apple’s quarterly sales – up from 10% five years ago and that sales of tablets have been particularly strong during lockdown. The Watch’s increasing focus on healthcare and fitness is highly likely to make it an ongoing success IMO – especially given current circumstances.

China sees stronger sales, Ocado does OK, New Look survives and Thomas Cook pops up online…

Chinese retail sales grow for first time since coronavirus outbreak (Financial Times, Thomas Hale) highlights some good news in a sign that consumer spending is now catching up with the country’s wider recovery, according to the latest official data. * SO WHAT? * Consumer spending has been a notable weakness in China, given that many other areas of the economy have been in recovery mode. Households have remained stubbornly cautious so this thawing is particularly welcome. Many countries look to China to see what the future may hold as it was the first major country to go into lockdown and the first one out, but I think that the different range of stimulus measures and incentives adopted around the world will have varying levels of success – and these differences will emerge more fully as time goes on.

In other retail stories today, Ocado says M&S items a hit after parting with Waitrose (Daily Telegraph, Simon Foy and Laura Onita) highlights a positive trading update yesterday from Ocado as it says that more shoppers are buying M&S goods in the fortnight since it launched its JV than they bought Waitrose goods in the two weeks before the switch-over while sales and revenues were up around the 50% mark for the quarter. It’ll be interesting to see how this plays out but surely Ocado will do a better job than M&S did on its own! New Look wins radical rent reform (The Times, Ashley Armstrong and Louisa Clarence-Smith) highlights a stay of execution for the troubled retailer as the believers trounced the doubters in yesterday’s vote on its latest CVA and Thomas Cook relaunches with customer cash pledge (The Times, Dominic Walsh) shows the return of a well-known name as its Chinese owner, Fosun Tourism Group, revives the travel company as an online player. It has kicked off with a promise that it will not take customer payments until they return from holiday, in a bid to gain customer trust. Good luck with that.

Nikola faces investigation, FCA rules on insurance claims and Carnival Cruises makes a big loss…

The plot thickens in Justice Department probes electric-truck startup Nikola over claims it misled investors (Wall Street Journal, Ben Foldy) as the US Department of Justice is now getting together with security regulators to look at allegations that the company misled investors by making exaggerated claims. Nikola/Hindenburg: uphill battle (Financial Times, Lex) makes the point that although Nikola might have been able to get away with scrappy tactics as a private company, now that it is publicly quoted it has to face much more scrutiny – as it is currently finding out !

FCA proves it can be Fast, Competent and Adept in insurance test case (Financial Times, Cat Rutter Pooley) heralds the latest development in the test case where the FCA took on a number of insurers regarding the wording over their insurance policies concerning “business interruption” and whether claimants were covered for the effects of coronavirus and lockdown. Policy holders should be hearing from their insurer within seven days but they won’t be getting any money just yet as insurers will be appealing the decision which came down largely in policy holders’ favour.

Then in Carnival Cruises posts $3bn quarterly loss due to Covid (The Guardian, Gwyn Topham) we see that cruise operator Carnival had a massive quarterly loss (somewhat unsurprising!) although they said that things are likely to improve from here. Yeah right. This business is toast for now IMO and will be hyper-sensitive to any further outbreaks. It’s a shame, but it’s just in the wrong business at the wrong time IMO.

…in other news…

Today, I thought I’d leave you with an unusual working from home idea in This insane motorized scorpion computer chair is perfect for work-from-home supervillains (SoraNews24, Casey Baseel) as well as a quick test to see if you have the ability to join America’s finest in CIA shares tricky observational test for aspiring spies – see if you can pass (The Mirror, Luke Matthews)

1. In TECH NEWS, Nvidia/Arm and Oracle/TikTok face more scrutiny while Huawei tries to appeal to developers
2. In CONSUMER/RETAIL NEWS, London renters move to the ‘burbs, shopper numbers fall and retailers call for continued VAT relief for overseas shoppers, Aldi does click-and-collect, Domino’s offers new jobs, New Look faces a big test and Amazon aims for more hires
3. In INDIVIDUAL COMPANY NEWS, Nikola allegations prove to be true and UBS/Credit Suisse explore options while City Airport and Emirates talk about job cuts
4. AND FINALLY, I bring you something you’ve probably never heard of but I love…

So the Nvidia/Arm and Oracle/TikTok deals face scrutiny while Huawei courts app developers…

Further to what I said yesterday, Nvidia secures control of key global tech with $40bn Arm deal (Financial Times, Kana Inagaki, Richard Waters and Patrick McGee) highlights yesterday’s deal as a mammoth one for the semiconductor industry as it gives the US company control over the tech behind mobile devices and data centres. It also gives Nvidia access to more mainstream computing, broadening its horizons from expertise based on graphics chips. Nvidia/Arm: SoftBank no more (Financial Times, Lex) suggests that this new combination needs to finally deliver on Arm’s early promises of being big in the Internet of Things. Number 10 vows to probe ‘close detail’ of Arm sale (Daily Telegraph, Matthew Field and James Titcomb) shows that the government is keen to at least look like it is addressing concerns of losing a national champion to the US. * SO WHAT? * Although the acquisition sounds reasonable on a strategic basis from Nvidia’s point of view, you can understand why there are concerns about what will happen to the HQ etc. under foreign ownership (e.g. it gets moved to the US, people lose their jobs etc.). Then again, they should have thought of that four years ago when Arm was sold to SoftBank! As things stand, Nvidia has promised to protect jobs and keep Arm’s HQ in Cambridge.

Oracle deal with TikTok to undergo US national security review (Wall Street Journal, Aaron Tilley) heralds the next stage of Oracle’s journey of “partnering up” with TikTok (not buying it) as it tries to avoid a US ban. Blow for London as TikTok HQ heads for US (Wall Street Journal, Laurence Dodds) shows that British hopes for a European TikTok HQ have taken a dent as US Treasury Secretary Steven Mnuchin said he’d received a “commitment…to create TikTok Global as a US headquartered company with 20,000

jobs”. In the deal, Oracle is expected to host TikTok’s US user data and take a stake in the company rather than buy it outright from Chinese parent ByteDance. TikTok/Oracle: out of sync (Financial Times, Lex) makes the point that if ByteDance maintains an interest in the company, it could mean that TikTok US may be able to keep the all-important algorithms as they aren’t being sold per se (so they won’t be covered by Chinese recently imposed rules that AI tech can’t be exported) on the one hand, but the deal will fall short of the full sale that the US government was looking for on the other. If the US government allows this semi-deal to go ahead it would be difficult to see what was achieved (apart from maybe a lower price!) given that security concerns won’t really go away. It would seem that Microsoft could have had a lucky escape here.

Meanwhile, Huawei courts app makers despite sanctions threat to its devices (Financial Times, Yuan Yang and Qianer Liu) shows that Huawei is still appealing to its longtime partners to make apps for its devices despite not knowing how much longer they’ll be able to make smartphones. From today, Huawei will not be able to buy any chips that were made using US technology due to the latest sanctions – which will mean that they will have to change their current smartphone designs completely. There is a very real possibility that it will have no phones to ship anywhere in the second half of 2021. Its new proprietary operating system, Harmony OS, is due to launch on smartphones next year. * SO WHAT? * Huawei’s position as being at the forefront of mobile telephony has been put in jeopardy by the US sanctions and its rivals have been making the most of Huawei’s weakness. Xiaomi overtook Huawei’s sales in Europe in the second quarter of this year and in September, Oppo hiked its sales target for the second half of this year by 30%. Some believe that BBK Electronics, which owns Oppo, Vivo, OnePlus and Realme could be net gainers from Huawei’s demise as its portfolio of brands covers different regions and may benefit from patriotism.

London renters move out, shop footfall drops, retailers call for VAT relief, Aldi does click-and-collect, Domino’s offer new jobs, New Look teeters and Amazon announces more hiring plans…

So in terms of the current state of the UK consumer, Renters leave central London as commuting takes back seat (The Guardian, Hilary Osborne) cites the latest data from Rightmove which shows that there is an exodus of sorts as renters leave central London in search of more space in the suburbs. There was also a tendency for more tenants to move to bigger properties with at least one extra bedroom. Maybe all this house hunting is leaving less time for shopping as Retailers hit by first weekly fall in shoppers since lockdown (The Guardian, Richard Partington) cites the latest figures from Springboard which show a loss of momentum in the high street, although this is normal as kids start going back to school.  Still, it’s not great for the shops and UK retailers look to challenge scrapping of VAT relief for overseas visitors (Financial Times, Daniel Thomas) shows that UK retailers, tourism companies and airport operators are fighting to keep these buying incentives alive after the government’s decision last week to withdraw the VAT retail export scheme for non-EU visitors from the end of December 31st. Visitors have used this incentive to get a refund on VAT on goods bought in the UK and taken back home. As you can imagine, retailers

in places like London’s West End as well as outlets like Bicester Village are particularly exposed to this and, given the current climate you can understand their fears. * SO WHAT? * The bad news for retailers continues unabated, with the odd exception. The VAT retail export scheme thing is going to be particularly devastating for some (what about Watches of Switzerland, for instance??) – given that international visitors account for around 50% of footfall in the West End, you can see how much of an impact this is going to have. As if things weren’t bad enough already!

Elsewhere in retail, Aldi gets with the programme in Aldi tests its first click and collect service (Daily Telegraph, Laura Onita) as it introduces the service in the UK for the first time (it’s still got a long way to go in terms of online grocery shopping capability!). Neither Aldi nor Lidl currently offer a full online shopping service because they argue that it dents profit margins – and they are, of course, known for their low prices. I know it’s not a retailer, but I thought I’d mention Domino’s offers 5,000 new jobs as deliveries boom (Daily Telegraph) as its shows that there is some good news out there while Landlords put New Look’s plans on ‘knife-edge’ (The Times, Louisa Clarence-Smith) shows that New Look’s future is really hanging in the balance as it faces a landlord vote on its latest CVA today, with the prospect of British Land – one of its biggest landlords – minded to object to its proposals. Hammerson also intends to vote against the restructuring and together, they own about 55% of New Look’s UK store sites. Tricky. Meanwhile, Amazon to hire 100,000 in US and Canada (Wall Street Journal, Ben Otto and Sebastian Herrera) gives more proof, as if more was needed, that Amazon continues to go from strength to strength.

The Nikola allegations ring true, UBS and Credit Suisse moot a combo and the airline industry suffers more blows…

Nikola admits rolling truck down hill as it counters ‘fraud’ claims (Financial Times, Peter Campbell and Claire Bushey) shows that allegations made recently by Hindenburg Research are proving to be true, despite initial protestations by Nikola’ chief exec to the contrary. * SO WHAT? * This is an absolute shocker and if this continues, you do wonder whether it can survive. I bet GM, who took a 10% stake in it last week, is consulting its lawyers and thinking of ways to back out. What a nightmare.

UBS tests the water over Credit Suisse mega-merger (Daily Telegraph, Lucy Burton) highlights a potential mega-deal that could create a serious Swiss investment banking champion. If it went ahead, it would be the biggest bank merger since the financial crisis – but talks are currently at an informal stage. * SO WHAT? * This merger has been mooted loads of times in the past – but the fact is that both companies have businesses that greatly overlap, so if they DID get together jobs losses would be huge IMO.

The gloom in the airline industry continues in London City airport to make more than a third of staff redundant (The Guardian, Gwyn Topham) after being shut down for three months at the peak of the pandemic and Emirates warns UK-based staff of cuts to workforce (Daily Telegraph, Oliver Gill). The tough times continue.

…in other news…

Today, I thought I’d introduce you to something I had as a kid – and still love to this day. This is a story about FURIKAKE (“foo-ree-kah-kay”) and it makes boring rice taste great: Seiji holds the Grand Prix of Marumiya Furikake【Taste Test】(SoraNews24, Krista Rogers)

1. In MACROECONOMIC & OIL NEWS, we see what’s next following the UK-Japan trade deal and BP’s “alternatives” future
2. In TECH NEWS, Trump boosts Triller, TikTok hits 100m European users and Oracle beats Microsoft. Apple aims to unveil and Nvidia aims at Arm
3. In PHARMACEUTICALS NEWS, Gilead makes a $21bn purchase and AstraZeneca resumes trials
4. In INDIVIDUAL COMPANY NEWS, Netflix splashes the cash and New Look gets closer to the edge
5. AND FINALLY, I bring you an unusual way to eat pancakes…

So the UK talks trade deals while BP aims for an alternative future…

Japan trade deal commits UK to stricter state aid curbs than in EU talks (Financial Times, Alan Beattie, Jim Pickard and Peter Foster) highlights controversial aspects to the UK-Japan agreement reached in principle on Friday in that the new agreement contains more stringent restrictions on state aid than ones currently being offered to the EU in Brexit talks. As things currently stand, the UK has told the EU that it should have total freedom on granting state aid subject to WTO rules whereas the new Japan deal restricts open-ended government bailouts that don’t have a clear restructuring plan in place. Having said that, some lawyers believe that the concessions made by the UK on this are less onerous than the ones that they would have to make with the EU on state aid. After Japan trade deal, the next challenge is Canada (Daily Telegraph, Lizzy Burden) shows that Canada appears to be next up on the trade front. Ottawa is thought to be favouring a “phase one” agreement – a bit like the one between the US and China – to tide things over in the short term, with a few to firming up and expanding later. However, the Canadians are highly skilled at negotiation, so this is likely to be tough. * SO WHAT? * The devil is always in the detail with these things and all parties are negotiating in highly unusual times. I would have thought that all sides will want as much wiggle room as possible in order to adapt to changing behaviour as we all try to cope with coronavirus.

Autumn redundancies could exceed 700,000 (The Guardian, Rupert Jones) cites analysis from the Institute

for Employment Studies (IES) which says that almost 500,000 redundancies may be announced this autumn with numbers potentially breaching 700,000 – and this is in addition to the 240,000 redundancies recorded by the government up until June. The report concludes by appealing for more help to those affected, for more measures to boost employment growth and for the provision of focused help on viable companies. * SO WHAT? * Tough times, but let’s face it – no-one knows what the real figure will be until the redundancies actually happen. An estimate of between 500,000 and 700,000 is a ridiculously wide range (you might as well just use a dartboard) and, I would argue, pretty useless. I find it hilarious when so-called experts spend a lot of time producing dross like this. Unfortunately, the subject matter is most definitely NOT hilarious. Still, if you must have an estimate, this is it.

Then BP’s Looney stakes future on producing less oil (Financial Times, Roula Khalaf, Anjli Raval and David Sheppard) reminds us that the chief exec of BP, Bernard Looney, will be unveiling the future of BP this week – and he will be emphasising a future with less oil and gas in it. He wants BP to be a diversified energy producer and targets net zero emissions by 2050 and production cuts of 40% over the next ten years. * SO WHAT? * This is great – but the real test will be if the oil price rises quite a lot from here. It’s one thing to do this kind of thing in a low oil price environment and quite another to stick to your morals if the oil price goes up to $80 a barrel, for instance. Reducing exposure to oil and gas won’t then look so clever and the risk then is that Looney takes the fall and someone less environmentally friendly takes the helm.

It’s all going on with TikTok, Apple is due for an unusual reveal and Nvidia goes for Arm…

It was interesting to see Trump talk up Triller as US answer to TikTok (Daily Telegraph, Laurence Dodds) as he endorsed the American TikTok alternative whose user numbers jumped from 13m active users in October last year to 65m last month – 35m joined in a few days after Trump threatened to ban TikTok in the US. TikTok tots up 100m in Europe (The Times, Alex Ralph) highlights the breach of a new user number landmark, but the really interesting news is that Oracle wins bid for TikTok in US; Microsoft proposal is rejected (Wall Street Journal, Georgia Wells and Aaron Tilley) – which shows that Oracle beat the previous favourite Microsoft in the bidding for the social media app. It will be TikTok’s “trusted tech partner” in the US and it seems that the deal is not a sale – it’s more of a “partnership”. Details are sketchy and it’s not known whether there will be a transfer of algorithms – something that was made problematic by China imposing a ban on exports of AI technology. TikTok’s algorithms that are responsible for recommending videos to users based on their preferences are seen to be a key ingredient of its success, so if those aren’t transferred over you’ve got to wonder what Oracle is getting itself into. * SO WHAT? * Trump threatened TikTok shutdown in the US if a sale was not agreed by a mooted September 15th deadline, so I guess this solves that problem. It is also interesting to note that retail giant Walmart had joined Microsoft’s bid – but it is now considering joining the Oracle bid. Oracle is making this move to boost its cloud computing business that is currently way behind Amazon and Microsoft’s capabilities. It’ll be interesting to see the specifics of this deal, but I have to say that my initial opinion is that Microsoft dodged a very expensive bullet.

Elsewhere in the land of tech, With no iPhone to launch, Apple turns to accessories and wearables (Financial Times, Patrick McGee and Tim Bradshaw) highlights the Apple reveal event tomorrow. This story was out over the weekend and observed that this will be the first time it has

not unveiled its new iPhone at the event in almost ten years! Instead, it will push the accessories business and new hardware such as the Apple Watch, a new iPad Air, new over-ear headphones called AirPods Studio and lost items tracker AirTags. It’s interesting to note that, over the last five years, sales attributed to the iPhone have fallen from 63% to 44% in the latest quarter. Over that time, its wearables and accessories sales have shot up by 144%, mainly thanks to the Apple Watch and AirPods. One interesting metric shows that for every 100 iPhones sold, Apple sells 49 pairs of AirPods and 14 Apple Watches. In contrast, for every 100 Galaxy S phones sold, Samsung sells 34 Galaxy Buds and 14 watches – and Apple also manages to sell at higher margins. * SO WHAT? * This will be subject to a great deal of scrutiny and will give Apple’s other products so much more airtime than they normally get. If this generates a lot of feelgood, then I am sure that the delayed iPhone launch won’t feel too long.

Ministers to step in as US tech titan buys Arm (Daily Telegraph, James Titcomb) highlights concerns by the UK government that the $40bn sale of Arm from Japan’s SoftBank to America’s Nvidia will result in a hollowing out of Arm’s Cambridge base. SoftBank promised in 2016, when it bought the UK tech company, that the UK workforce will double and that its HQ will remain in Cambridge and according to ARM: UK-based chip designer sold to US firm Nvidia (bbc.co.uk, Leo Kelion), the new acquirors will honour this (the deal has just been announced). Highflying Nvidia’s deal for Arm signals loftier chip ambition (Wall Street Journal, Cara Lombardo, Maureen Farrell and Asa Fitch) shows the wider implications of a successful deal between the two. * SO WHAT? * Given Nvidia’s expertise in graphics processors and Arm’s dominance in the microprocessors that are embedded in 90% of the world’s smartphones, this deal will make Nvidia a powerful force in smartphones and a major supplier to other devices including smart speakers and fitness trackers. This is one of the biggest deals ever done in semiconductors, but the road ahead may face bumps as China may not like its “neutral” supplier falling into American hands, among other things. SoftBank bought Arm for $32bn in 2016 but has struggled to boost growth in the business, so maybe the new owner is better placed to do so.

Gilead goes shopping and AstraZeneca resumes…

Gilead reaches deal to buy Immunomedics for $21bn (Wall Street Journal, Cara Lombardo and Jonathan D.Rockoff) highlights a chunky deal for Gilead as it buys Immunomedics and its highly-rated breast cancer drug for a tidy sum. Gilead is paying a whopping 108% premium to the price Immunomedics was trading at before the deal

was announced. Oncology is a hot area for the major drugmakers and Immunomedics’ breast-cancer treatment Trodelvy, is particularly attractive.

Elsewhere, AstraZeneca Covid-19 vaccine trials resume in UK (Wall Street Journal, Peter Loftus) shows that the drugmaker has resumed trials in the UK after pausing last week following a participant falling ill and the regulators said it was safe to do so. Trials in other countries remain suspended pending local permissions. * SO WHAT? * There will no doubt be relief that trials have resumed but it is a reminder of how difficult finding a vaccine really is.

Netflix spends and New Look teeters…

Netflix to take crown for spending on films and television (Financial Times, Alex Barker) highlights the streamer’s massive spend on entertainment content this year as a report by Ampere Analysis shows that its spend on films and programming will rise by $3bn to $13.6bn in 2020 – more than rivals ViacomCBS, Disney and NBCUniversal, excluding sporting rights. Spending on content is expected

to increase to new highs in 2020 despite crumbling economies and delays to content production.

The retail nightmare continues in New Look pleads with landlords to back rescue deal to save it from administration (Daily Telegraph, Laura Onita) as a vote with 300 landlords on whether or not to accept a CVA is due tomorrow. Apparently, Boohoo is hovering in the wings to buy it – and given that Boohoo has recently bought the name and websites (not the shops) of Karen Millen, Coast, Oasis and Warehouse since they collapsed, it will not bode well for the shops or indeed their employees. Their future hangs in the balance…

…in other news…

Today, I thought I’d leave you with the absolutely hilarious young lady in Woman labelled ‘genius’ for sharing ‘revolutionary’ way she eats duck pancakes (The Mirror, Courtney Pochin). Probably something best not to try at a restaurant unless you like attracting attention…

1. In MACROECONOMIC & OIL NEWS, the ECB keeps rates unchanged and BP buys into wind
2. In INDIVIDUAL COMPANY NEWS, Oracle benefits from cloud-computing, LVMH takes the fight to Tiffany, Nikola faces friction, AstraZeneca “stays on track” and British Airways launches a rights issue
3. In RETAIL NEWS, retailers fear a poor Christmas and Morrisons’ profits are hit by pandemic costs
4. In LEISURE NEWS, Peloton unveils its first ever quarterly profit and Pure Gym shores up its finances
5. AND FINALLY, I bring you a haunted toilet…

So the ECB holds firm and BP invests in wind power…

ECB to monitor rise of euro after keeping rates on hold (Financial Times, Martin Arnold) shows that the ECB’s governing council left interest rates unchanged but said that it would be keeping a close eye on the Euro, which has strengthened by 10% against the dollar since March. The worry here is that if the Euro gets too strong, it could harm exports by effectively making them more expensive.

New world of wind power for BP as it takes the plunge in America (The Times, Emily Gosden) shows that BP has just spent $1.1bn on a 50% interest in two US wind farm

projects with Norway’s Equinor (which used to be known as Statoil and is 67% owned by the Norwegian government). The two companies will also form a strategic partnership to work together on other projects in the fast-growing American offshore wind market, with a view to potentially rolling it out to other countries. * SO WHAT? * This is all part of BP’s new strategic direction to invest more in green energy, aiming for a net zero carbon footprint by 2050. BP/Equinor: spinning windmills (Financial Times, Lex) says that BP has paid quite a high price for getting involved as it is late to the party and will therefore find it more challenging to get returns than early movers such as Equinor. Still, it’s a move in the right direction and shows that BP’s CEO is putting his money where his mouth is (for the moment, at least!).

Oracle benefits from cloud-computing, the LVMH/Tiffany drama continues, Nikola faces criticism, AstraZeneca “stays on track” and British Airways raises funds…

I found today’s news to be particularly “bitty” today, so apologies for the randomness in this section – but they are important stories!

Oracle results bolstered by cloud-computing growth (Wall Street Journal, Aaron Tilley) is an interesting story that highlights would-be-TikTok-buyer (!) Oracle as being one of the many companies that have benefited from the increase in demand for cloud-computing products and services during lockdown. Companies are generally accelerating their shift to cloud-computing and Oracle has managed to pick up new clients for its cloud products, including Zoom which needed more capacity to service its massive upsurge in users. * SO WHAT? * Oracle has enjoyed some of the benefits of this boom in demand for cloud-computing but it still has baggage in the form of a legacy in database products. It seems to me that Oracle is very keen to accelerate moves towards cloud-based products and services and that it hopes that its supposed interest in TikTok will give it some kind of jolt. FWIW, I think it would be bizarre as it has no experience in this area at all – it would be a massive vanity purchase as far as I can see.

Following on from yesterday’s news, LVMH retaliates against Tiffany by preparing lawsuit (Financial Times, Leila Abboud) shows that LVMH is now filing a lawsuit against Tiffany, alleging that it mismanaged the business during Covid-19, “forcing” it to reconsider the $16.6bn takeover bid. Interestingly, a report on Bloomberg said yesterday that LVMH’s CEO Bernard Arnault “asked for help” from the French government to extract him from the deal, although the company strenuously denied this on a media call yesterday. * SO WHAT? * The drama continues, but I suspect that this is all a charade in an effort to force the price down. Who else is going to want to buy Tiffany now if LVMH walks away?? Tiffany has everything to lose here – and it will be made worse by having to pay for a drawn-out lawsuit.

Nikola shares fall after short seller claims business is an ‘intricate fraud’ (Financial Times, Claire Bushey and Peter Campbell) shows that shares in the much-hyped electric truckmaker Nikola fell by almost 10% in trading yesterday as a short seller, Hindenburg Research, claimed to have “extensive evidence” to prove that the company’s proprietary tech was actually bought from another company. * SO WHAT? * This claim could put a cloud over any business that has been run by founder Trevor Milton in the past. Nikola’s share price has more than quadrupled since listing in June as investors hope its fortunes will follow those of Tesla and this claim comes only days after GM announced a $2bn deal with it. The Hindenburg report makes a number of incredibly serious accusations including that it lied about making in-house electrical inverters (it bought them in, allegedly) and faked a product video in 2018 by ROLLING a Nikola One truck along a downhill stretch of highway to cover for the fact that it had no working engine 😱 and edited it to make the road look flat! Nikola’s stock shot up by 40% on the GM announcement, but then it took a hit following the Hindenburg revelations. Funnily enough, Trevor Milton sounds rather p!ssed off and vows to address the allegations. It’s difficult to tell whether Hindenburg or Trevor Milton is telling lies, but you should get popcorn, a drink and settle in – this looks like it is going to be one humdinger! GM must be feeling VERY worried right now (and probably a bit stupid). If it turns out that Hindenburg is right, I think it will be the end of Nikola. If the allegations are disproved, its share price could have an enormous rebound IMO!

Following on from the recent disappointing AstraZeneca news, AstraZeneca ‘still on track’ to submit Covid vaccine data before end of year (Financial Times, Sarah Neville) sounds like the company is trying to scrabble around to keep the feelgood going after a pause in its trials took the shine off its vaccine hopes. Let’s hope for the best – but at least our expectation levels may be more realistic now!

Then in BA owner IAG launches steeply discounted €2.75bn rights issue (Financial Times, Philip Georgiadis) we see that British Airways’ owner is trying to shore up its finances in the aftermath of coronavirus-related decimation of its business. IAG warned of falling passenger numbers for this year as travel restrictions and quarantine measures hit hard. The tough times for the airline industry continue…

Retailers fear a poor Christmas and Morrisons’ profits get hit by pandemic costs…

It feels weird talking about Christmas in September, but after recent comments about US retailers bringing Christmas forward in order to get consumers spending now, Lack of festive cheer to leave embattled retailers out in cold (Daily Telegraph, Laura Onita) shows that fears are increasing among retailers that a tough Christmas is looming in the aftermath of the end of furlough, the prospect of Brexit and consumers generally tightening their

belts. On average, UK households spend over £2,500 each month but in the run-up to Christmas they spend an additional £800, according to Bank of England estimates. Expectations for this year remain muted to say the least…

In Morrisons counts the costs of pandemic as sales surge (The Times, Ashley Armstrong) we see a bit of a mixed bag as the supermarket did well on the one hand with higher sales during lockdown, but on the other hand profits fell by over 25% due to increased costs of hiring, paying sick leave, bonuses and putting in safety measures. This was mitigated to some extent by four months of business rates relief but it’s not ideal. Digital business is booming (it has quintupled since the start of the year) but it is readying itself for a tricky Christmas.

Peloton turns its first profit and Pure Gym shores up its finances…

Peloton posts first-ever profit as pandemic speeds sales (Wall Street Journal, Kimberly Chin) shows that Peloton is one of the coronavirus “winners” as more people elect to sweat in the privacy of their own homes as revenues almost tripled. Demand is such that it is now increasing production of its stationary bikes and treadmills in order to improve wait times for its equipment. It is now expanding its offering and cutting the base price of its stationary bike by around $350 to $1,895. * SO WHAT?* This is a great performance but it also faces more competition as gyms open up and other fitness start-ups (e.g. Mirror, which was bought by Lululemon Athletica for $500m recently) try to soak up demand.

Talking about gyms, Pure Gym builds up £100m in financial muscle (Daily Telegraph, Hannah Uttley) shows that the gym chain has received a £100m cash injection from its US private equity shareholder Leonard Green to help get it through the lean times of coronavirus. The company has made positive noises about its reopenings, but times are still tough so the extra cash will come in handy.

…in other news…

Today, I thought I’d leave you with the rather bizarre Coronavirus leads to creation of haunted toilet at Japanese theme park (SoraNews24, Casey Baseel). At least if you scare easily you are sitting in the right place 😂.

1. In INDIVIDUAL COMPANY NEWS, LVMH tries to back out of its purchase of Tiffany, Tesla has valuation problems, AstraZeneca’s pause gives cause for thought and airlines cut schedules
2. In TECH NEWS, TikTok options are mooted and Epic Games pits its users against Apple
3. In HIGH STREET/RETAIL NEWS, things look tricky for Lloyds, New Look and Pizza Hut while Simon & Brookfield decide to rescue JC Penney
4. AND FINALLY, I bring you a cute kid who will make your day…

So LVMH cools on the Tiffany purchase, Tesla hits a bump, AstraZeneca’s action gives us cause for thought and airlines cut schedules…

*** IT’S THURSDAY SO IT’S ZOOM CALL TIME! This is where I do the business and financials news roundup and then give YOU the opportunity to ask me anything! From this week, FREE Watson’s Daily subscribers can have a 30 minute call HERE, but if you are a PAYING/FULL subscriber you can have a 1 HOUR call HERE. The 1 HOUR call will also include chance for discussion (key for improving your knowledge!). NB calls will finish early if everyone runs out of questions – so ask away! This is YOUR chance! ***

In LVMH says it cannot complete Tiffany takeover after France intervenes (Finanical Times, James Fontanella-Khan, Ortenca Aliaj, Leila Abboud and Arash Massoudi) we see that LVMH is ostensibly trying to back out of its proposed $16.6bn takeover of US jeweller Tiffany – because the French government urged it to do so! Given that such a move will have been widely expected given the number of other deals that came together before Covid and then unravelled it is hardly surprising that Tiffany immediately countered with a lawsuit against LVMH, accusing it of delaying tactics. LVMH’s chief exec, Bernard Arnault, is known for his tough negotiation tactics – hence his nickname “the wolf in cashmere” – and has been trying to renegotiate the terms of the $135-a-share deal that was initially announced in November. * SO WHAT? * The French government had urged LVMH to back out of the deal as part of presenting a united front to America as Trump imposed tariffs on French luxury goods in response to France’s imposition of a digital tax. LVMH’s offer last year was at a 37% premium to the pre-announcement share price and was pretty toppy at the time. LVMH/Tiffany: French bleat (Financial Times, Lex) says that LVMH will be arguing that the coronavirus outbreak triggered a “material adverse change” (aka “MAC”) clause giving it legitimate reason to reconsider its bid whereas the US courts are likely to resist such a claim. The implication here is that this sort of thing is pretty cut and dried (LVMH would probably be forced to stick to the deal) but the unknown quantity here is the apparent involvement of the French government as it sees LVMH as a strategic business and hence is likely to get more involved.

Tesla investors strap themselves in for a bumpy road as volatility returns (Daily Telegraph, Matthew Field and Michael Cogley) highlights the recent Tesla share price weakness since the most recent peak it reached on August 31st and has a look into why this happened. Interestingly, Jefferies’ automotives analyst Phillippe Houchois (fun fact: I used to work with Philippe when I was a stockbroker at Cazenove!) observed that “we have been bullish on Tesla for two years now, but I must admit it has been hard to keep track of the speed of the moves. There has been logic in the exuberance, but it is very hard to know when it stops”. In essence, the article points to tech-related excitement, SoftBank options purchases and retail investor-fuelled buying on platforms such as Robinhood on the up and then the S&P500 entry snub and investor profit taking (Baillie Gifford, for example) on the down. Tesla

looks overvalued as battery doubts halt charge (Daily Telegraph, Robin Pagnamenta) takes a closer look at the prospect of the company’s “Battery Day” (sounds like some kind of festival promoting ABH!) which is due on September 22nd where Elon Musk is expected to unveil a “million-mile battery” which will be a vast improvement on current tech in terms of energy density and performance. * SO WHAT? * Big Tech saw a Big Sell-Off this week, but I would say that these things happen from time-to-time as investors look to crystallise the massive gains some of them have made. What is perhaps more interesting, to my mind, is what happens on September 22nd. If the new battery tech breakthrough lives up to the hype, it could be massive – and Tesla’s share price could resume its path to the moon once more. One of the major stumbling blocks to wider adoption of electric vehicles is the continued expense of the battery in the car itself (it represents 30% of the cost of the vehicle), which keeps the selling price stubbornly high. Prices of batteries have been falling in recent years from over $1,000/kWh in 2010 to $381/kWh in 2015 and now $147/kWh, according to Bloomberg New Energy Finance. Tesla is trying to get this figure to well below $100. The thing is that now, Tesla isn’t the only player in the sandbox – Renault, for example, looks like it will be selling more electric vehicles this year than Tesla. I think that a battery breakthrough will be more important than ever to even coming close to justifying Tesla’s heady price tag.

Given the announcement, I thought that AstraZeneca’s Covid trial pause a reminder of huge challenges in race for vaccines (Financial Times, Sarah Neville, Clive Cookson and Kiran Stacey) shows that the pharma giant’s confirmation on Tuesday that it had temporarily halted trials of its coronavirus vaccine has been a real blow to everyone’s hopes for a vaccine sooner rather than later. It serves as a reminder of just how difficult it is to find an effective vaccine. Although AstraZeneca was keen to stress that it was not a major problem, badging this latest development as a sign of how careful it is being, you would have thought that things must be reasonably serious given the enormous pressure all pharma companies are facing regarding the discovery and development of a coronavirus solution. The previous record time for finding a vaccine was four years for mumps – and this took four years! Achieving the near impossible is what pharma companies are trying to do now, but I would argue that in addition to tech changing everyone is trying to find a solution at the same time globally so I would expect the sharing of information to be on a much bigger scale than before which will surely compress the process 🤞

Then in US and European airlines cut schedules as passengers fail to return (Financial Times, Claire Bushey and Philip Georgiadis) we see that Europe’s biggest discount airline, Ryanair, has reduced the number of passengers it expects to carry in the fiscal year to March (EasyJet also cut its flight schedule earlier this week) and Finnair is expected to offer up to 80 flights daily in October versus the 200 it had planned previously. Over in the US, United Airlines announced that capacity would be cut by 70% versus Q3 of 2019 – a small increase versus the previous guidance of a fall of 65%. The airline industry nightmare continues…

TikTok options narrow and Epic Games continues to complain…

TikTok, US discuss ways to avoid sale (Wall Street Journal, Miriam Gottfried, Georgia Wells and Kate Davidson) highlights the latest in the ongoing TikTok saga as parent company ByteDance is talking to the US government about ways to avoid a full sale of its US operations. * SO WHAT? * Discussions in this regard have heated up since the Chinese government announced measures that would make a sale to an American company much more difficult, but it seems to me that time is running out for a solution to the TikTok problem. A number of 

options are still on the table but time is rapidly running out as a sale is supposed to be agreed by next week, according to Trump’s most recent pronouncements.

Talking of lost causes, Fortnite mobilising gamers to wage war on Apple (Daily Telegraph, Laurence Dodds) highlights Epic Games’ efforts to turn users against Apple in its current fight by urging them to #FreeFortnite sounds like a pathetic attempt to rally its userbase. * SO WHAT? * Given the enormity of the task it faces and the potential losses it must already be experiencing, I would agree with a prediction made in this article that “Apple will hold, Epic will fold” and that things will be back to normal soon enough (with lawyers having earned a lot in the process!). As I have said before, I don’t think Epic stands a chance if it proceeds on its own – it needs to get with others to even have a hope and no-one seems willing to stick their neck out.

The gloom continues on the UK high street but JC Penney gets saved…

Lloyds to cut hundreds of UK jobs as it revives restructuring plans (The Guardian, Julia Kollewe and Sarah Butler) highlights yet more job cuts in the banking sector as part of restructuring efforts while Almost 125,000 UK retail jobs lost so far this year, study estimates (The Guardian, Sarah Butler) cites a study by the Centre for Retail Research which tells us what we already know – that retailers are getting mullered.

New Look close to collapse as it seeks rent deal (Daily Telegraph, Laura Onita) highlights yet another apparel retailer dicing with death while Pizza Hut move to close 29 outlets threatens 450 jobs (Daily Telegraph, Rhiannon Curry) shows the latest casual dining casualty as it is in talks with creditors about a CVA.

On a positive note, Mall owners Simon and Brookfield to rescue JC Penney (Wall Street Journal, Suzanne Kapner and Alexander Gladstone) shows that JC Penney managed to find a saviour (for now!) at a cost of $800m. I would imagine this is not the end of JC Penney’s sorry saga!

…in other news…

Today, I thought I’d leave you with what must be the cutest video ever! If you are having a rough day – or even if you are not – you really should watch the video in Toddler leaves people in tears as baking with grandma descends into chaos (The Mirror, Luke Matthews).

1. In MACROECONOMIC & OIL NEWS, Global trade boosts Germany and France but fears of a wobble hit oil prices. Blue collar jobs in the UK surge but warnings are made over furlough extension
2. In TECH NEWS, Apple countersues Fortnite maker, ByteDance offers staff bonuses, Microsoft announces two console releases and Slack fails to convert
3. In RETAIL NEWS, Iceland hires, JD Sports benefits, Halfords rides high and SCS sells more sofas
4. In INDIVIDUAL COMPANY NEWS, Tesla’s share price craters, GM buys a chunk of Nikola, AstraZeneca halts progress and Beyond Meat makes moves in China
5. AND FINALLY, I bring you the most amazing ice cream bars ever…

So global trade picks up but there are worries for the outlook while UK blue-collar jobs outpace white-collar ones and Andy Haldane warns about extending furlough…

Global trade rebound fuels rise in German and French exports (Financial Times, Martin Arnold and Valentina Romei) cites the latest Eurostat figures which show that German exports rose for the third month in a row while France also showed a healthy increase. * SO WHAT? * The implication here is that Europe is on track for a decent recovery in Q3 of this year but some economists are warning that momentum may be waning and Benchmark oil prices drop below $40 a barrel for first time since July (Daily Telegraph) also reflects wider fears that demand for global trade may be weakening. Saudi Arabia cut future selling prices earlier this week as coronavirus cases seem to be on the rise again.

On the employment front, Blue-collar openings recover faster than office jobs in the UK (Financial Times, Delphine Strauss) cites findings from a monthly KPMG/Recruitment & Employment Confederation survey

which reflects a strong uptick in the hiring of temp staff in August. On the other hand, there was only a small rise in permanent staff appointments and overall demand remained weak. Vacancies for blue-collar and construction roles grew strongly while those for clerical and secretarial staff and finance and accounting roles fell. Top economist warns against furlough scheme extension (The Guardian, Phillip Inman) heralds some potentially worrying news for some as Andy Haldane, the Bank of England’s chief economist, is warning the government against extending the furlough scheme saying that it would only be delaying the “inevitable” shake-out of businesses induced by the pandemic. He is saying that a “necessary process of adjustment” is needed and that extending the current 31st October deadline would only postpone the process. * SO WHAT? * It’s understandable that there are more temp roles out there than permanent ones given that employers will be nervous about committing to full time employees given the uncertain economic backdrop. I suspect that many will privately agree with what Andy Haldane is saying, but this is not what people want to hear as his advice would lead to a massive rise in unemployment going into Christmas and undoubtedly even more carnage on the high street as people become even more cautious about spending.

Apple countersues Epic Games, ByteDance offers employee bonuses, Microsoft announces the release of two consoles and Slack disappoints…

Apple countersues ‘Fortnite’ maker Epic Games, seeks punitive damages (Wall Street Journal, Tim Higgins) shows that Apple has decided to take the fight back to Epic Games, accusing it of duplicity and greed and is now seeking punitive damages, arguing that its 30% charges are fair given the huge value it gets from being on the App Store. * SO WHAT? * This is really turning into a battle royale between the two, although I still don’t fancy Epic’s chances given Apple’s sheer size and financial firepower. Yes, Spotify is accusing Apple of the same thing and Facebook CEO Mark Zuckerberg said in an employee webcast that Apple has the power to restrict innovation and “to charge monopoly rents” – but unless all of these companies get together to gang up on Apple, I don’t think Epic stands a hope.

ByteDance gives bonuses to staff after TikTok turbulence (Financial Times, Ryan McMorrow) shows that TikTok’s owner is doling out the readies to all of its 60,000-odd employees globally (equivalent to half a month’s wages!) as it faces question marks over the future of its business against the backdrop of ongoing US-China trade wars and ban in India (which means that TikTok is now banned in its top two markets). * SO WHAT? * Given what’s going on, you can understand why staff are going to be feeling somewhat antsy, because even if they stay on there could be a long, slow and painful decline into oblivion if the company decides to drag things out in court. IMO, this is a sticking plaster being put on cracks in a dam. The company has also been handing bonuses to TikTok stars with over 10,000 followers in order to stop a mass exodus (presumably to Facebook’s Instagram Reels). Microsoft

and Oracle are still in the running to buy the business but, as I said last week, I think that a deal is going to be far harder (if not impossible) to make given China’s recent moves on restricting the export of Chinese AI-related tech – which includes TikTok’s valuable “recommendation” algorithms.

There’s some exciting news for gamers in Microsoft to release two new Xbox consoles; Series S to cost $299 (Wall Street Journal, Sarah E. Needleman) as the company aims to release two games consoles this autumn – the “premium” all-singing-all-dancing Series X (no prices released yet) and the cheaper-and-more-cheerful Xbox Series S for $299 (it’s smaller than previous models and doesn’t have a disk drive). Current speculation suggests a November launch, but there’s no official guidance on that. * SO WHAT? * Given lockdown and ongoing restrictions on so many “normal” activities, I would expect the launch of the new generation of consoles by Microsoft and Sony to be PARTICULARLY strong this time around. There will no doubt be massive shortages heading into Christmas…

Then in Slack’s pandemic growth takes hit from disappointing billings (Wall Street Journal, Aaron Tilley) we see that Slack’s shares fell almost 20% in after-hours trading as quarterly billings undershot expectations despite the company reporting strong sales. It suffered from having fewer users as more people were being laid off in addition to intensifying competition from Microsoft, which is aggressively pushing usage of Teams. * SO WHAT? * It’s interesting to see that although Slack has benefited from the pandemic, it has not done quite as well from it as Zoom, for instance. Slack’s stock was up 30% this year prior to announcing its results whereas Zoom’s share price has quintupled over the same period. FWIW, I think this could be down to Slack’s pricing strategy. I use Slack and it seems to me that there is a massive gulf between the free offering and the paid one – which really means that you have to think very hard about whether you really want to use it, especially if you can get Teams for “free” as part of Office365.

There’s reason to cheer for Iceland, JD Sports, Halfords and SCS…

In the usually gloomy world of UK retailing, it’s good to see some good news for a change! Iceland in hiring spree amid online boom (Daily Telegraph, Laura Onita) shows that the frozen food specialist is looking at recruiting 3,000 delivery drivers and extra staff to help with the growth in online orders. It also announced a tie-up with UberEats for delivery within London initially, with a view to expansion thereafter. Iceland bosses said that online orders had shot up by over 300% since April. * SO WHAT? * Iceland is just the latest retailer to announce more jobs following the huge uptick in its online business. The tie-up reflects similar deals that others have made – e.g. Co-Op and Deliveroo and Asda with JustEat. I personally think that tie-ups are the way to go rather than building your own networks as that incurs massive costs and takes a lot of time to build – plus there’s the advantage that scaling up or down quickly is likely to be far less time-consuming. It’ll be interesting to see whether the likes of Aldi and Lidl follow suit…

Online shift buoys JD Sports as footfall struggles (Daily Telegraph, Simon Foy) shows that JD Sports’ online sales were stronger under lockdown but the cost of boosting its

online capability took the shine off half-year profits. Online sales more than doubled during lockdown but footfall at physical stores is still disappointing at the moment.

Elsewhere on the high street, Halfords keeps show on road with cycling boom (The Times, Ashley Armstrong) highlights a double-boost for Halfords as it benefited from rising demand in car services as well as strong demand for bicycles as consumers continue to elect to avoid public transport. Although the company is expecting a fall-off towards the end of the year (which spooked investors a bit), current demand appears to be brisk. * SO WHAT? * I would agree with the company on this because I think that the car thing is likely to be short-lived as people trickle back to work. After all, not everyone can get to work by car anyway! Also, I think that people who buy bikes (or service older ones) for commuting purposes are far less profitable than those who do it for sporting purposes. I would argue that commuters tend to buy one bike and ride it into the ground whereas sports users tend to buy more (and more expensive) steeds. Still, it was probably a boost that they were not expecting!

Then in SCS is sitting comfortably as customers upgrade sofas (The Times, Ashley Armstrong) we see that sales of sofas have also surged under lockdown, according to a trading update by the retailer. It said that like-for-like orders had risen by 51% in the six weeks to September 5th but it was less certain about prospects going into the end of the year given economic uncertainty.

Tesla’s share price craters, GM buys into Nikola, AstraZeneca halts proceedings and Beyond Meat moves into China…

In a very quick scoot around some other very interesting news today, Tech stocks rout grows with Tesla falling 21% (The Times, Simon Duke and Robert Miller) shows Tesla falling further south as it had its worst ever day in trading (although they will be congratulating themselves that they got their capital raising away right at the top of the market!) for no apparent reason and General Motors takes 11% stake in electric vehicle maker Nikola (Financial Times, Claire Bushey) shows that momentum is continuing to build for the electric truck specialist Nikola as GM tried to buy into tech rather than develop it organically, which GM/Nikola: honey for the badger (Financial Times, Lex) observes is something that investors seem to prefer.

Meanwhile, there’s potential bad news for a quick vaccine in AstraZeneca pauses vaccine trial after suspected adverse event (Financial Times, Hannah Kuchler and Sarah Neville) but good news for meat alternatives in Beyond Meat builds China presence with new production facility (Financial Times, Thomas Hale). Meatless marches on!

…in other news…

Today, I thought I’d leave you with something that is even better than a Magnum: Matcha parfait ice cream bars: Kyoto tea store deconstructs parfaits, creates stunning new sweets (SoraNews24, Oona Mcgee). These things look like works of art!

1. In CONSUMER/RETAIL/HIGH ST NEWS, US shoppers will see an early Christmas, UK consumer spending strengthens and house prices rise while out-of-town retail benefits, Morrisons employs and Pizza Express announces a rescue
2. In TECH & TELCO NEWS, Samsung signs a big deal with Verizon and China’s top chipmaker takes a tumble
3. In NEWS ON CORONATRENDS, IPOs evolve and law firm winners and losers diverge further
4. AND FINALLY, I bring you an unusual day out…

So we look at what’s going on with US and UK consumers, a retail park revival and a mixed bag from Morrisons and Pizza Express…

*** OUR NEW COMPETITION WILL BE OPENING SOON FOR ENTRIES – SEE WATSONSDAILY.COM FOR MORE DETAILS ***

Christmas set to come early for US shoppers as Covid-19 forces rethink (Financial Times, Alistair Gray) shows that US retailers are planning to market Christmas before Halloween at places like Macy’s, Kohl’s, Calvin Klein, Guess and Target as a means to boost sales volumes. Although it is thought that an extended promotion period will help sales, it will also hit margins at a key time in the last quarter of the year. * SO WHAT? * OK, so Christmas shopping has been getting earlier and earlier over the last few years due at least in part to events like Black Friday and other “artificial” promotions but it is likely to be spread over a more protracted period this year as authorities want to avoid crushes at stores that could lead to more cases of coronavirus. Interestingly, it is thought that there will be so much e-commerce going on that logistics companies may start to impose additional charges (which will either squeeze retailer margins if they take the extra costs on the chin or they will pass them wholly or partly on to the consumer). Whether consumers will be in the mood to spend come Christmas-time is a moot point, however, as the spectre of rising unemployment looms large.

Meanwhile, UK consumer spending exceeds last year’s level for first time since lockdown (Financial Times, Valentina Romei) cites the latest data from Barclaycard which shows that monthly consumer spending rose above last year’s equivalent month (August) for the first time since lockdown. We spent more on clothing, pubs and bars but not so much at shops as we still got our retail kicks online. * SO WHAT? * This is good news, but August was no doubt boosted by Eat Out To Help Out, we are now heading into ‘flu season and could also be seeing potentially more unemployment as furlough comes to an end. Leisure, hotels and accommodation are still suffering along with airlines and travel agents – the latter two reporting spending down by a whopping 61% in August this year versus last. Given that the Barclaycard figures cover almost half of all credit and debit card spending, the trends they identify are worthy of note. The chief exec of the BRC, Helen Dickinson, was pretty downbeat about the current situation though, observing that “city centre retailers continue to be devastated by low footfall and poor sales, as office workers stayed away for yet another month”.

Retail parks deal is vote of confidence (The Times, Louisa Clarence-Smith) heralds an interesting turn of events as European property investor, M7 Real Estate, has just bought six retail parks for £157m from RDI Reit, a listed landlord. The chief exec of M7, Richard Croft, believes that retail is evolving rather than dying, pointing out that “you still need somewhere to click and collect”. It’s also interesting to note that the fund bought retail property rather than industrial property because it is actually cheaper these days, given that demand for industrial use (for things like warehousing, for instance) is pretty strong. Maybe out-of-town isn’t completely dead after all!

On that front, Primark: UK city centres ‘not dead’ despite Covid crisis (The Guardian, Sarah Butler and Julia Kollewe) shows that the Associated British Foods-owned offline-only apparel retailer is trying to talk a good game about its big city centre stores in London, Birmingham and Manchester despite sales having fallen to 50% of last year’s levels since reopening. On the plus side, out-of-town retail parks actually performed better than expected and took market share from rivals, but then on the other hand, working from home and low tourist levels hit city centre sales. * SO WHAT? * There’s obviously a risk here that stores in central locations will continue to be hit as lockdown = fewer people = lower footfall = lower sales and so there is an argument for the retailer to invest more in out-of-town outlets. Interestingly, it is planning on opening 700,000m² of retail space in the year from mid-September. No doubt it is praying that there won’t be another major outbreak as there still appear to be no plans to build an online presence.

Elsewhere, Morrisons takes on thousands of new staff (The Guardian, Sarah Butler) shows that Morrisons is taking on more employees in line with the expansion of its online service and its increased in-store cleaning requirements. Employee numbers have shot up since the beginning of the year and it joins others such as Tesco, Amazon, AO.com, Kingfisher (owner of B&Q) and delivery firms Hermes and DPD in taking more on as demand increased during the pandemic. The company is to report its numbers this Thursday and it is widely expected that its increased recruitment costs will hit profits.

On the other hand,  Pizza Express hails ‘vital’ CVA but 73 sites are to close (Daily Telegraph, Hannah Uttley and Ben Gartside) highlights the closure of 73 restaurants after landlords overwhelmingly agreed to a CVA, meaning that 1,100 jobs will be at risk. Poorly performing outlets will be closed and it will pay monthly rather than quarterly rent. The tough times continue.

Samsung signs a big deal and China’s top chipmaker suffers…

Samsung seals $6.6bn deal with Verizon as Trump targets Huawei (Financial Times, Song Jung-a) shows that Samsung has just signed a deal with Verizon to build 5G networks in the US in a major snub to China’s Huawei. The contract runs until the end of 2025 and many believe that Samsung will be a net gainer (as well as Eriksson) in the ongoing strangulation of Chinese tech in America. Huawei continues to suffer from US pressure while Nokia is suffering from quality issues. * SO WHAT? * This is a decent win for Samsung, whose presence in the telecoms equipment market is pretty modest with 3% global market share in 2019 versus Huawei on 28%, Nokia on 16% and

Eriksson on 14%. This division could yet prove to be an important growth area for Samsung as the world moves towards 5G, especially as the demand for its smartphones has waned during lockdown.

Shares in China’s top chip maker tumble as US weighs export controls (Wall Street Journal, Joanne Chiu) highlights a massive 23% fall in the share price of Semiconductor Manufacturing International Corp, China’s most advanced chipmaker, after the US government said it was thinking about putting it on the “entity list” (America’s trading blacklist). * SO WHAT? * SMIC relies heavily on US equipment and software and this would be the latest blow to China tech in the country. SMIC rivals Taiwan Semiconductor Manufacturing Co and United Microelectronics Corp may benefit at its expense. Share prices in other Chinese chipmakers – such as Hua Hong Semiconductor – also fell as investors feared further Huawei-like pressure.

The IPO market evolves and law firm winners and losers get wider apart…

This year has upended the IPO in more ways than one (Financial Times, Sujeet Indap) is a really interesting article that looks at the way IPOs have changed during lockdown. Exhausting globetrotting roadshows have been replaced by video calls and traditional flotations have seen more competition from other options such as “direct listings” and “reverse mergers” with “blank check companies” (a Special Purpose Acquisition Company, or “SPAC”) which raise money from investors who then buy other businesses. * SO WHAT? * Although there will always be a place for traditional IPOs, it seems that the rules and available options will continue to evolve.

Pandemic widens gap between law firm winners and losers (Financial Times, Kate Beioley) highlights a widening gap between Magic Circle law firms and smaller rivals such as Travers Smith, Pinsent Masons and Ashurst due to a “flight to quality” and an ability to be more flexible with their cost bases. * SO WHAT? * Work in restructuring, bankruptcy, employment and distressed M&A tends to increase in a downturn and many expect results from many law firms to get worse before they get better because they have yet to fully factor in the effect of the coronavirus. Overall, though, the legal sector has done better than others due to the number of issues that have resulted from the pandemic, ranging from employment law to restructuring.

…in other news…

Today, I thought I’d leave you with what I think is the most unusual idea for a theme park that I’d actually quite like to go to if I could in A chain of “welding theme parks” is opening in Japan (SoraNews24, Casey Baseel). If only they had those over here! I bet the queues are better than Legoland/Disneyland 😂

1. In CONSUMER/RETAIL NEWS, the end of furlough looms for Sunak, the Asda bidding war is set to end shortly, Lidl talks expansion and we take another look at Amazon’s drones
2. In TECH NEWS, Apple is now bigger than the Russell 2000 and Epic Games tries to return to the app store
3. In INDIVIDUAL COMPANY NEWS, vaccine developers gets together and the Qashqai gets delayed
4. AND FINALLY, I bring you a cautionary tale about electric fly swats…

So the end of furlough looms, Asda should get a buyer soon, Lidl wants to make ground and we look at the future of Amazon’s drones…

*** THERE IS GOING TO BE A MAJOR ANNOUNCEMENT TONIGHT ABOUT WATSON’S DAILY. PLEASE TUNE IN FOR MORE ON A ZOOM CALL TONIGHT AT 7.15PM HERE (Meeting ID: 853 6931 8260, Passcode: 087201) ***

Sunak faces job cuts crisis after furlough term ends (Daily Telegraph, Tim Wallace) shows that there are tough times ahead as a survey from BDO showed that 60% of mid-sized UK businesses are expecting to cut staff once the Job Retention Scheme (JRS) runs out at the end of October. Almost 90% of such firms said that they’d already made some redundancies and there are particular fears that certain skills in manufacturing could disappear forever. * SO WHAT? * Let’s remember that this is a SURVEY and is therefore a measure of sentiment. The reality could be vastly different (either way) depending on what the government does and what else is going on in the economy at the time. Of course businesses are going to be painting a dire picture – they want government help (it’s very understandable!). I would have thought that it would be advisable to extend furlough at least in some areas rather than have a hard stop (like with Eat Out To Help Out) because a sudden end could make companies take more cautious actions than they need to, leading to unemployment jumping overnight. This would, in turn, further darken sentiment and lead to a wider downward spiral that could become increasingly difficult to stop.

In the cutthroat world of UK supermarkets, Asda bidding war in final phase as rivals circle (Daily Telegraph, Hannah Boland) highlights that Asda’s future owner could emerge this week as private equity firms fight it out. Apollo Global Management and Lone Star Funds are believed to be preparing offers, with bids due today. There are others believed to be in the running, but Apollo and Lone Star are seen to be the front-runners to buy the business from  current parent Walmart. * SO WHAT? * Walmart has been

trying to offload Asda for the last few years as its international strategic focus has changed (it wants to concentrate its efforts more on growth markets like India, for instance) and the bid by Sainsbury’s fell through. Walmart is thought to want to keep a minority interest in Asda whoever the buyer may be, but we’ll find out terms soon enough.

It’s game on as Lidl steps up expansion plan amid pandemic (The Times, Ashley Armstrong) shows that Lidl wants to use the recession to grow as it did during the last one, when it proceeded to eat incumbent supermarkets’ lunch and tempt customers away. Lidl now has a 5.9% market share and Aldi has 7.9% but I think it’d be fair to say that the “Big Four” (Tesco, Sainsbury’s, Asda and Morrisons) are much more savvy now and won’t give up market share so easily. It is aiming to open a new shop every week and wants to reach 1,000 stores by 2023. * SO WHAT? * Although the company’s physical stores have grown in number since it came to the UK in 1994 to 800 supermarkets, 13 distribution centres and over 23,000 employees, it is still behind the curve on web sales. Interestingly, although the online grocery market has doubled in size since March to 14%, it seems that Lidl will not be chasing despite rival Aldi recently enlisting the help of Deliveroo for deliveries. The company maintains that this is a very expensive way to shop and will make it harder to keep prices low.

Then in Amazon/drones: oops a daisy (Financial Times, Lex) we see a discussion on the implications of last week’s news that the company got approval for a new fleet of drones. Delivering direct to residential areas is problematic given such difficulties delivering to apartment blocks or basement flats but it cites the use of such drones in China where JD.com moves goods from warehouses to “village promoters” who then go “the last mile” and deliver by hand. * SO WHAT? * I think that drone deliveries are still WAAAY off becoming mainstream reality as regulation continues to be very tricky. Although the US FAA gave approval for a drone fleet last week, the practicality may be made trickier in America by the US-China trade spat given that China makes over 70% of civilian unmanned aerial vehicles, with DJI being the biggest maker.

Apple’s valuation comparisons continue to impress while Epic Games pleads for a return to the app store…

Apple’s value vaults over entire US index of small-cap stocks (Financial Times, Robin Wigglesworth) highlights yet another record as Apple’s valuation was briefly larger than that of the entire Russell 2000 index of US smaller companies prior to the Big Tech sell-off last week! The five biggest constituents of the S&P500 are all tech companies: Apple, Amazon, Microsoft, Alphabet and Facebook. * SO WHAT? * This is indeed impressive stuff, but on the other hand their combined outsize influence means that any valuation wobble – as we saw last week – can have a huge effect on the rest of the index. I guess that, at the moment, the outperformance of these stocks covers the woes of many other companies. Unfortunately, if their valuations fall there is the danger that other companies in the index will feel downward pressure no matter how well they do. It is also interesting to note that Apple’s success highlights

the trend of big companies getting bigger while smaller companies are going sideways or getting smaller – and there is even a widening gap between “mega caps” and everyone else.

Given that context, ‘Fortnite’ maker asks judge again to return game to Apple’s app store (Wall Street Journal, Sarah E.Needleman) shows that Epic Games, the maker of Fortnite, is trying to get the judge to make Apple return it to the AppStore. It filed a motion late on Friday seeking a preliminary injunction against Apple, alleging that the latter was engaged in monopolistic behaviour by barring it. Epic revealed that devices running Apple’s iOS system were the largest platform and that 63% of players who accessed the game by such devices only play Fortnite this way. * SO WHAT? * This new filing is in addition to the broader case on anticompetitive conduct scheduled for September 28th and Epic Games says that Apple’s actions have irreparably harmed its business. Given Apple’s size and power, I don’t think that Epic has a chance. At the end of the day, they signed up to Apple’s (and Google’s) terms and they broke them – simple as. The knottier question is whether there is some kind of cartel thing going on as other app stores are charging very similar rates but I would be surprised to see any proper action this side of the presidential election.

Vaccine developers rally and the Qashqai gets delayed…

In Covid-19 vaccine developers prepare joint pledge on safety, standards (Wall Street Journal, Peter Loftus and Jared S.Hopkins) we see that companies including Pfizer, Johnson & Johnson and Moderna are putting together a joint statement to pledge that they will not seek government approval for coronavirus vaccines until they have proven to be safe and effective. This is expected to be made public early next week and is meant to reassure the public that corners won’t be cut in getting a vaccine approved. * SO WHAT? * I think that this is a bit of meaningless PR that is designed to quell rising doubts that vaccines are going to be approved too quickly. Vaccines normally take years to get to market, but current developments imply that this process will be way faster than usual, prompting fears that they will be approved before being fully tested. FWIW, I think that pretty much

everyone is going to have to take vaccines when they come out as I can imagine that there will be some form of official proof that you have submitted to it in order to do things like travel abroad etc. This is just a guess on my part but I can imagine a system of a sort of “vaccine passport” that you will need to show in order to do certain things – it may even be required by employers, for instance, in order to be able to work in an office and could be required to get on a plane and travel to certain countries etc.

Production of Nissan’s UK flagship vehicle delayed further (Financial Times, Peter Campbell) heralds some disappointing news as Nissan has delayed UK production of the new Qashqai until the middle of next year. This is mainly due to the pandemic but it will also give the carmaker time to adapt to any changes to trading rules post-Brexit. Production was originally due to start in October but has been delayed a number of times due to the coronavirus. * SO WHAT? * This will be tricky given the popularity and importance of the Qashqai, but I guess that Nissan is doing the sensible thing by holding off and waiting for more clarity given the uncertain outlook for the car market and wider economy.

…in other news…

Today, I thought I’d leave you with the cautionary tale in Man blows up part of house in France while trying to swat fly (Skynews, Lucia Binding). Just think before you swat…

1. In MACROECONOMIC & MARKETS NEWS, Macron pledges €100bn, UK business slashes investment and US stocks fall
2. In RETAIL & HIGH STREET-RELATED NEWS, European retail sales drop and in the UK, vacant shop numbers rise, Costa makes cuts, Pret does dinner, Co-Op expands and Amazon announces more UK staff
3. In PHARMACEUTICALS NEWS, Pfizer warns against being too hasty while GSK and Sanofi start human trials
4. In INDIVIDUAL COMPANY NEWS, GM and Honda deepen ties and Virgin Atlantic heads for more job cuts
5. AND FINALLY, I bring you burger-in-a-can…

So Macron pledges some wedge, UK businesses get nervy and US stocks weaken on tech…

Macron pledges €100bn recovery fund as France and UK diverge (Daily Telegraph, Tim Wallace) highlights the French government’s unveiling of a €100bn four-year stimulus package – called France Relance (“Relaunch France”) – designed to keep the economy in recovery mode post-coronavirus. The funds will finance green projects, tax cuts and employment support after the economy contracted by a chunky 13.8% in the second quarter. The spending will kick off with cuts to business taxes – France currently has the highest corporation taxes in the OECD at 32% (versus the UK’s 19%), meaning that there is ample scope to cut. * SO WHAT? * The aim here is to get France back to where it was pre-Covid within two years and have enough money left over to help it grow more. Interestingly, not all of this package will be financed by France itself – up to €40bn of this will come from the EU!

UK businesses slash investment as coronavirus crisis bites (Financial Times, Valentina Romei) cites a Bank of England survey which shows that UK businesses are cutting investment plans in the third quarter by 32% on average, with the food and accommodation sector seeing the steepest cuts of 60%. This confirms findings in a recent data release from the Office for National Statistics which showed that just under half of businesses reported turnover below what they usually expect in the two weeks to August 23rd.* SO WHAT? * Although there was a big uptake in government-back loans, businesses remain cautious about the uncertain outlook and prolonged unwillingness to invest could hobble UK industry’s longer term recovery potential. Investment needs at least a degree of certainty – but in the coronavirus era that we are

currently in, there just isn’t any. I think that the government will just have to monitor the situation and perhaps extend payment deadlines and/or offer more money. Like many things, it all depends on the timing of a vaccine!

Then in Tech stocks dive as rally hits reverse (The Times, Tom Howard) we see that American stocks suffered their biggest one-day fall since March 16th in trading yesterday as the tech-heavy Nasdaq dropped by a hefty 5%, which dragged down other indexes such as the S&P500 and Dow Jones. Tech stocks including Facebook, Apple, Amazon, Microsoft and Alphabet all fell between 4 and 8 per cent – and these stocks alone account for almost 25% of the S&P500’s total value. Even Tesla had a bad day yesterday, falling by 9%. Still, The economy is limping, but Wall Street is booming (Wall Street Journal, Liz Hoffman) shows that in all the chaos, investment banking and trading revenues hit eight year highs in the first half of 2020, according to figures compiled by industry research group Coalition. This has been largely due to market volatility (which encourages more trading, which stokes volatility, which encourages more trading etc.), heavy stimulus by the Federal Reserve to prop up the economy and the urgent need by companies to raise cash – fast. * SO WHAT? * FWIW, I think that investors were just taking some money off the table after the latest tech rally – but I don’t think underlying drivers have suddenly changed, so I would expect investors to pile back in again once the dust has had a bit of time to settle. Big Tech stocks now have such an outsize influence on ALL indexes these days that it is no surprise that a big move in the Nasdaq has major knock-on effects on other indexes. I thought it was also interesting to note that some banks are trying to downplay their strong trading performance by saying that it was a blip rather than a trend. On the financing front, I would expect companies to continue to use different ways to raise money – including using the markets in bond and/or equity issuance. However, I imagine that there will be more competition for funding sources from the likes of private equity that can offer different attractions and, if the reports are to be believed, a LOT of money.

European retail sales fall – and in the UK, vacant shop numbers rise while Costa cuts, Pret adapts, Co-Op expands and Amazon hires…

Eurozone retail sales run out of steam as north-south split emerges (Financial Times, Martin Arnold) cites Eurostat figures which show that eurozone retail sales fell by 1.3% in July versus the previous month, with the implication that the recent rebound in consumer spending in the bloc was temporary. The figures also showed that the north-south divide in European economic recovery is widening as German, French and Dutch retail sales stayed above last year’s levels while Spanish, Portuguese and Greek sales fell. * SO WHAT? * Economists were expecting better, so these figures were a blow to expectations. Given the uncertain outlook from here until we get a vaccine, further growth prospects are likely to be muted.

Meanwhile, on the UK high street, Costa to cut 1,650 staff in slump on high street (The Times, Dominic Walsh) shows further evidence of coffee shop carnage as Britain’s biggest operator – owned by Coca-Cola – has made some tough decisions following last week’s announcement by Pret A Manger to cut almost 2,900 jobs. Talking of which, Pret A Manger shifts to dinner deliveries and out-of-town shops (Financial Times, Alice Hancock and Judith Evans)

shows that the London-centric sandwich chain is having to pivot and adapt its offering to survive the lack of office workers in central locations. * SO  WHAT? * Pret has suffered more than other rivals because of its heavy reliance on London and is now having to evolve its offering to provide more hot dinners in the evening and cheaper meal deals. It is also looking at international expansion and providing some of its products to supermarkets. 

On the plus side, Co-Op creates 1,000 jobs and opens 50 new stores in UK (The Guardian, Jasper Jolly) highlights the latest supermarket to announce expansion plans as it responds to the continued trend of consumers shopping closer to home. * SO WHAT? * I think that this is interesting to see given the current backdrop and it also makes me wonder what will happen to independent convenience store owners who could potentially get squeezed out by bigger players such as the Co-Op snapping up properties (presumably on the cheap given current high street decimation). The danger is that they will not get bought out themselves because there are arguably plenty of sites to choose from.

Another retail story doing the rounds today is Amazon creates 7,000 more UK jobs to meet online boom (The Times, Simon Duke) which shows that the e-tailing giant has announced plans to respond to increasing demand for online shopping by hiring more employees and increasing its UK headcount to over 7,000. ONS figures show that online spending rose by 50.4% between February and July and now represents 28.9% of total retail sales. Amazon’s stellar growth continues!

Pfizer warns against hasty vaccine approval while GSK/Sanofi starts human trials…

In Pfizer boss warns on risk of fast-tracking vaccines (Financial Times, Hannah Kuchler) we see that Pfizer’s chief exec, Albert Bourla, is warning about the risks of fast-tracking a Covid-19 vaccine approval as pressure mounts on pharma companies to come up with the goods. He said that his company would never submit a vaccine for authorisation before it was fully ready and his comments play against a backdrop where the US government seems to be preparing to distribute a vaccine just before the presidential election in November. * SO WHAT? * I think that you should, from now, expect mass @rse-covering PR

from pharma execs who want to make sure that they won’t be blamed for pumping out vaccines that don’t work or have bad side effects. This is completely understandable especially given that search, production and distribution has become highly politicised in the run-up to a presidential election. Tough times.

Meanwhile, Glaxo and Sanofi start human trials in the US of coronavirus vaccine (The Times, Alex Ralph) shows that both companies are starting human trials of their vaccine with results expected in December. If this goes OK, there will be more widespread testing and if that goes OK, companies could seek regulatory approval in the first half of next year. Fingers crossed 🤞! * SO WHAT? * There are currently over 200 vaccines in development around the world but the drop-off rate is high, so it’s wise not to put too much hope in individual candidates – which is why governments and investors alike are spreading their money around in an attempt to find the “winners”.

GM and Honda deepen ties while Virgin Atlantic heads for more job cuts…

In other news, GM, Honda deepen ties, plan joint vehicle development (Wall Street Journal, Mike Colias) highlights the latest joint venture between car makers as they all bid to lower costs by sharing things. They announced an alliance that will involved increased co-operation on

engineering, components and parts purchasing among other things. Honda said it wanted to drive through big cost savings in North America while maintaining its own offerings there.

Then in 1,000 face the axe at Virgin Atlantic in rescue deal (Daily Telegraph, Oliver Gill and LaToya Harding) we see the latest job cuts in a decimated and increasingly decimating sector as part of its £1.2bn rescue deal. This will mean that the company’s pre-covid 10,000 employees will have been cut in half 😱. Short term pain for long term survival or death of a thousand cuts??

…in other news…

Today, I thought I’d leave you with something that’s rather bizarre in Gourmet Japanese hamburger steak in three-year-shelf-life can: Genius or madness? Let’s find out! (SoraNews24, Casey Baseel). Burger-in-a-can, anyone??

1. In CONSUMER/RETAIL NEWS, we take a look at what consumers are and aren’t spending their money on as Macy’s in the US has a bumpy recovery
2. In CAR NEWS, investors scramble to find the next Tesla, electric cars sales stall in the UK and Ford aims to make more cuts
3. In TECH NEWS, India bans more Chinese apps and Apple joins others in passing digital tax on
4. In INDIVIDUAL COMPANY NEWS, Lego triumphs, Juul considers its future and the Gym Group goes on the offensive
5. AND FINALLY, I bring you the hilarious Uncle Roger…

So we see what consumers are and aren’t spending their money on while Macy’s paints a mixed picture…

*** It’s Thursday today, which means that it’s time for the Zoom call! This is where I do a roundup of the week and then give you the chance to ask me anything! Click HERE to do the call at 5pm TODAY! ***

House prices hit record high after easing of lockdown (The Guardian, Jasper Jolly) shows that UK house prices have made up for their lockdown losses with August experiencing the steepest price rise for 16 years, according to the latest Nationwide building society figures. Nationwide’s chief economist says that “behavioural shifts” (e.g. more working from home and an increasing desire to have a garden) may have boosted activity. * SO WHAT? * Whatevs. The MAIN reason for this boost is Rishi Sunak’s freebie 😂! Although I think that there’s a certain amount of pent-up demand that got caught up in the lockdown that I would class as “real” demand, activity has certainly been boosted by the stamp duty holiday and super-low mortgage rates. I would imagine that the next big event is going to be the end of furlough – if it’s “soft” (phased out gradually and/or industry-specific) the resulting drop-off may not be too bad, but if it’s “hard” (a sudden end to government payments) I would expect housing activity to fall off a cliff. In the meantime, if you have a decent steady job and are ABLE to move, there will be a lot of options open to you.

So although UK consumers may be spending on houses, they are not spending money flying away on holidays or business trips – Heathrow to cut workforce by up to 25pc after £1bn loss (Daily Telegraph, Oliver Gill) and United plans to cut more than 16,000 staff (Wall Street Journal, Doug Cameron) will attest to that – or even on travelling to

work, as per Rail passengers down 3m on last year despite return to office plea (The Guardian, Gwyn Topham).

Department for Transport figures published last week showed that train journeys on Monday 24th August were just 38% of 2019 levels. Consumers also appear not to be spending on the high street, which is resulting in Empty shops on UK high streets at highest level in six years (The Guardian, Sarah Butler) although Eat Out to Help Out scheme serves up 30% spending boost (The Times, Philip Aldrick) cites the latest Barclaycard figures which show that spending on dining out jumped by over 30% last month. Interestingly, there are signs that normality is starting to return as dining out from Thursday to Sunday also rose by 33%. Given that Barclaycard processes almost 40% of all UK transactions, this is an indicator to be taken seriously. Still, the spectre of no more furlough in the near future could put the dampeners on too much optimism.

Meanwhile, across the Pond, Macy’s posts $431million loss as stores continue recovery (Wall Street Journal, Charity L.Scott) highlights a gaping first quarter loss for the struggling department store chain despite sales actually turning a corner. The company’s interim CFO said that the results were stronger than forecasted as a result of better digital sales along with a faster-than-expected recovery of stores and luxury goods sales. However, Macy’s: thanks, but no thanks (Financial Times, Lex) strikes a more sceptical tone, pointing to the problems Macy’s was facing before coronavirus hit and to the fact that fellow department stores JC Penney, Neiman Marcus, Stage Stores and Lord & Taylor have all filed for bankruptcy during the pandemic. * SO WHAT? * Cutting jobs, closing stores and raising $1.3bn in a bond offering are all positive moves, but could ultimately prove to be a case of just moving the deck chairs on the Titanic, especially if the upcoming holiday season proves to be a dud. I would suggest that the same is more or less true for many analogue department stores operating in an increasingly digital world.

Investors try to find the next Tesla, UK sales of electric cars weaken and Ford makes more cuts…

Given Tesla’s rip-roaring success, it’s perhaps unsurprising to see Investors pour cash into Chinese start-ups in hunt for next Tesla (Financial Times, Christian Shepherd and Peter Campbell) as they pile into companies like Xpeng Motors (up 40% on its New York trading debut last Friday!) and Li Auto (up almost 70% since July!) are getting the benefit – and even Nio, which had been struggling, is now rising from the ashes. Optimists say that they will benefit from a strengthening Chinese EV market but pessimists say that the boom may be too early as there are still issues with China’s charging infrastructure and an increasingly crowded market comprising of both domestic and international players. When you see stories like Tesla’s biggest independent investor cuts stake in electric carmaker (Financial Times, Chris Flood) talking about Scottish fund manager Baillie Gifford selling off a bit of its stake in the company, generating a $17bn profit from its investment in the process, you can understand why investors are chasing The Next Big Thing!

Mind you, Appetite for electric cars in UK wanes as pandemic squeezes finances (Financial Times, Peter Campbell) cites a survey by Auto Trader which shows that the number of respondents expressing an interest in buying an EV has dropped sharply since the beginning of the year. In January, 16% said that they were planning on buying a battery-only car but in August only 4% said they were thinking of doing so. * SO WHAT? * Although buying electric is generally expensive up front, this is normally mitigated by savings in fuel and running costs during the course of ownership. In this case, though, respondents cited changing personal finances as the main factor behind this change of heart and an increasing unwillingness to splash out a large lump sum in uncertain economic circumstances. It seems that we are not going electric just yet…

Then in Ford looks to trim 1,400 salaried employees in US through buyouts (Wall Street Journal, Micah Maidenberg) we see that Ford is planning on cutting more employees by offering buyouts to employees who are eligible to retire as of December 31st. This comes in addition to the 7,000 already axed last year globally. The tough times for carmakers continue…

India takes another swipe at Chinese apps and Apple joins Google in passing on digital taxes…

Following on from recent moves to ban Chinese apps in India following skirmishes between Indian and Chinese troops on the Himalayan border, it seems that things are getting increasingly feisty in India bans 118 Chinese apps as Himalayan border tensions surge (Financial Times, Amy Kazmin and Christian Shepherd) as the country goes even further, banning Tencent’s massively popular PUBG Mobile game. Apps owned by the likes of Tencent, Alibaba and Baidu were accused of “stealing and surreptitiously transmitting” Indian user data to China. * SO WHAT? * Tensions continue to rise between the two nuclear-armed

countries and India has imposed other anti-Chinese measures such as placing new restrictions on Chinese investment and ordering telecoms operators to phased out Chinese telecoms equipment from their networks. Although these things can potentially be reversed, ultimately it may make growth harder for Chinese companies in India. Given the market potential there, this really could prove to be a spanner in the works for overseas growth for Chinese companies – but this could, in turn open the door for other overseas operators – such as Google and Facebook – to make decent inroads.

Following on from Google’s announcement that it would pass on any new digital taxes to advertisers, Apple joins other tech titans in passing digital levy buck (Daily Telegraph, James Titcomb) shows that Apple will pass any increased costs onto app developers. Because they just can…

Lego triumphs, Juul considers and the Gym Group gets active…

In other news doing the rounds today, Lego builds up online sales as profits increase by 11pc (Daily Telegraph, Simon Foy) highlights a bumper first half from the toy manufacturer. Sales increased by over 10% in the major markets of Europe, Asia Pacific, the Americas and China. They did particularly well from digital sales under lockdown.

Elsewhere, Juul to cut more jobs, explore exiting Europe and Asia (Wall Street Journal, Jennifer Maloney) shows that things continue to change drastically for the e-cigarette supremo Juul as it plans another big round of layoffs and market retreats (it already cut about a third of its workers at the start of this year). It is considering pulling out of up to 11 countries and sticking with the US, Canada and UK. The carnage continues!

On a healthier note, Gym Group targets empty retail sites (Financial Times, Alice Hancock) shows that the budget gym operator is looking to buy up sites abandoned by distressed retailers as the number of new members increases and its finance re-jigging starts to kick in.

…in other news…

You may be aware that I took last week off 😱😱😱, but during that time, you will be glad to know that I spent the odd minute here and there on YouTube. Now I’m probably a bit late to this party, but I thought I would introduce you to a hilarious character called “Uncle Roger” who clearly likes egg fried rice 👍. Although he is a comedy character, I wholeheartedly agree with his assessment of Jamie Oliver’s recipe HERE. This guy (played by comedian Nigel Ng) is a genius 😂!

1. In MACROECONOMIC NEWS, China exports rise, the Eurozone dips into deflation and Brazil enters recession
2. In CONSUMER/RETAIL NEWS, UK mortgage approvals rise, Dunelm benefits, Ocado has a rough first day with M&S, Debenhams edges towards oblivion, Morrisons champions flower power, Ted Baker sees a return and B&M moves up
3. In TECH NEWS, the TikTok purchase gets trickier, Google aims to pass on any digital tax and Apple’s valuation reaches new heights
4. In INDIVIDUAL COMPANY NEWS, Tesla raises more money (just because it can)
5. AND FINALLY, I bring you the right way to eat McFries…

So China exports rise while the Eurozone sees deflation and Brazil hits recession…

New export orders boost China output (The Times, Martin Strydom) cites the latest Caixin/Markit manufacturing purchasing managers’ index which shows that manufacturing activity in China grew at its fastest rate since January 2011. * SO WHAT? * This is good news as it implies that manufacturing activity is getting back on track. Given that China was the first to shut down in the coronavirus outbreak, everyone is looking very closely at how it progresses towards normality.

In Eurozone slides into deflation for the first time in four years (Financial Times, Martin Arnold) we see that the latest figures from Eurostat show that the pressure is building on the European Central Bank to get more involved in helping the bloc’s economic recovery. Headline

consumer price inflation was -0.2% in August versus +0.4% in July – something that will no doubt feature at next week’s ECB policy meeting. For now, the fall was blamed on weaker oil prices, Germany’s cut in VAT and delayed summer sales in France, Italy and Belgium.

Coronavirus tips Brazil into recession (Financial Times, Bryan Harris) shows that Brazil’s economy has now officially entered into recession in spectacular fashion with Q2 GDP figures experiencing their worst fall in any of the nine recessions it’s had in the last 40 years. * SO WHAT? * Impressive, but join the club – everyone is hurting! Many are hoping that these disastrous Q2 figures signal the low point in the coronavirus aftermath but there are concerns that President Jair Bolsonaro may just start trying to spend his way out of recession – something that may prompt capital outflow from the country from overseas investors given that a spending cap imposed by the constitution will be breached (investors don’t like uncertainty). There is also some uncertainty surrounding the immediate future Brazil’s finance minister, Paulo Guedes, who is more cautious on the spending front – which isn’t going down well with Jair “Tropical Trump” Bosonaro. 

UK consumers spend, Ocado has a rough first day, Debenhams looks even shakier, Morrisons says it with flowers, Ted Baker sees a return of sorts for the founder and B&M gets promoted…

Following on from yesterday’s news about car finance applications rising sharply, Mortgage approvals rise points to recovery (The Times, Philip Aldrick) shows that consumers are spending on pretty much the biggest ticket items most people ever get as mortgage approvals have now recovered to their pre-pandemic levels. This is probably almost entirely due to Rishi Sunak’s stamp duty holiday but this trend is being echoed in the latest consumer credit and deposit data as well. Dunelm benefits from home spending boom (Financial Times, Patricia Nilsson) shows that the home furnishing retailer is doing well due to all this house buying activity as well as people getting bored of staring at the same sofa/cushions etc. during lockdown. The company remains cautious on the outlook, however, as the prospect of further future lockdowns could scupper a longer term recovery. * SO WHAT? * Sunak’s stamp duty holiday appears to be working a treat for the housing market – and anyone related to this will also recover as a result. Traditionally, DIY stores, soft furnishing specialists and, to a certain extent, electrical retailers tend to do well in a buoyant housing market as movers use the opportunity to buy new stuff and non-movers spruce up their homes. The market got an “artificial” kick up the backside courtesy of the government and the party will last at least until the deadline comes next year. What happens after that will depend on whether there is a hard or a soft deadline and what else is going on for the consumer at the time (which may itself depend on what happens when furlough ends). As a quick aside, it’s interesting to see movement in the property market whilst at the same time landlords are suffering with lack of government support. I wonder whether a “side benefit” of the current circumstances from Sunak’s point of view is that multiple homeowners are being shaken out, potentially giving individuals more chance at the entry end of the market. Thus far, private landlords have provided stiff competition at the part of market populated by first-time buyers, so their current pain regarding lack of rental payments may result in a thinning out of such competition. Just a thought…

Elsewhere in retail, First day of Ocado M&S deliveries marred by cancellations (The Guardian, Sarah Butler) highlights a tricky first day for “Mocado” (that’s my name for the venture😁) as reports of late order cancellations and inability to get new delivery slots for a week surfaced on social media. * SO WHAT? * The fact is that the launch was very popular. Also, on a first day, glitches were bound to happen IMO. However, if this continues, what was seen as a dream combo could turn into a nightmare. Let’s hope that this was all down to first day nerves – otherwise M&S really will go down the toilet!

Speaking of things going down the toilet, Debenhams’ deadline for bids passes as final collapse looms (The Times, Ashley Armstrong) shows that yesterday’s 5pm deadline for bids has now passed. Given that the company wanted to sort out a deal by the end of this month, things aren’t looking great, especially as it seems that it has not being paying rent, rates or suppliers whilst simultaneously shutting down stores. Talk about the death of a thousand cuts! I would put my money on liquidation and Mike Ashley (CEO of Frasers Group, owner of House of Fraser) cherry-picking stores.

Elsewhere in retail, Morrisons doubles in-store flower stalls to meet demand (The Guardian, Sarah Butler) highlights Morrisons’ intentions to double the number of flower stalls in its supermarkets, taking on some professional florists who may have suffered in the coronavirus shake-out, Ray Kelvin nominee takes place on Ted Baker’s board (Daily Telegraph, LaToya Harding) heralds a return of sorts for Ted Baker’s founder who still owns 12% of the business – although he will not be taking on a day-to-day role himself. Remember he’s the guy who had to make an embarrassing exit following allegations of enforced hugging, getting employees to sit on his lap etc. He IS the genius behind Ted Baker, whatever his foibles, and since his departure in 2018, the company has fared disastrously.

Then in B&M to enter FTSE100 as ITV changes channels (Financial Times, Jonathan Eley and Patricia Nilsson) we witness a historic moment as the discounter makes it to the big leagues, displacing ITV in the FTSE100’s quarterly shake-up. Great for B&M (more exposure, prestige – and buyers of shares!), embarrassing for ITV.

TikTok hits a major snag, Google aims to pass on tax costs and Apple’s valuation goes ballistic…

TikTok deal talks are snarled up over fate of app’s algorithms (Wall Street Journal, Liza Lin, Aaron Tilley and Georgia Wells) highlights a major spanner in the works for the TikTok sale negotiations as the Chinese government issued new restrictions on the export of AI tech at the end of last week. * SO WHAT? * TikTok’s algorithms that decide which videos are recommended to users are widely seen as its “secret sauce” and, as such, will at the very least put a lower ceiling on a selling price – and which could actually spoil the whole sale. TikTok’s owner ByteDance is seeking clarity, but TBH I can see any protestations falling on deaf ears as the government doesn’t like ByteDance and may be willing to sacrifice it as an example to others. In the meantime, I think that Instagram Reels will continue to pick up the slack…

Google to pass cost of digital services taxes on to advertisers (Financial Times, Alex Barker) shows that the tech giant intends to brush off any digital services taxes in Europe by passing them on to advertisers from November. The price of serving an ad on Google will, for instance, increase by 2% in the UK and 5% in Austria. * SO WHAT? * Given Google’s size and power, it can do things like this and not take the hit. Will it mean that companies will do their advertising instead by traditional means? I think not.

Then I thought I’d mention Apple now outguns all of the FTSE100 put together (Daily Telegraph, Matthew Field and Louis Ashworth) as it highlights the fact that Apple is now worth more than all the companies in the FTSE100 put together! Mad, huh?! Incredible 😱 – and just a bit ridiculous IMO.

Tesla raises even more money (because it can)…

Tesla aims to raise $5bn in its biggest issue of new stock in a decade (The Guardian, Mark Sweney) shows that the electric car company announced intentions to raise up to $5bn, taking advantage of a nigh-on 1000% share price surge over the last year and comes one day after it

completed its 5-for-1 stock split. The company didn’t reveal any details about what it was going to do with the $5bn. * SO WHAT? * Tesla is clearly an impressive company and retail investors in particular seem to love it. However, the fact remains that it sports a huge valuation for a company that doesn’t actually sell very much! Still, I guess everyone is buying it for the future…

…in other news…

I thought I’d bring your attention today to McDonald’s show right way to eat ketchup and fries – and we’ve all been doing it wrong (The Mirror, Paige Holland). Well I never!

1. In MACROECONOMIC, MARKETS & OIL NEWS, India has a GDP shocker, global markets have a stellar August and oil prospects improve
2. In CONSUMER-RELATED NEWS, white-collar jobs lag, landlords suffer, Swissport and Addison Lee turn to job cuts while car finance applications rise
3. In RETAIL NEWS, Amazon gets drone approval and M&S kicks off with Ocado
4. In INDIVIDUAL COMPANY NEWS, Zoom raises its outlook again, Apple and Tesla continue to benefit from their stock splits while Nestlé makes an acquisition
5. AND FINALLY, I bring you a racing duck…

So India suffers, markets prosper and oil prospects depend on a vaccine…

*** I’M BAAAACK! I hope you haven’t missed me too much since I was off last week! You will be glad to know that I caught up on a load of sleep in the meantime 👍 ***

India’s economy contracts 24% during coronavirus lockdown (Financial Times, Amy Kazmin) highlights disastrous economic figures as the country’s GDP contracted by an annualised 23.9% in the quarter ending in June – way more than analysts were expecting – and it is also on track to overtake Brazil in terms of cumulative Covid-19 cases, making it second only to the US. * SO WHAT? * India’s economy was losing momentum even before the pandemic hit and Modi’s draconian anti-Covid actions seem to have not only decimated the economy – they also failed to contain the virus. Just to give you an idea of scale, India’s construction output fell by half and manufacturing output fell by 40% during lockdown. On the other hand, agriculture was a rare positive as it expanded by 3.4% due in some part to farmers being allowed to get back to work before many others. Clearly this is a shocking performance but given that India is the world’s second most populous country (China is the #1, the US is #3 and Brazil is #6, according to figures from Worldometer), I don’t think that it should be too surprising. The government’s chief economic adviser, K.V. Subramanian, told local TV that “the worst is over and the V-shaped recovery can continue” but others, such as investment bank Nomura, believe that the rebound is actually slowing down. The pressure is increasing on the government to provide more of a helping hand to struggling Indians.

In Global equities complete hottest August since 1986 (Financial Times, Adam Samson, Hudson Lockett and Richard Henderson) we see that markets around the world trended higher over August for over three decades. The combination of a weaker dollar, co-ordinated fiscal and monetary stimulus and the recovery of major global economies put the boosters under global equities during a month that is usually pretty quiet. * SO WHAT? * Given that the world tends to follow the US, there are two big tests on the horizon regarding the sustainability of the current rally. One is the next meeting of the US Federal Reserve – where everyone will be hoping for more stimulus measures to be announced – and the other is the presidential election in November. If the result of the latter is close, then months of political wrangling are likely to follow – which could scupper any major policy changes and scare off investors (which will hit markets). I would also add that perhaps China’s apparent recovery, according to recent official figures, is also adding to the feelgood.

Then in Vaccine to be shot in the arm for oil (The Times, Ben Martin) we see that Goldman Sachs is forecasting a Brent crude oil price of $65 a barrel by the third quarter of 2021 powered largely by the prospect of a vaccine prompting a boost to global trade. * SO WHAT? * I think anyone with half a brain cell could have told you that global economies will improve with the advent of a vaccine, the implication being that a recovery in economic confidence will boost trade. This will, in turn, boost oil demand as goods fly and sail around the world in increasing quantities. The main point of note here is that this brings forward Goldman’s initial expectations of recovery. Oil majors such as BP and Royal Dutch Shell will be praying they are right as they have, along with many others (especially shale producers) suffered a great deal due to oil price weakness this year.

Job prospects vary but more punters want to buy cars on finance…

Low demand for UK office workers reveals ‘asymmetric recovery’ (The Guardian, Jasper Jolly) shows that job recovery is patchy since lockdown has eased with LinkedIn Data revealing that jobs in white-collar areas – such as media, software and finance – has lagged other sectors. For instance, the new job rate for transports and logistics workers has climbed by 18% year-on-year while demand has also increased for delivery drivers and workers in areas such as healthcare and construction. Perhaps unsurprisingly, the leisure sector has been among the hardest hit areas. Separately, data from the jobs website Indeed show that new job postings are still far below what they were last year but they are showing signs of improvement. * SO WHAT? * This is, I think, to be expected, but I would caution against relying too much on data from LinkedIn because I think that its coverage can be patchy as not everyone uses it. I think it’s also difficult to tell trends on a per-industry basis because not ALL people in finance use LinkedIn ALL of the time, for instance. I used to be a headhunter for a number of years in the investment banking industry and I can tell you now that there were whole swathes of areas where employees did not bother with LinkedIn (and if they did, they didn’t always update it!). Indeed is perhaps a bit more reliable because it is broader, but even then they are talking about job postings. They will be very strong in a tight labour market, but I would also imagine that if you are, say, a delivery driver, your employer will probably ask you to recommend your mates first before spending money on posting a job ad at the moment. At least both LinkedIn and Indeed are saying that the job market is turning up – but then again many are forecasting a doubling of unemployment when the government withdraws wage support in November.

Government U-turn is a nightmare for landlords (Daily Telegraph, Ben Beadle) highlights the current plight of landlords after extending the ban on repossessions by one more month in order to protect renters. Government data shows that 94% of private landlords are individuals, many of whom have invested money in one or two properties as a pension. 60% of landlords have a gross non-rental income of less than £20,000 and so many do not have the

reserves to weather the current crisis. Some will face a double-whammy of being made homeless and then further legal action if they can’t meet certain legal requirements regarding their property. * SO WHAT? * OK, so this article was written by the chief exec of the National Residential Landlords Association, so it’s his job to represent his members and paint as bleak a picture as possible, but it is still worth considering that landlords who were previously sitting pretty on their investments got a very rude awakening due to the effects of the coronavirus. Calls will be increasing on the government to step in to protect landlords as well as tenants, but I imagine that they are not going to be high on the government’s list of priorities.

There’s more bad news on the jobs front in Thousands of jobs at risk despite rescue in the bag (The Times, Callum Jones) as Swissport, one of the UK’s biggest airport baggage handlers, has warned that between 3,500 and 4,500 staff could lose their jobs unless the government extends the current furlough scheme. And this is despite having successfully negotiated a €1.9bn rescue deal with creditors. Taxi firm Addison Lee accelerates job cuts (Daily Telegraph, Ed Clowes) piles on more misery as it said that it could cut up to 10% of its workforce to save money as the evaporation of international and corporate travel has hit it particularly hard. The tough times continue…

Meanwhile, UK car finance applications rise by quarter in July and August (Financial Times, Peter Campbell) shows that although the economy out there is looking pretty shaky, some consumers are going out there and buying cars. * SO WHAT? * Some of this is due to pent-up demand that built up over lockdown and some of it is due to people wanting to avoid public transport in increasing numbers. There are those, of course, who have continued to work under lockdown and saved enough money to buy. Let’s not get too excited here, though – yes, car sales were up by just over 24% from July 1st to August 24th VERSUS THE PREVIOUS YEAR, but sales overall IN THE YEAR SO FAR are still way less than they were in 2019. July and August are traditionally weak months as buyers tend to wait for the new registration in September so the figures look more flattering than they actually are – so car dealers should keep the champagne on ice for now. It’ll be interesting to see what new car registrations are like this month but I think that the fate of furlough is likely to be more of an accurate indicator of where the car industry is going to be heading.

Amazon gets some good news and M&S kicks off with Ocado…

Amazon gets US approval for drone fleet, a package-delivery milestone (Wall Street Journal, Sebastian Herrera and Andy Pasztor) highlights an exciting development as the e-tailing behemoth said it got approval from the Federal Aviation Administration to establish a fleet of delivery drones. Having said that, they will still have to go through many more hoops before they get the green light for widespread use. At the moment, the company can only perform tests involving customers from the UK and US –

so it’ll be a while yet before we get drone delivery! Exciting, though, no? Also, this will potentially be very exciting for drone manufacturers – but it’ll be a slow burn, I think.

Percy Pig hits the roads as M&S deliveries by Ocado begin (The Guardian, Mark Sweney) highlights today as being the first day for Ocado delivering M&S food, rather than Waitrose’s. * SO WHAT? * Waitrose is going it alone after its 20-year association with Ocado as M&S is now being dragged up to date with online shopping trends via the Ocado venture after years of being on the sidelines regarding its online shopping capability. About blimmin’ time! You will be seeing a lot of Percy Pig branded Ocado vans travelling around now! M&S “just” needs to sort out the rest of its business now…

Zoom lifts expectations again, stock splits continue to benefit Apple and Tesla while Nestle makes an acquisition…

In other news doing the rounds today, Zoom again lifts full-year outlook as sales surge during pandemic (Wall Street Journal, Kimberly Chin) shows that the company continues to knock it out of the park as it lifted its full-year forecasts for the second time during the pandemic and Apple, Tesla shares keep rising after stock splits (Wall Street Journal, Karen Langley) shows that these winners just keep winning in the share price stakes following the 4-for-1 and 5-for-1 respective splits that came into effect after the market close on Friday. Nice!

Then in Nestlé agrees $2.6bn deal for Aimmune Therapeutics (Financial Times, Alice Hancock) we see that Nestlé’s health division got a boost by buying the biopharm company Aimmune Therapeutics that will strengthen its presence in food allergy prevention. Still, Nestlé/biotech: peanut gallery (Financial Times, Lex) says the acquisition is a big gamble but then again up to 240m people suffer from food allergies on a global basis, according to the World Health Organization, so there is some logic to this purchase. It’s just that Aimmune has made no sales as of yet (although the company shows potential having recently won US approval for its peanut allergy treatment) and it is likely that the investment will take some time to pay off.

…in other news…

Did you see David Attenborough’s Planet Earth: A Celebration last night? If you didn’t, you need to watch it on iPlayer. There were so many examples there of nature vs nature – and it was incredibly fascinating. Sometimes, though, nature decides to compete with man – and there’s a great example of it in Daredevil duck races cars down the motorway at 60mph (Metro, James Hockaday). Amazing!

1. In RETAIL/HIGH ST/CONSUMER NEWS, Alibaba sees stellar online sales, House of Fraser hustles, Asda has suitors and car sales rise
2. In LEISURE NEWS, Genting Hong Kong signals more cruise operator woes, nightclubs face ruin and ‘EOTHO’ gives a seaside boost
3. In TECH NEWS, Huawei employees worry and newspapers join in against Apple
4. In INDIVIDUAL COMPANY NEWS, Uber and Lyft get a reprieve and Estée Lauder announces job cuts
5. AND FINALLY, I bring you an amazing traditional craft and a WHF option…

So Alibaba triumphs, House of Fraser warns of closures, Asda attracts suitors and car sales rise…

*** I am going to be OFF between August 24th and 28th 😱. My wife has even banned me from the study so I cannot get to my laptop! Normal service will be resumed on Monday 31st August! See you then! ***

Alibaba’s online orders soar during coronavirus, fueling a sales recovery (Wall Street Journal, Liza Lin and Dave Sebastian) highlights a stellar Q1 profit for the e-commerce giant as its profits more than doubled versus the same period in the previous year. It benefited from more shoppers buying daily necessities and revenues rose by 34%, above market expectations. Revenues were also strong in its cloud-computing segment as businesses increased their efforts to digitise. * SO WHAT? * Chinese consumers are already the worlds biggest online shoppers but the pandemic has accelerated a trend for older consumers and those in smaller cities to buy more online. These results mark a solid rebound from the tricky January-March quarter when Alibaba’s profits were hit by falling valuation of its public investments. It remains to be seen how escalating US-China tensions will impact companies such as Alibaba.

Then in a sign that there is some consumer confidence out there, UK car dealer sales rise as Covid drives people from public transport (The Guardian, Jasper Jolly) cites the latest figures showing that car dealerships are reporting a rise in new and used vehicle sales in July as people continue to avoid public transport. Even the struggling Lookers chain said sales across new and used cars were up by 17% and Vertu, the UK’s #5 car dealership, said new car sales were up by 18% in July versus July 2019 and secondhand sales by 14%. * SO WHAT? * I’ve said before not to get TOO excited by these figures because July and August are typically slower months as new car buyers prefer to wait for the “new” registration plates in September. The whole industry is on tenterhooks regarding sales in that month and thousands of jobs will depend on how sales go.

Mike Ashley warns of store closures at House of Fraser despite expected profit rise (Financial Times, Jonathan Eley) highlights tricky times ahead as Frasers’ CEO Mike Ashley warned of more store closures when the business rates holiday finishes in March 2021. At this point they will be payable once more but based on 2015 rental values until they get reviewed in 2023! The company reported strong full-year results and forecast a rise of up to 30% of underlying profits for the full year. Ashley also announced a £100m investment in improving the company’s digital capability spread over the next three to four years. * SO WHAT? * Ashley has been extremely vocal for quite some time now on the whole business rates thing and it will be interesting to see whether anything actually changes. I guess that the easiest thing for the government to do would be to extend the holiday across the board or target specific categories of store that need more help – but there’s a while yet before the deadline. It’s interesting to see that he has been building stakes in other luxury businesses that will bolster his luxury segment – he’s bought 12.5% of Mulberry so far this year and is working on Hugo Boss.

Veterans go head to head in £6bn battle for Asda (The Times, Ashley Armstrong) shows that two parties are competing to buy Asda from parent company Walmart. Private equity firms Lone Star and Apollo Global Management are being advised by Paul Mason (CEO of Asda 20 years ago) and Rob Templeman (former chief exec of Debenhams) respectively. Asda is the UK’s #3 supermarket chain and has been owned by US retailer Walmart since 1999. Walmart’s overseas strategy has changed in the last year or so and it almost offloaded Asda to Sainsbury’s in what eventually ended up as a failed bid. It still wants to keep a minority stake in Asda as it sees a private equity deal as a stepping stone to a public listing in a few years’ time. It is rumoured that Walmart has given bidders until September 7th to table proper bids. * SO WHAT? * Loads of private equity firms expressed an interest in Asda initially, but it seems that many eventually got cold feet because of Asda’s low margins and the uncertainty of prospects for British retail in general. There are fears out there that further weakness under a coronavirus-induced recession could trigger a price war that could decimate already-thin margins.

The cruise industry gets another blow, nightclubs face ruin and Eat Out To Help Out gives some cause for hope…

As if things weren’t bad enough already for the industry, Cruise ship operator Genting Hong Kong halts payments on debts (Financial Times, Thomas Hale) shows that Genting Hong Kong, one of the territory’s biggest cruise ship operators, is now suspending payments on debts of nigh on $3.4bn as it seeks to restructure its debt. Genting was previously known as Star Cruises and is listed on the Hong Kong Stock Exchange – and its share price cratered by 38.5% on this news. * SO  WHAT? * The company previously issued a profit warning for the first half but I have to say that things aren’t looking good for the future. The whole industry has been absolutely decimated by the pandemic and I don’t even think there’s that much scope for consolidation with rivals because they are all “in the same boat”. The only thing I can think of that could save them is if a business came along that wanted to start afresh with cruises. If that happened, it would probably have its pick of boats/ships/vessels (or whatever they call them!) given that other operators will be wanting to offload. I would have thought this is an industry that even private equity firms would deem to be a step too far…

Back in the UK, UK industry facing ‘financial armageddon’ (The Guardian, Rob Davies) highlights the plight of nightclub owners who feel left out from government incentives such as “eat out to help out” among other measures. Over 50% of the members of the Night Time Industries Association (NTIA) say they think their businesses will fail within the next two months unless they get more government support. * SO WHAT? * The NTIA warned that this could put over 754,000 jobs in jeopardy and operators in smaller towns are likely to be particularly hard hit. Clubs are expected to be the last entertainment venues to be able to reopen as part of ongoing government efforts to contain the crisis. The tough times continue.

On a brighter note, Bournemouth among beneficiaries of ‘eat out to help out’ scheme (The Guardian, Richard Partington) shows that seaside towns are among the biggest beneficiaries of the “eat out to help out” initiative, according to the research conducted by the Centre for Cities thinktank, as people were encouraged to return to town centres. Larger cities did not do so well but Franco Manca chief hails Government’s ‘eat out’ deal (Daily Telegraph, Hannah Uttley) highlights the success of Franco Manca and The Real Greek owner Fulham Shore thanks to the scheme. Chief exec David Page said that the initiative has not so far had much of a detrimental effect on weekend trade – something he had been worried about when the scheme first started. He added that the scheme had encouraged diners to order more and tips for waiters and kitchen staff had increased.

Huawei employees face uncertainty and newspapers join in the Apple debate…

Huawei employees worry about lay-offs after tougher US sanctions (Financial Times, Ryan McMorrow) shows that employees of the embattled tech giant are getting more worried by the day about job losses following Trump’s tightening of loopholes this week. Both employees and analysts are concluding that the ban on using US tech in its products could effectively close down the smartphone and 5G equipment businesses and also impact cloud computing, gaming and virtual reality units. * SO WHAT? * Huawei earned 65% of its revenues overseas in 2013 versus 41% last year and the current US tensions could make matters much worse. Having said that, some in the company say that they have been getting used to Trump’s

shenanigans over the last two years and that this will force the company to be more self-sufficient in the future. There will be pain in the meantime, though…

In News publishers join fight against Apple over app store terms (Wall Street Journal, Benjamin Mullin) we see that major news organisations are joining in the growing number of companies pressing for better terms on Apple’s App Store. All app developers have to pay Apple 30% of first-time subscriptions made via iOS apps which then goes down to 15% after the subscriber’s first year. Apple argues that this is the same on other platforms and helps to cover Apple’s operating expenses. * SO WHAT? * It seems that momentum is building here as Spotify initiated resistance last year, Epic Games are currently suing over the same thing and even Facebook gently stuck the boot in recently. I have said this before but I think that none of these companies have a chance against Apple on their own – if they want to get any kind of success they will ALL need to act together IMO.

Uber/Lyft get a stay of execution and Estée Lauder announces job cuts…

Lyft, Uber get more time as they fight California order (Wall Street Journal, Preetika Rana) shows that both companies got a last minute reprieve from the state appeals court. It will allow them to continue to operate during the appeals process of the ongoing case of whether they should be reclassifying their drivers as employees.

They were both very close to shutting down operations at midnight prior to the decision. The case continues…

Then in Esteé Lauder plans to cut up to 2,000 jobs globally after profits dive (The Guardian, Sarah Butler) we see that the make-up, skincare and fragrance company is looking at shutting stores and department store concessions. The company, which also owns brands including Jo Malone, Clinique, La Mer and MAC, said it was aiming to cut 10-15% of its standalone stores as part of a bid to cut $400m in costs after sluggish sales during the coronavirus pandemic. Although online sales were strong, they were not enough to mitigate the closure of its physical retail outlets.

…in other news…

I thought I’d leave you today with an amazing Japanese craft that really is quite special in The ancient Japanese textile craft made with jagged fingernails (SoraNews24, Oona McGee). How amazing is this?? Also, for those of you working from home and yearning for different surroundings, how about this for inspiration: Barbados Offers One Year Visa for Remote Workers (Trendhunter.com, Grace Mahas)…

1. In NEWS ON ECONOMIC INDICATORS & TRENDS, Maersk turns a corner while UK inflation rises, traffic returns, suburbs see spending and cosmetics experience changes
2. In TECH NEWS, Apple breaks $2tn, Huawei phones users could be about to suffer badly and BlackBerry announces a phone
3. In RETAIL NEWS, we see retail winners and losers in the US and China
4. In INDIVIDUAL COMPANY NEWS, Johnson & Johnson makses a big acquisition
5. AND FINALLY I bring you instructions for “how to bag a husband” 1958 stylee and unnerving see-through toilets…

So Maersk turns a corner, UK inflation rises and cosmetics-buying patterns change…

*** It’s THURSDAY, which means that it’s ZOOM CALL time! I will be on Zoom THIS EVENING at 5pm and will be going through the week’s key business and financial markets themes and then you can ask me anything (details are HERE)! NB I AM GOING TO BE ON “HOLIDAY” NEXT WEEK, SO THERE WILL BE NO WATSON’S DAILY FROM MONDAY 24TH TO FRIDAY 28TH. ZOOMS WILL RESUME THE FOLLOWING WEEK! ***

Maersk sails back to strength as demand lifts (Daily Telegraph, Alan Tovey and Lizzy Burden) shows that the Danish shipping giant has actually lifted its profit forecasts for the full year on signs of a demand pick-up in global trade. They also benefited from lower fuel costs. * SO WHAT? * The company may have spoken too soon as Trump made rumblings yesterday about postponing trade talks with China, which could dent sentiment. Having said that the Shanghai Containerised Freight Rate (tracks shipping costs on one of the world’s major trade routes) and Baltic Dry Index (tracks rates for ships transporting dry bulk commodities) are rising from coronavirus lows. Given Maersk is a key player in transporting goods all around the world, it is seen as a key bellwether for the state of global trade.

In the UK, Pent-up demand for hair cuts, new clothes and travel lift inflation to 1pc (Daily Telegraph, Tim Wallace) highlights a surprise rise in inflation in July. Hairdressers upped their prices by 8% for men and children and 5.6% for women, ice cream prices shot up by 16.7%, petrol and diesel prices were also higher and even clothing saw stronger pricing as the much-predicted big discounting didn’t materialise. Other items that saw price rises were garden furniture, fridges, cleaning equipment, package holidays and takeaways. As a result of this rise, Savers lose interest as inflation beats account rates (Daily Telegraph, Marianna Hunt and Tim Wallace) shows that there’s only one easy-access savings account left now (offered by National Savings & Investment) that beats inflation with a 1.16% interest rate – meaning that many households will suffer a drop in the value of their cash in real terms.  * SO WHAT? * The rise in inflation was a surprise given all the economic upheaval, but it is welcome nevertheless as rising inflation can be seen as a signal of a recovery. I suspect that V-shaped recovery fans will use this as proof of their belief. I am sceptical about a V-shaped recovery because there are so many uncertainties 

HOWEVER, if the government extends furlough, I think that this scenario could have much more chance of coming to fruition. Extending furlough will avert a massive spike in unemployment that would be a body blow to any kind of confidence but the question is whether furlough will successfully plug the gap between pandemic-related business devastation and recovery or whether it will just be like rearranging the deck chairs on the Titanic.

In other glimpses of the current state of the economy, Rising traffic levels signal economy is speeding up (The Times, Gurpreet Narwan) highlights findings by Jefferies, the investment bank, that energy consumption is now at 97% of normal levels while traffic congestion was up from 87% to 90% in the last week. Jefferies publishes weekly reports that bring together a number of other “mini-indicators” and it concludes that the economy could actually grow by over 15% in Q3 after falling by over 20% in Q2. Suburbs lead London’s economic recovery while city centre struggles (The Guardian, Joanna Partridge) cites a report from the thinktank Centre for London and King’s College London which shows that the ‘burbs are actually leading an economic recovery as consumers stay and spend locally and office workers and tourists stay away from the city centre. Transaction data from Mastercard shows that consumer spending has shifted outwards from central London – which is not surprising given that 75% of London’s workers have yet to return to their desks, according to data from Morgan Stanley. Another interesting stat from Transport for London showed that journeys to London workplaces were about 50% of average levels in the first week of August but driving and cycling frequency had returned to normal.

Then in ‘Lipstick effect’ wears off as recession hits cosmetics (The Times, Ashley Armstrong) we see that lockdown has had a major effect on the $530bn cosmetics industry. The terms “lipstick effect” was coined in 2001 by the chairman of Esteé Lauder, Leonard Lauder, who said that lipstick sales were inversely correlated to the state of the economy as people bought lipstick as an affordable luxury to cheer themselves up in an uncertain world. Coronavirus has not only affected what products are sold (eyeliner and mascara have seen stronger sales as these are still areas you can see over a mask!) – it has affected how they are sold as many of the traditional department stores and boutiques closed overnight. * SO WHAT? * The cosmetics industry is just one more example of an industry that has had to make rapid changes to survive the current climate. I would imagine that the sudden change will have caught many off guard and so I would expect there to be more consolidation in the industry as smaller operators do what they can to survive and biggest operators look to enhance their existing offering and perhaps cut dead wood.

Apple breaches $2tn, Huawei users could suffer and Blackberry makes a comeback…

Lockdown sales surge helps Apple hit $2trn (The Times, Tom Knowles) shows that Apple has become America’s first company to get a $2tn valuation only two years after it breached the $1tn mark. It has benefited enormously under lockdown from sales of handsets, tablets and laptops as well as its services. There is a great graphic in How Apple compares (The Times) which shows you the company’s growth history and how $2tn compares to other things. For example, it is bigger than Saudi Aramco (market cap of $1.82tn), it is equivalent to almost 10% of America’s GDP and, on its own, it is worth almost 70% of the entire FTSE100 put together! Apple/Tesla: divide and conquer (Financial Times, Lex) takes a look at stellar valuations and Apple’s announcement of a stock split. Will other companies such as Facebook indulge in a bit of stock split action given the post-announcement share price performances of Apple and Tesla? If so, investors will be piling into other potential stock split candidates.

Sanctions are a Huawei hang-up for 4m (Daily Telegraph, Matthew Field) shows that up to four million UK customers could be saddled with increasingly useless Huawei mobile phones as the company looks like it will not be able to renew the temporary licence it has used up till now to get Android updates. Phones developed before May 2019 (including the P30 and Nova ranges) are still expected to get key security features but phones developed after that date (e.g. the P40 range) have been completely blocked from using Google’s apps when the US was put on a US blacklist. Huawei has about a 10% market share of UK smartphones. * SO WHAT? * This is another nightmare and another potential nail in the coffin for Huawei. It’s like ZTE all over again!

On a more positive note, BlackBerry brand to be revived by release of 5G model in 2021 (Daily Telegraph, James Cook) highlights the latest return of the BlackBerry phone brand as its “new” owner, OnwardMobility, said it would release a new 5G model probably in the first half of 2021. It hopes it will sell to government and enterprise customers rather than “normal people”. It will use an OnwardMobility design and be powered by Android. * SO WHAT? * Just what we all need! ANOTHER mobile phone brand! Still, it’s probably quite good for it to create a niche for itself. It’ll maybe even get a good margin out of it if it doesn’t have to sell to the masses!

We see how coronavirus has polarised winners and losers in the US and China…

Target sales jump as pandemic speeds e-commerce shift (Wall Street Journal, Sarah Nassauer and Suzanne Kapner) shows that the gap between retail’s winners and losers has been magnified by the coronavirus pandemic. Ones that had been allowed to stay open have generally done pretty well, whereas those who had to close did not. Yesterday, Target reported its strongest every quarterly results and DIY chain Lowe’s announced its strongest sales growth in decades! On the other hand, Kohl’s and TJ Maxx, who had to close temporarily, announced major sales declines. * SO WHAT? * I expect the strong to get stronger

and the weaker ones, if they can actually survive, will take some time to recover as they have a deeper hole to climb out of.

Premium retailers rise China’s recovery from Covid-19 crisis (Wall Street Journal, Trefor Moss) shows a different divide in China where the pandemic has led to an increasing contrast in performance between makers/purveyors of premium products (e.g. Monlcler and Lululemon Athletica) doing really well and those aiming at mass-market consumers struggling to return to growth. Luxury brands were probably given a little lift in China as affluent consumers’ movements were affected by travel restrictions. * SO WHAT? * More affluent Chinese have been much more able to take advantage of deals designed to encourage spending versus their less affluent counterparts who just want to cover the basics. I presume that this trend will continue for at least the time being until employment struggles back to normal levels.

Johnson & Johnson makes a big acquisition…

Johnson & Johnson to buy biotech Momenta in $6.5bn deal (Financial Times, Ortenca Aliaj and James

Fontanella-Khan) highlights an all-cash deal that will broaden the world’s biggest healthcare company’s capabilities in autoimmune treatments. * SO WHAT? * This will give J&J’s drugmaking division Janssen Pharmaceutica access to Momenta’s promising product pipeline. The deal comes only days after Sanofi bought Principia and I suspect we will see more consolidation in a fragmented industry.

…in other news…

I thought I’d leave you today with life advice that our forebears were given in 129 ways to get a man according to 1958 advice – carry a hat box and sell fishing tackle (The Mirror, Jane Lavender). Gems such as “Look in the census reports for places with the most single men” and “Read the obituaries to find eligible widowers” sound somewhat psychotic IMO. Then there’s Japan: See-through public toilets open in Tokyo parks (SkyNews) which will no doubt make many people nervous! You’ll see why 😂! When you are in there you will be praying that there won’t be any power cuts…

1. In MARKETS & MACROECONOMIC NEWS, new highs divide opinion while Germany extends furlough
2. In HIGH STREET/RETAILER NEWS, Pizza Express closes 73 sites, Asda unveils stellar online performance, Walmart powers through, M&S announces drastic changes and Amazon offers Morrisons’ full range
3. In TECH NEWS, Huawei faces real difficulties and Oracle gets involved in the TikTok frenzy
4. AND FINALLY, I bring you the best campervan ever!

So markets heat up and Germany extends furlough…

US stocks set record after powerful rebound from March low (Financial Times, Colby Smith, Richard Milne and Adam Samson) highlights the S&P500 hitting an all-time high in trading yesterday, meaning that it has shot up by a whopping 52% since the lowest point of lockdown on March 23rd. It smashed through the intraday high of 3,395 – which was the previous record high set in February – and closed at a new record. Asia stocks edge higher after Wall Street’s S&P500 hits record (Financial Times, Hudson Lockett) shows that the feelgood spread to Asian markets but then Norway’s oil fund fears market disconnect from real economy (Financial Times, Richard Milne) shows the world’s largest sovereign wealth fund voicing concerns over the increasing disconnect between the financial markets and the real economy. Record low interest rates and massive market stimulus around the world have helped markets to power out of the massive rut they were in at the lowest point of the outbreak. Concerns aside, the performance of the $1tn oil fund had its second best quarterly performance ever and is now flat to slightly up on the year overall. On the other hand, Compile a ‘happy list’ and markets do not look so crazy (Daily Telegraph, Tom Stevenson) has some great advice for market watchers, saying that you must always argue the case for the opposite of what you feel. If you think markets are going to be great, you need to think about the risks. If, on the other hand, you are pessimistic, you need to look for the upside potential. * SO WHAT? * The bull argument is that the world’s economy is on the path to recovery and Goldman Sach’s head of global investment research, Jan Hatzius, believes that we’ve already made up about half of the 17% GDP decline between January and April. Also, the full lockdown we saw is unlikely to be repeated as other cheaper ways of containing the virus are now being used. Tech and healthcare are likely to be strong and, of course, there is increasing optimism that a vaccine will be found. Looking at the charts, there are parallels to be drawn between what happened to the markets in the aftermath of the 1930 stock market crash and the 2009 financial crisis. In 1930, stocks recovered only then to fall again for three years – but in 2009, there was a huge amount of fiscal and

monetary support which powered an 11-year recovery. What we are experiencing now is more akin to 2009. The bear argument would point to a potentially shaky recovery that is reliant on only a very narrow set of sectors – with tech being the main one – hiding the ongoing failure of huge swathes of businesses. As things stand, governments are spending massive amounts of money to avert unemployment carnage and other business life support and so it is actually hiding the true underlying state of affairs. What do YOU think?

Germany to extend furlough to 24 months (The Guardian, Philip Oltermann) heralds a potentially major development as German chancellor Angela Merkel has indicated that she is positively disposed to extend the current scheme from 12 to 24 months, which lets firms put staff on part-time work to reduce costs. A final decision on the extension is expected on 25th August. As Germany extends furlough, Sunak wants UK to embrace change (The Guardian, Richard Partington) contrasts the situation between the UK and Germany and highlights the differences in the structure of the furloughing initiatives. The UK Job Retention Scheme (JRS) has involved the government paying 80% of the wages while workers stayed at home at the peak of the scheme and will start to tail off until October – so there is an impending sense of urgency about what Sunak’s next move will be. In Germany’s Kurzarbeit scheme, the government pays at least 60% of wages for the time that a worker is not working but employers can pay staff for the remainder of their usual hours if they work them. The National Institute of Economic and Social Research believes that extending the current UK scheme until the middle of next year would cost “only” £10bn and could pay for itself by keeping unemployment benefit claims low and help furloughed workers to continue spending and paying taxes. Sunak will also be hoping that the £1,000 per employee job retention bonus that goes to employers for keeping staff on until January next year will also give businesses extra incentive. A job creation scheme, retraining grants and more staff at job centres are some of the other measures available. * SO WHAT? * Crunch time is coming on both a second wave and an expected employment crisis. Sunak and his team have to decide the lesser of many evils regarding the balance between infection risks and the health of the economy. Now that we have more data available and the “luxury” of seeing how different systems in other countries have worked I hope that Sunak is better-equipped to make the best decisions he can!