Category: Uncategorized

1. In MACROECONOMIC & OIL NEWS, the UK has the worst GDP drop of the G7 and Saudi Aramco keeps its dividend despite conditions
2. In CORONATRENDS NEWS, megadeals revive M&A while UK’s trad banks trounce the challengers
3. In TECH NEWS, TikTok continues to attract buyer interest but must be wary of Instagram
4. In INDIVIDUAL COMPANY NEWS, Amazon could put warehouses in malls and a British start-up grows meat
5. AND FINALLY, I bring you a mask that you can eat with and a plant upcycling idea…

So the UK goes to the bottom of the class and Saudi Aramco maintains the dividend…

UK to plunge into deepest slump on record with worst GDP drop of G7 (The Guardian, Richard Partington) says that forthcoming figures due out from the Office for National Statistics (ONS) this Wednesday are expected to show that GDP fell in the June quarter by 21%. This means that the UK will officially fall into recession with two consecutive quarters of GDP contraction (GDP fell by 2.2% in the first quarter). The US and eurozone are already in recession but China managed to avoid it after returning to growth in the  second quarter.

Saudi Aramco to keep $75bn dividend despite dive in profits (The Guardian, Jillian Ambrose) shows that the Saudi Arabian state-owned oil behemoth remains steadfast in paying a $75bn dividend to its shareholders this year despite profits taking a massive 73% hit for the last quarter. The global slowdown in oil demand during lockdown and lower oil prices hit the company hard. * SO WHAT? * This is quite a bold move, but given how it marketed its IPO to retail punters I think they are just doing the decent thing. Saudi Aramco has managed to do a bit better than the other oil majors in the slump due to its reserves being some of the lowest cost oil sources in the world. Overall, Saudi Arabia has been quite successful, with Opec, in squeezing out nascent US competition by keeping the oil price low. Prices have recovered from the $16 a barrel in April to a healthier $40+ level more recently.

Megadeals revive M&A activity and the UK’s traditional banks surge ahead…

Megadeals lead M&A revival as big companies bulk up (Financial Times, Ortenca Aliaj, Kaye Wiggins, James Fontanella-Khan and Arash Massoudi) shows that a number of massive deals has sparked a revival in M&A activity since the start of last month as companies try to huddle together to weather the recesssion or revive deals that were delayed by the pandemic. According to Refinitiv data, eight deals of over $10bn have been signed in the last six weeks which is the fastest start for megadeals in the second half since 2007 just before the financial crisis. Deals signed include the $21bn sale of Marathon Petroleum’s Speedway petrol stations to Japan’s Seven & i Holdings and Analog Devices’ purchase of Maxim Integrated Products for $20bn. * SO WHAT? * Dealmaking activity that had been in an upward trajectory until the coronavirus stopped it dead in its tracks appears to be revving up again. Refinitiv data shows that June and July have seen over $300bn in M&A versus $100bn in April and $130bn in May and it appears that a deal backlog is now starting to work its way through the system. M&A activity is often viewed as being a reflection of confidence in the economy, but I get the feeling that the main drivers from

now could be about weaker companies getting together to weather the storm (not always a good idea) and companies making opportune purchases of companies that had previously been out of reach but that had suffered from the coronavirus.

Pandemic seals dominance of UK’s biggest banks (Financial Times, Nicholas Megaw) shows that the momentum we saw in high street banking in the aftermath of the financial crisis has had the oxygen sucked out of it since the coronavirus as the UK’s “big four” of Barclays, HSBC, NatWest and Lloyds continue to dominate. In the aftermath of the financial crisis challenger banks such as Metro Bank popped up with the aim of disrupting the status quo and providing more customer choice in the field of lending but since the pandemic hit, the big four have provided over 80% of the government-backed loans of SMEs as at the end of June. This stands in stark contrast to the four biggest US banks accounting for only 12% of similar lending over the same period. In the UK, the big four hold well over 50% of deposits whereas their American counterparts only hold about 35%. * SO WHAT? * The big four are winning at the moment but I do wonder whether challenger banks’ relative lack of “bad loan baggage” could ultimately prove to be useful in the longer term. Mind you, for that to really work, you’d have to see more government support that is targeted specifically at challengers to help level the playing field IMO given that bigger banks currently have a big advantage in terms of lower funding costs.

TikTok continues to attract interest but Instagram’s a-comin’…

Tech, financial firms eye ways to save TikTok’s US operations from ban (Wall Street Journal, Georgia Wells, Rolfe Winkler and Cara Lombardo) shows that a number of firms other than Microsoft are interested in buying TikTok. Twitter has apparently thrown its hat in the ring (but surely it will fail as it is a) not that big and b) because Trump hates it 😜) but there are others like VC giant Sequoia Capital, PE firm General Atlantic and Japanese investment company SoftBank are all among those touted as having an interest. It still looks very much like Microsoft is the front-runner, though!

TikTok isn’t’ the first – or last – app Instagram copies (Wall Street Journal, Nicole Nguyen) shows that although

Instagram is late to the TikTok party, it may still make a splash with its version called Reels. Instagram has been notorious for copying successful features of rivals’ apps. For instance, it nicked Stories, augmented-reality selfie filters, geostickers and disappearing messages all from Snapchat! Reels launched on Wednesday last week and looks very similar to TikTok thus far although there is some functionality that is lacking at the moment. * SO WHAT? * I really think that there is a danger here that Microsoft may end up buying what could turn out to be a very expensive dud. Facebook is known for nicking other companies’ ideas and there’s not really much that can be done about it legally. I would say that Facebook is far more savvy about what its users want and could use the current limbo situation as a window to form a solid base from which to attack. Yes, there are others in the frame doing something similar but I think Facebook’s Instagram is the real danger here.

Amazon could put warehouses in malls and a British start-up grows meat…

Amazon and mall operator look at turning Sears, JC Penney stores into fulfillment centers (Wall Street Journal, Esther Fung and Sebastian Herrera) shows that America’s biggest mall owner, Simon Property Group, has been in talks with Amazon about turning some of its major department stores into Amazon distribution hubs. The talks have centred on converting stores previously or currently occupied by the failed Sears and JC Penney but it is not clear exactly how many locations will go this way. * SO WHAT? * I think this is intriguing as malls used an anchor tenant such as a department store to bring in foot traffic in the traditional business model. Over the years – and especially since lockdown, this trend has been failing and so it is interesting to see that property owners are looking to get creative. Talks may yet come to nothing between the two parties, but it’s interesting that it’s even

being suggested. Maybe it’s something that could happen in failing malls elsewhere in the world? Surely this is something that would also be appropriate for out-of-town retail parks as well.

Meanwhile, Down in the lab, a British start-up aims to engineer a food revolution (Daily Telegraph, James Cook) shows that British start-up Higher Steaks has created the world’s first lab-grown bacon! The small Bristol-based company is aiming to beat much better funded competitors who have spent years trying to develop something similar. It uses stem cells to grow pig fat and muscle in labs from small samples of pigs that don’t require them to be killed. Chief exec Benjamina Bollag says that “From a small blood sample or a small skin patch, you can make an infinite amount of meat”. * SO WHAT? * How amazing is this?? Unfortunately, it’ll be a while yet before this can come to market as the current cost of producing 1kg of pork runs into the thousands of pounds. Still, rapid advances are being made and the company reckons that meats cultivated like this could make it to YOUR plate in the next three to five years! Competitors including Memphis Meats and Meatable are very well funded, but the company maintains high hopes of success.

…in other news…

I thought I’d leave you today with a rather interesting mask variation that could be used in restaurants in To entice customers, Japanese restaurant Saizeriya creates mask you can wear while eating (SoraNews24, Scott Wilson) and then there’s the “hack” that you’ve probably wondered about at some point or other but have decided not to go through with in Mum leaves kids in stitches with her trick to ‘revive’ dead plants in seconds (The Mirror, Courtney Pochin). OMG.

1. In BIG PICTURE NEWS, Donald Trump makes some big announcements, Chinese firms face de-listing in the US and the BoE is surprisingly chirpy
2. In TECH NEWS, Microsoft broadens its TikTok ambitions and Nintendo sees a massive rise in profits
3. In HIGH STREET NEWS, Hammerson shakes up rents, Franco Manca man eyes opportunity and Travelex makes cuts
4. In INDIVIDUAL COMPANY NEWS, Uber has a ‘mare and ITV has its worst ever ad decline
5. AND FINALLY, I bring you an intriguing invention…

So Donald Trump makes a splash, Chinese firms face de-listing and the BoE sounds quite upbeat…

Donald Trump to order government to buy medicines from US companies (Financial Times, Demetri Sevastopulo and Aime Williams) highlights the President’s signing of an executive order that will force the federal government to buy specific essential medicines from US manufacturers in a bid to break reliance on foreign supply chains. With one eye clearly on the voters, he said “Over the course of the next four years, we will bring out pharmaceutical and medical supply chains home and we will end reliance on China and other foreign nations”. Donald Trump threatens executive action to spur stimulus talks (Financial Times, Demetri Sevastopulo, Lauren Fedor and Claire Bushey) shows Trump trying to take the initiative in the current stimulus negotiation impasse between the White House and Democrats and threatening to take executive action to force Democrats to bend to his way of thinking. Issues up for debate include the renewal or not of $600-a-week emergency unemployment benefits (they ended last week) as well as aid to help cities. In White House seeks crackdown on US-listed Chinese firms (Wall Street Journal, Dave Michaels) we see that the Trump administration recommended a plan yesterday that will force Chinese companies with shares traded on the US stock exchanges to de-list unless they comply with US audit requirements. Such companies have faced criticism in the past for their lack of transparency but under this new plan, Chinese firms that already have a listing on the NYSE or Nasdaq will have to comply by 2022 or give up their listing. Those that do not already have a listing will have to comply before getting one. And if that wasn’t enough, Trump executive orders target TikTok, WeChat apps (Wall

Street Journal, Andrew Restuccia and Jing Yang) shows that Trump issued two executive orders yesterday that will ban people in the US, or those subject to US jurisdiction, from transactions with the China-based owners of the apps starting in 45 days’ time. When it comes in, it could prevent Americans from downloading the affected apps from the Apple or Google app stores. * SO WHAT? * Whoooah! Trump has been BUSY! I think that making all these announcements at the same time makes a statement to his fellow Americans. He clearly wants to portray himself as the key guy fighting America’s corner against the Chinese. He is in full presidential re-election mode and will no doubt relish skirmishes with China’s Xi Jinping as further evidence of his patriotism (having said that, if he pushes it too far it could backfire spectacularly). Although I can’t comment on whether Chinese apps are really a threat or not to national security, I do think that the US (and others) have been willing to turn a blind eye to more opaque accounting practices of Chinese companies for many years because no-one wanted to be the party-pooper and potentially cut themselves off from one of the biggest growth drivers in town. This was bound to happen sooner or later IMO.

Back in the UK, BoE surprises City with its chirpy outlook (Daily Telegraph, Tim Wallace) shows that the Bank of England is getting slightly more upbeat about the prospects for the UK economy although yesterday its monetary policy committee (MPC) voted unanimously to keep interest rates at the record low of 0.1%. In May, the BoE said that it would not be able to announce any official forecasts but yesterday it resumed making its predictions. It observed that the housing market had “returned to close to normal levels”, most furloughed staff are now working, the GDP fall was not as sharp as they’d envisaged in May. The focus now is firmly on encouraging banks to keep lending to encourage growth.

Microsoft broadens its TikTok ambitions and Nintendo triumphs…

Microsoft expands TikTok takeover ambitions to entire global business (Financial Times, Miles Kruppa, Arash Massoudi, Stephanie Findlay and Primrose Riordan) shows that US software giant is now broadening its ambitions to buy all of TikTok’s global business including its operations in India and Europe. We already knew that they were looking at buying the US, Canada, Australia and New Zealand businesses but this is way bigger. TikTok does not operate in China. * SO WHAT? * If this deal actually came off it would be MASSIVE as India is TikTok’s biggest market and the US is its second biggest. TikTok has been banned in India since June when the government there banned 59 Chinese mobile apps, but if

Microsoft bought it, I would presume that the stigma would be removed and TikTok could be restored. The negotiations continue…

Nintendo profits soar 541% as consumers retreat to living rooms (Financial Times, Leo Lewis and Kana Inagaki) shows that the Japanese gaming company has benefited big time from lockdown despite a worldwide shortage of Switch consoles and a not-very-impressive pipeline of in-house games. The year-on-year hike in sales and profits over the April/June quarter was way more than analysts had been expecting and saw a particular boost from sales of fantasy game Animal Crossing: New Horizons. * SO WHAT? * It is interesting to see that lockdown hastened a shift from buying physical copies of the games to more downloads (digital versions have higher margins). Something similar happened with Sony in their latest quarterly results and they observed that increasing familiarity with downloading meant more sales as gamers worked their way through older titles.

Hammerson tries to adapt to the carnage, the top man at Franco Manca sees opportunities and Travelex makes cuts…

Hammerson to shake up rents after £1bn loss (Daily Telegraph, Rachel Millard) shows that shopping centre owner Hammerson is doing an overhaul on the way it charges rent as it tries to boost its longer term survival prospects after falling to a £1bn loss. It used to charged fixed quarterly costs but it is considering an expansion of a system for shops to pay rent based on their turnover. It is also looking at potentially linking payments to click-and-collect sales to get a slice of any internet revenues. * SO WHAT? * It’s about time the lazy old system was updated to give everyone a fair crack at the whip – but it’s telling that it’s taken such dire circumstances to make landlords take their fingers out of their ears and listen to retailers who’ve been after this for years. It will be interesting to see whether landlords revert to the old way when things eventually calm down a few years down the road…

On the actual high street itself, Franco Manca owner hungry to expand into cut-price empty sites (Daily Telegraph, Oliver Gill) shows that David Page, boss of Fulham Shore (which owns Franco Manca and the Real Greek) is hoping to use the current crisis to help him rapidly expand the chains – which is something he did in the early nineties with Pizza Express to great success. Landlords

have been queuing up to offer him sites abandoned by rivals – and it looks likely that he could expand quickly -and on the cheap – as it is currently very much a buyer’s market. For instance, it would only cost Fulham Shore £150,000 to repurpose a former Carluccio’s because everything is already there. Usually, it would cost about £650,000 to fully fit out a new Franco Manca. As far as current performance is concerned, Eat Out debut hailed as ‘astonishing’ (The Times, Dominic Walsh) highlights the huge success of Rishi Sunak’s meal subsidy offer as he has brought all staff back off furlough and incredibly strong sales. * SO WHAT? * Back in the nineties, Page grew Pizza Express from 80 to 200 restaurants in only five years by taking full advantage of cheap property prices. He is clearly hoping to do the same again but we’ll just have to wait to see whether he manages to repeat this success. It seems to me that Sunak’s plan has been pretty successful so far, but I think that restaurants will want to see what happens to trade on Thursdays, Fridays, Saturdays and Sundays – when the offer doesn’t apply – before they get too giddy. After all, there is a danger that the plan just shifts weekend business to early week.

Things are altogether gloomier in Travelex cuts 1,300 jobs after rescue deal agreed (Daily Telegraph, LaToya Harding) where embattled forex provider Travelex has now agreed a deal to survive, but at the cost of 1,300 jobs. A new Travelex is to emerge from pre-pack administration but its shops on the high street and some airport branches will not reopen as the UK business will be bearing most of the brunt of the cuts.

Uber and ITV voice their suffering under lockdown…

In other news, Uber ridership fails to recover as pandemic drives another big loss (Wall Street Journal, Preetika Rana) shows that Uber, rather unsurprisingly, announced its latest massive loss due to the heinous performance of its core ride-hailing business. Gross bookings were down by 75% year-on-year in the latest quarter but apparently the business in Asia was showing signs of bouncing back – especially in Hong Kong and New Zealand. Also, on the positive side, its food delivery service has done well over the pandemic.

Then in ITV suffers steepest fall ever due to Covid-19 lockdown (The Guardian, Mark Sweney) we see that ITV saw a 43% fall in ad revenues over the second quarter. It’s affected the broadcaster so badly that it could fall out of the FTSE100 next month. Chief exec Carolyn McCall said that she thought the worst was over but that future prospects remain unclear. Tough times, but hardly surprising for a firm that relies on production and advertising revenues to make its money!

…in other news…

I thought I’d leave you today with the intriguing invention in Japanese company develops “smart mask” that translates speech to eight languages (SoraNews24, Master Blaster). Could be something to take on holiday, perhaps??

1. In TECH NEWS, Twitter cuts Trump, TikTok rivals lure creators and the Microsoft deal gets closer
2. In HIGH STREET & CONSUMER NEWS, WH Smith, River Island and William Hill announce cuts while consumers spend on cars and Sunak’s meal deal
3. In FINANCIALS NEWS, we look at some bank trends, Metro Bank’s loss and a £1.7bn deal for Hastings
4. In NEWS ON CORONATRENDS, cinemas clash with streaming, Segro becomes the UK’s biggest landlord and gold keeps shining
5. AND FINALLY, I bring you a zombie Ferris wheel and Ross Kemp’s shocking trout pout…

So Twitter cuts Trump and TikTok-related dramas continue…

*** It’s THURSDAY today, which means that it’s ZOOM TIME! I will be going through the week’s key business and financial markets news and will then open up for questions to you! Click HERE to join ***

Twitter freezes account of Trump presidential campaign (Financial Times, Hannah Murphy and Demetri Sevastopulo) shows that Twitter froze the account yesterday for breaking rules on misinformation after it posted a video where Donald Trump, President of the United States and self-styled leader of the free world said that children were “almost immune” to coronavirus. O.M.G. That’s like saying that someone is just “a bit” pregnant or that these curtains are “a bit flammable”. It was such a ridiculous statement that even Facebook removed it (in fact, they removed it before Twitter did!). * SO WHAT? * Although this is comically bad, the serious point here is that people seem to be able to post all kinds of rubbish on social media without much real backlash. I just wonder whether, as we get closer to the presidential election, American voters will be bombarded with even more of this kind of stuff to drown out real news in order to cause panic and control the narrative.

In Rivals take advantage of TikTok’s troubles to poach talent (Financial Times, Hannah Murphy) we see that rivals to TikTok are lining up to capitalise on the uncertainty surrounding the video app. Triller has just taken on Josh Richards, up to now a TikTok creator with 20m followers who earns hundreds of thousands of dollars promoting music and merch. Byte, launched by the former founder of Vine, has already seen a “huge influx” of creators “in the last few weeks” and Facebook’s Instagram yesterday launched Reels in 50 countries. Some of the major influencers are already starting to build up a presence on other platforms by directing existing fans to them. Meanwhile, Video app’s takeover deal ticks ever closer (The Times, Simon Duke) shows that a potential deal between Microsoft and TikTok’s parent ByteDance is ongoing and could be finalised within three weeks, according to CNBC reports yesterday. * SO WHAT? * It’ll be interesting to see how many people sign up with the TikTok alternatives and whether they are made up of people who haven’t been on TikTok before or whether they will just migrate onto the new platforms. It’s too early to tell whether these platforms can co-exist or whether one will emerge victorious. Although Reels is backed by Facebook, it’s not guaranteed to work as its previous TikTok me-too Lasso was a flop. 

UK High Street blues continue but consumers are spending on some things…

WH Smith puts 1,500 jobs at risk as commutes slow (Daily Telegraph, Laura Onita) shows that the high street stalwart is going to cut up to 10% of its staff. This will be part of wider cost cutting efforts to mitigate against the damage caused by coronavirus on its commuter-focused business in railway stations and airports. Island is no safe haven in the retail storm (The Times, Robert Miller) highlights problems for River Island as the company is the latest one to consider a Company Voluntary Arrangement (CVA). The fashion retailer is currently looking at closing some stores and cutting rents on others. Elsewhere on the high street, in William Hill shuts another 119 stores as more punters shift online (Financial Times, Alice Hancock) we see that the UK bookmaker is making more cuts and store closures and will be merging its retail and online operations as the migration to online gambling has increased under lockdown. * SO WHAT? * The effects of coronavirus have been devastating on so many high street retailers and it’s likely that there will be more suffering to come. There may be some light at the end of the tunnel for William Hill, though, as its US business looks like it could be a real growth area as. It is looking to take advantage of its

knowledge in sports betting that was only fairly recently legalised in America so now the company earns 61% of its profits in the UK as opposed to 85% a couple of years ago. Mind you, for that to properly kick in, there have got to be more sporting events!

It’s not all bad, though! Meal discounts offer diners taste of normality (Daily Telegraph, Hannah Uttley) shows that restaurants and pubs have seen a real uplift in the early days of the “Eat Out To Help Out” campaign where the government subsidises your food up to £10 a head. Also July car sales drive recovery hopes higher in hard-pressed motor trade (The Times, Robert Lea) shows that there has been a big bounce (from an extremely low base) in car sales according to the latest figures from the Society of Motor Manufacturers and Traders, with new car registrations in July being 11% higher than the same month last year. Sales so far this year are around 58% of 2019 levels, so it’s not time to crack open the Bolly just yet. * SO WHAT? * I think that the restaurant thing is good because it gives people a reason to go out after spending months in lockdown. It may break some of the reticence of the more cautious among us enough to tempt them to venture out more and spend. The car thing sounds a bit spurious, though, as figures were pumped up by the fact that car show rooms were only opened in June after lockdown and because July and August sales figures tend to be weak because the usual trend is a slowdown before the new registration plate in September. Still, these are not negative developments – we just have to wait and see whether they are just a blip or morph into a trend!

We look at some of the current bank trends, Metro Bank’s loss and Hastings going private…

Four trends from the bank earnings season (Financial Times, Owen Walker, Stephen Morris, Nicholas Megaw and Laura Noonan) sounds like an extremely 🥱🥱🥱 headline, but actually it’s quite interesting! Having just emerged from the latest banking results season, this article does a good roundup of what’s emerged. Firstly bad loan provisions continue to rise on both sides of the Atlantic as everyone is bracing themselves for a rush of defaults, but provisions were bigger in the US than in Europe. Secondly, banks with more exposure to trading operations did well because of the increased amount of trading activity in very volatile markets. Morgan Stanley, Goldman Sachs and JP Morgan did particularly well in this regard and BNP Paribas benefited the most from this in Europe, although Barclays was not-too-shabby either. America’s top six banks manged to grow their capital despite putting aside massive loan loss provisions and cost-cutting has also featured highly. Credit Suisse and Société Générale are among those embarking on big cost-cutting plans while the likes of HSBC and Deutsche Bank are re-visiting previous plans for big lay-offs.

Elsewhere, Metro Bank falls to £241m loss after sharp rise in loan provisions (Financial Times, Nicholas Megaw) shows that the UK challenger bank still has a lot to do to get back on track after last years scandals and upheaval. The rise in expected credit losses was actually more of a consequence of new economic forecasts rather than actual customers defaults – which have been kept relatively low so far by loan repayment holidays and government rescue schemes. * SO WHAT? * I think that Metro Bank is in the very early stages of a four year restructuring and given that things are really bad for all high street lenders it is up to them to just hunker down and survive as best they can.

Then in UK insurer Hastings to be taken private in £1.7bn deal (Financial Times, Oliver Ralph) we see that the insurer is to go private following the receipt of a £1.7bn cash offer – a 47% premium to the share price before the news came out – from South Africa’s Rand Merchant International and Finnish insurer Sampo. There has been a lot of interest in the UK general insurance market from foreign companies with the likes of Allianz, Axa and Zurich having or increasing presence – and Munich Re is now the largest holder in Admiral. * SO WHAT? * This gives Hastings a bigger balance sheet from a “sugar daddy” to play with, Rand Merchant clearly likes what it sees as it has owned a 30% shareholding in the company since 2016 and Sampo gets to expand its geographical footprint.

Cinemas and streaming clash, Segro becomes the UK’s biggest landlord and gold keeps going…

Cinemas forced into duel with streaming giants (Daily Telegraph, Michael Cogley) shows that cinemas will be clashing with studios as Disney is the latest to announce the release of Mulan to video-on-demand on its Disney Plus service – a film that was supposed to be released this month. It’ll cost $29.99 in the ‘States to stream from September 4th although Disney will release it in cinemas that can allow it. * SO WHAT? * OK so Disney says this is a one-off, but the successful release of Trolls World Tour under lockdown has shown studios that video on demand is a viable option to generate revenues under current circumstances. Mind you, I have to say that I am sceptical about this because how many people are going to be willing to pay $30 for ONE film? Going to the cinema is a bit of an event and costs around $12 per person in the US. And if you are streaming other films and TV as well, $30 a pop sounds like a big ask (especially for a film like Mulan). This all follows the recent agreement reached between Universal Pictures and AMC Entertainment (the #1 cinema owner in the US) for the former to be allowed to release films for viewing at home only 17 days after release.

Segro’s crown as Britain’s largest landlord comes at a princely price (Financial Times, Cat Rutter Pooley) is a really interesting article which highlights the fact that the

decidedly un-sexy sounding landlord of warehouses is now the UK’s biggest landlord – with a valuation a full 45% higher than the combined market cap of British Land and Land Securities! The latter two have been absolutely killed by retail tenants’ suffering and it is likely that their exposure to offices will be the next painful problem they will have to deal with. Not so for Segro, with its bet on warehouses serving burgeoning demand from online businesses proving to be particularly astute! * SO WHAT? * This stellar demand can’t go on for ever – and as high streets start to open up again, online shopping may calm down a bit versus the initial frenzy of lockdown. Still, Segro still has exposure to data centres – which should also continue to see hot demand. An interesting company!

Then in After Covid-19, just how high will prices go in the 2020 gold rush? (The Guardian, Rupert Neate) we see that the gold price continued to power through the $2,000 level in trading yesterday. The price of the precious metal has risen by 34% since the start of the year and it has continued its climb over continued concerns over the effects of the coronavirus and rising geopolitical tensions around the world. * SO WHAT? * Clearly, gold’s performance so far this year has been impressive but it could yet go further in theory. The World Gold Council says that if you take into account inflation, it could go to $2,800 if it were to match the price in January 1980! Bank of America Merrill Lynch analysts reckon it could hit $3,000 an ounce by early 2022 and US financial pundit and speculator Jim Rickards reckons it could hit $15,000 by 2025! 😱 This guy is clearly talking his own book 😂. Still, it does make you think!

…in other news…

I thought I’d leave you today the rather weird No escape from the terror with Japan’s new haunted Ferris wheel (SoraNews24, Casey Baseel) and then the cautionary tale in Ross Kemp learns hard way not to disturb wasps (SkyNews). This is a bit of a shocker!

1. In COMMODITIES NEWS, BP tries to go green, oilfield services companies continue to suffer and gold breaks $2,000
2. In TECH NEWS, the TikTok drama continues, Twitter gets a big fine, Sony benefits from lockdown and Google/Fitbit gets the full EU treatment
3. In HIGH STREET NEWS, both Dixons Carphone and Pizza Express make cuts
4. In INDIVIDUAL COMPANY NEWS, Disney goes into the red, EasyJet increases flights and Diageo has a hangover
5. AND FINALLY, I bring you sushi cake and a weird illusion…

So BP makes green noises, oilfield services continue to suffer and gold hits a new high…

Green pledges help BP to shine despite record loss (The Times, Emily Gosden) shows that BP had a bit of a mixed bag yesterday. It disappointed on the one hand with the announcement of a halving of its dividend and a record $17.7bn loss but then gave some investors reason to cheer as it announced an ambitious new green energy strategy whereby it would increase its alternative energy investments tenfold over the next decade to $5bn a year. The idea is that it will still invest around 50% of its annual spending in oil and gas that would generate cash to invest in wind and solar projects and transition it from being an oil and gas company to a broader energy company. * SO WHAT? * This is quite some statement coming from one of the biggest oil companies in the world. I think it sounds like a noble idea, but let’s face it CEO Bernard Looney has only had the top job since February this year. He is a BP ‘lifer’ who does what pretty much every new incoming CEO does – and that’s to do a major review and put his stamp on things so people can’t accuse him of benefiting from the work of predecessors. It would be great for the environment if he sticks to this new ideal, so we’ll just have to see whether he executes or falls short. In a weird kind of way, I wonder whether BP has actually been helped by the coronavirus. The world has been moving towards embracing alternatives for a while now and the low oil price (although it’s not THAT low now!) and coronavirus outbreak have given BP an excuse to do an almighty clear out and review of current assets. Alternative energy has made great

strides in the last few years as an increasingly viable proposition and if BP can put its full financial weight behind it, advances will just accelerate. Let’s hope BP lives up to its promise!

Parched US shale patch crushes oilfield services sector (Financial Times, Myles McCormick) shows that the oilfield services companies who do the donkey work for oil companies like drilling wells, laying pipes and maintaining roads are continuing to suffer. According to Goldman Sachs estimates, listed US oil producers have cut capex by about 50% and companies such as Schlumberger, Halliburton and Baker Hughes – with a combined market cap of $55bn – have taken almost $45bn in writedowns over the last year. Although activity is picking up, it’s not happening fast enough for the US shale industry and consultancy Rystad Energy reckons that global spending on oilfield services will fall by 25% this year. * SO WHAT? * Times are very hard indeed for the oil industry generally, but America’s exposure to the more expensive-to-produce shale oil means that it will probably be hit harder than most. It seems like Saudi Arabia’s plan to keep oil prices low to defeat the American producers has worked quite nicely – although there has been some collateral damage in the process.

Then in Gold price hits record $2,000 as investors seek safe-haven (Daily Telegraph, LaToya Harding) we see that the price broke through $2,000 for the first time in trading yesterday as demand continues to be driven ever-upwards by investors seeking out safe-haven assets. The gold price has risen by over 30% so far this year! Interestingly, Bank of America Global Research analysts believe that gold could reach $3,000 an ounce over the next 18 months as the trend continues…

The TikTok thing continues, Twitter gets a big fine, Sony benefits from lockdown and Google/Fitbit will get the full treatment…

TikTok defends sale of US arm as investors move behind Microsoft (Financial Times, Henry Sender, James Fontanella-Khan and Demetri Sevastopulo) highlights the increasing drama going on in the fight for TikTok in America. In a letter to employees, ByteDance chief exec Zhang Yiming said that he had “no choice” but to accede to Trump’s demands to sell the app in order to avoid punitive action by the Committee on Foreign Investment in the US (“Cfius”) which could completely ban TikTok in the US. Interestingly, Microsoft is also seeking reassurance from China that there won’t be any retaliatory measures taken against it if the sale goes ahead – and there is even talk that Microsoft might sell some of its China business to ByteDance to smooth things over. On the other hand, TikTok owner hits back over claims he caved in to Trump (The Times, Simon Duke) shows that ByteDance has been facing criticism from China for caving to Trump and some users of Douyin, China’s domestic (and and more advanced!) version of TikTok have said they will delete the app in protest. * SO WHAT? * This is a tricky problem for Zhang Yiming as he is going to have to placate both the Chinese and American sides to this tetchy deal in order for ByteDance to emerge unscathed. I think that, ultimately,

he’ll do pretty well out of it (he’ll surely keep a chunky share in it). As I said yesterday, I don’t think he’ll get LOADS of heat from the Chinese government on this because it’s not exactly a strategic asset – BUT the Americans will probably need to sweeten the deal a bit so he can emerge with at least a bit of dignity. 

Twitter braced for $250m fine over ad data (Daily Telegraph, Margi Murphy) shows that the social network may have to pay a hefty $250m fine for using people’s phone numbers and e-mails for targeted advertising without users’ knowledge following a complaint from the US Federal Trade Commission. This covers 14m people in the UK between 2013 and 2019 (!). Naughty naughty. This is why I laughed when Twitter took the moral high ground versus Facebook on political advertising. Twitter is just as bad as everyone else!

Then on the tech hardware side of things, Lockdown’s captive market for Sony (The Times, Simon Duke) highlighted Sony’s strong performance over the latest quarter thanks to the boom in online video games over lockdown. Sony will be looking forward to another boost later this year when the PS5 goes on sale. * SO WHAT? * OK, so other divisions like films aren’t going to do so well due to delays in production and closed cinemas but games have done really well. I think that covid provided a boost that Sony would not have been expected as game and console sales tend to fall off in the run-up to a new console launch. The success of the launch will depend on timing and what the games line-up is like.

The gloom continues with job cuts at Dixons Carphone and Pizza Express…

Dixons Carphone to get rid of 800 managers across UK stores (The Guardian, Zoe Wood) shows that the electrical goods retailer is cutting costs despite benefiting from brisk sales of laptops, monitors and games consoles during lockdown as people kitted themselves out for working from home and home-based amusements. The company said it was trying to create a “leaner” management structure at its outlets and the latest cuts are in addition to the 2,900 announced in April when it closed the Carphone Warehouse chain.

Then in Pizza Express puts 1,100 jobs and 67 outlets at risk as buyer sought (Daily Telegraph, Hannah Uttley) we see that the pizza chain is looking to close 67 of its restaurants in the UK, putting 1,100 jobs on the line. It is making deep cuts now as its current owner, China’s Hony Capital, is looking for a buyer. A restructuring is taking place under a CVA which will mean the closure of about 15% of its store portfolio, but it is subject to approval by landlords and creditors. Hony Capital will retain ownership of the mainland China business. * SO WHAT? * The tough times continue for casual dining chains. The landscape that was already changing before covid hit was put into overdrive under lockdown and it’s still unclear as to how things will look even a few months from now.

Disney goes into the red, EasyJet targets more flights and Diageo suffers…

Disney slips into the red for first time since 2001 (Daily Telegraph, James Titcomb) highlights the current state of the company as the entertainment giant was hit by their theme parks, cruise lines, movie business and sports broadcasting businesses all being hit at the same time by the coronavirus. Sales cratered by a whopping 40% in the latest quarter. Disney Plus, on the other hand, has been wildly successful. * SO WHAT? * Who’d have thunk it, eh?? Virtually everything Disney does was hit by lockdown. Its cruise ships remain docked, blockbuster projects like Avatar and Star Wars have been delayed and its theme parks, when operational, run on very limited capacity. It will just want to hunker down and weather storm until it passes.

Then in EasyJet to increase flights after passenger demand rises (Financial Times, Tanya Powley and Sarah Provan) we see that EasyJet plans to increase flights this

summer due to continued strong demand despite rising numbers of coronavirus cases in Europe. Despite this, it will still only be flying at 40% of last year’s capacity going into the end of September. This compares with Ryanair plans to run at 60% of its capacity in August and 70% in September. * SO WHAT? * It’s interesting to see this move and maybe what I said last week is coming true as initial fears of a complete travel collapse were overdone as those already working from home are probably more likely to be relaxed about the prospect of self-isolating on their return to the UK.

Lockdown leaves Diageo with hangover (The Times, Dominic Walsh) shows that the drinks giant suffered more than market analysts were expecting through the coronavirus as it had to take a big hit on its emerging markets business. It suffered through the closure of bars and restaurants, so potentially this may start to rise (slowly) as such outlets start to open back up. Clearly supermarket sales of brands including the likes of Guinness, Captain Morgan, Baileys, Smirnoff and Tanqueray were not enough to mitigate the loss of business elsewhere!

…in other news…

I thought I’d leave you today with the incredible creation in Japan’s sushi that’s actually cake fools the eyes, blows the mind, pleases the stomach (SoraNews24, Casey Baseel) and the weird illusion in ‘Intense’ optical illusion leaves people puzzled – see if you can solve it (The Mirror, Paige Holland). This really is strange!

1. In TECH NEWS, the Trump/Microsoft/TikTok thing moves on, Apple faces a $1.4bn lawsuit in China and Amazon drones on
2. In FINANCIALS NEWS, HSBC accelerates job cuts as profits plunge, SocGen has a surprise loss, Hiscox ups its coronavirus claims estimate and Metro Bank buys RateSetter
3. In CORONAVIRUS “WINNERS” & LOSERS, the UK property market strengthens and Eat Out To Help Out provides support but cruises take a massive blow, Hays Travel announces job losses and advertisers cut budgets
4. AND FINALLY, I bring you a great anti-influencer tactic and the false Shibuya Scramble…

So the Trump/TikTok/Microsoft thing gathers pace, Apple faces a lawsuit in China and Amazon aims to launch its UK drones…

Trump seeks cut of Microsoft deal to acquire TikTok (Financial Times, Demetri Sevastopulo and Hannah Murphy) shows that Trump has done a u-turn on his opposition to Microsoft buying TikTok’s US operations but now wants a “very large percentage” of the purchase price for the US Treasury. There were no details given as to how that would actually work in practice but he did say that if nothing happens deal-wise by around the middle of September, he will shut down TikTok’s US operations. Microsoft/TikTok is not a done deal and The challenges Microsoft faces in buying TikTok (Financial Times) cites difficulties with valuation, how the US business could be separated out of the global operations due to having to split up back-end bits and pieces, the potential for rival bidders (how about Apple, Disney or Snap?) and whether a deal will solve all of TikTok’s political problems. Why TikTok owner ByteDance is no Huawei for Beijing (Financial Times, Yuan Yang) makes the point that China is unlikely to “fight” for ByteDance/TikTok in the same way as it has done for Huawei because it’s not strategically important (and it has a tense relationship with the government anyway) and TikTok ponders HQ in London after Trump’s hostility (The Guardian, Rob Davies) shows that talks are back on, after being suspended, about a London HQ that could be a decent non-US base from which to launch further expansion. Facebook at risk from TikTok’s unlikely saviour (Daily Telegraph, Laurence Dodds) suggests that Facebook will be quaking in its boots at the prospect of a Microsoft-funded TikTok but TikTok but Microsoft/TikTok: racing against the clock (Financial Times, Lex) suggests that a deal could pose wider questions about the continued dominance of Big Tech and that the companies within this category are increasingly becoming politicised. * SO WHAT? * God knows how Trump is going to extract money

from Microsoft for this deal. Will he be charging a 20% introduction fee 😂?? This sounds like hot air to me as it looks like he is just latching on to something now that had already been going on for a few weeks and turning it into a vote-winner (because it shows that he is living up to his pledge to Make America Great Again). TBH, if he uses the argument that the Treasury deserves some dosh because of this deal, I’d argue that Microsoft should send a cheque to India for doing them a favour because the ban TikTok is living under over there at the moment shows that a nationwide lock-out is actually possible, giving credence to Trump’s threat. Even though TikTok is not a strategic asset as far as China is concerned, I am sure that it will use its treatment as an excuse to retaliate in its own way – the recent removal of about half of the paid games from the Apple App Store China is an example of this.

In other tech news, Apple faces $1.4bn lawsuit in China in Siri patent fight (Wall Street Journal, Liza Lin) shows that Shanghai Zhizhen Network Technology said yesterday that it is suing Apple for $1.4bn in damages after China’s Supreme Court recently upheld the validity of its Chinese patent for a Siri-like chatbot after eight years going through the courts. * SO WHAT? * Apple intends to appeal the decision and it’s not a foregone conclusion for either side. However, if Shanghai Zhizhen applies for a preliminary injunction, the court could decide to prohibit Apple from selling products loaded with Siri in China for the duration of the court case. Presumably that would be an inconvenience rather than disastrous for Apple given that they could just do some kind of iOS update to sort that out (although I don’t know that for sure).

Amazon aiming high as UK drone fleet set for launch (Daily Telegraph, Hannah Boland) highlights something quite exciting – that Amazon is on the cusp of rolling out a fleet of drones in the UK that will deliver light packages! Figures pulled together by The Daily Telegraph using LinkedIn data suggest that Amazon has almost doubled member numbers of its Cambridge-based “Prime Air” team in the last year – and have most recently hired several “flight operators”. Sounds exciting, no?

HSBC accelerates cuts, SocGen surprises on the downside, Hixcox ups its Covid claims estimate and Metro Bank makes an acquisition…

In a tricky day of news for financials, HSBC accelerates 35,000 job cuts amid Covid-19 profit plunge (The Guardian, Kalyeena Makortoff) shows that the bank announced a much-worse-than-expected 80% drop in pre-tax profits in the second quarter, a hefty $3.8bn loan loss charge and an acceleration in cost-cutting plans globally. Société Générale falls to surprise loss with equities unit under pressure (Financial Times, Davide Keohane and Owen Walker) shows that the French bank fell to an unexpected loss in the second quarter as an overhaul of its struggling investment bank resulted in a chunky charge. * SO WHAT? * This is the second consecutive quarter of loss for SocGen and company’s share price is now 60% lower than it was at the start of this year. Ouch! This is particularly painful given that arch-rival BNP Paribas actually beat market expectations in its results last week due to a strong performance in fixed income trading and lower-than-expected loan loss provisions.

If banks are being hit by loan loss provisions due to the coronavirus, UK insurer Hiscox ups Covid claim estimate by 50% (Financial Times, Oliver Ralph) shows that insurers are increasing the amount they need to put aside for Covid-related claims. There is a risk that this could more than double as well if the ongoing High Court Test case it is engaged in against the Financial Conduct Authority goes against both it and fellow insurers! It is one of eight insurers involved in the case that is going to decide whether their policy wordings were enough to help them squirm out of having to pay companies who thought they were covered for coronavirus-related business disruption.

Then in Metro Bank snaps up RateSetter for £2.5m (Daily Telegraph, Simon Foy) we see that the troubled challenger bank bought internet lender RateSetter for £2.5m – with another £9.5m to come over three years following completion of the deal – in an effort to reivigorate the high street chain. Metro Bank is still struggling to recover from a massive accounting error last year which ended up seeing off many of its top management, including chairman Vernon Hill and chief exec Craig Donaldson. * SO WHAT? * This is a tiddler of a deal, but I guess it shows willing. The company is in the early stages of a four-year restructuring plan, so presumably there will be more to come. This deal will at least advance its ambitions to increase its unsecured lending business but it’s got a long way to go! 

The UK property market strengthens, restaurants get a boost but travel and advertising continues to hurt…

In the “winners” corner today, Stamp duty cut lifts agent Purplebricks to listings high (Daily Telegraph, Rachel Millard) shows that Aim-listed Purple Bricks saw a massive increase in the number of properties listed with the online estate agent following Rishi Sunak’s recent raising of the stamp duty threshold and ‘Eat Out’ scheme fills tables but operators worry about afters (Financial Times, Alice Hancock and Andy Bounds) shows that restaurants are going to be enjoying a boost from another Sunak initiative to pay £10 towards people eating out at participating venues. Whether or not this will help long term, though, is a moot point and it is too early to tell. FWIW, I think it is a good way of easing people into the idea of going out to restaurants once more after a long period of being confined to their homes.

Over in the “losers” corner, though, Hurtigruten suspends all expedition cruises after Arctic Covid-19 outbreak (Financial Times, Richard Milne) puts another nail into the coffin of the cruise ship industry as at least 41 staff and

passengers were infected with the coronavirus on two sailings of the Norwegian shipping company’s vessels at the end of July. What a nightmare for all involved given the cripplingly negative PR the industry received in the early stages of the outbreak. Staying on the subject of leisure, Hays Travel cuts and DW Sports collapse put 2,600 jobs at risk (The Guardian, Rob Davies and Mark Sweney) shows that tour operator Hays Travel is targeting about 900 cuts and DW Sports about 1,700 due to disastrous conditions. Hays Travel is the company that bought the high street shops from Thomas Cook when it collapsed last year. In addition to owning shops, DW Sports also owns Fitness First, but this business will be unaffected.

The gloom continues in Advertisers pulled more than £1.1bn spend during lockdown (The Guardian, Mark Sweney) which cites the latest figures from Nielsen as showing the impact of the coronavirus lockdown on advertising spend. UK advertising on traditional media including TV, newspapers, magazines, radio and cinema, billboards etc. almost halved during lockdown. * SO WHAT? * This is hardly surprising because it is a well-known fact that one of the first things to get cut during a downturn is advertising spend. I suspect that spend will increase from the currently very low base, but I don’t expect a sharp recovery to pre-Covid levels as I think that companies will be much more picky about what they spend their advertising budgets on.

…in other news…

I referred, in yesterday’s Watson’s Daily, to some rather unsavoury influencer behaviour yesterday – and that continues today in Restaurant plagued by influencers asking for free food shares ‘wonderful’ solution (The Mirror, Courtney Pochin). Well done to the restaurant taking this admirable stance! Then I thought I’d bring you Brand-new Tokyo Shibuya Scramble intersection opens…but over 50 miles away from Tokyo?! (SoraNews24, Casey Baseel). For those of you who know a bit about Tokyo, there is a famous road crossing that everyone sees in a district called Shibuya in news reports, films, dramas etc. The thing is, it’s so busy that it is very difficult to film there – so they built another one over 50 miles away! How random is that?!?

1. In TECH NEWS, the US broadens action against Chinese tech and a Microsoft/TikTok deal is still in play
2. In CONSUMER & BUSINESS TRENDS NEWS, Britons shun foreign travel, Hobbycraft sees a massive uptick, face masks worsen the plastics problem while restaurants and gyms look forward. Businesses are pessimistic but prepare for the new normal
3. In INDIVIDUAL COMPANY NEWS, Marathon Petroleum sells a petrol station chain for $21bn and upscale department store Lord & Taylor files for bankruptcy
4. AND FINALLY, I bring you an unusual job description and an amusing face mask add-on…

So the US gets tougher on Chinese tech and TikTok/Microsoft talks continue…

US to widen action against Chinese tech groups beyond TikTok (Financial Times, Aime Williams and Hannah Murphy) highlights a threat by the Trump administration to “take action” against Chinese software companies that it deems as a security risk in the next few days. Until now, it seems that TikTok has been singled out for “special treatment” but US secretary of state Mike Pompeo implied yesterday that this would be broadened to more Chinese software companies. He didn’t give any further details on what action would be taken and neither did the National Security Council. The US continues to claim that TikTok user data is at risk because it is owned by China’s ByteDance and Steve Mnuchin, US Treasury Secretary said yesterday that TikTok could not continue to operate in the US whilst being owned by ByteDance. America has form on this front as the government’s Committee on Foreign Investment in the United States (aka “Cfius”) forced the Chinese owner of popular gay dating app Grindr to sell to investor group San Vicente Acquisition earlier this year.

Meanwhile, Microsoft aims for a deal to buy TikTok’s US business (Wall Street Journal, Georgia Wells, Michael C. Bender, Kate O’Keeffe and Cara Lombardo) shows that the software giant is continuing to move forward with plans to

buy the US operations of TikTok despite talks almost being derailed by remarks that Trump made on Friday night that cast doubt on the outcome. Microsoft’s chief exec Satya Nadella put out a blog post after a phone call yesterday with Trump saying that the company aims to conclude negotiations with ByteDance by September 15th. This was the company’s first official confirmation that it was interested in the acquisition. Interestingly, the deal also includes the app’s services in Canada, Australia and New Zealand. * SO WHAT? * This all sounds sooo dodgy, don’t you think? Trump needs to appeal to his anti-China voters in the run-up to the presidential election and he can basically use his power to engineer a massive tech coup by effectively enabling one company – Microsoft – to buy one of the hottest apps around! I would have thought that his threats are also limiting the price that ByteDance can charge because if Microsoft thinks they are having to pay too much, they can walk away knowing that Trump’s threat of enforcing a ban is real. When Trump spoke on Friday, ByteDance’s CEO Zhang Yiming immediately said he’d sell his stake in TikTok, for instance. It’ll be interesting to see how this continues to unfold but it looks to me very much like a deal will be reached. If Microsoft bags this deal with or without the help of other investors (it has invited others to potentially join the party), it will immediately broaden its user base which has, until now, been mainly corporate. Fun fact: Zhang Yiming used to work at Microsoft many years ago but left because he thought it stifled his creativity!

Consumer tastes evolve and business try to adapt to a new normal…

Given what happened last week, Britons shun foreign travel for holidays at home (Financial Times, Alice Hancock) is hardly surprising. According to a survey published last week by VisitBritain, the national tourist board, around 14m adults in Britain intend to take a holiday in the UK before the end of September – so owners of holiday parks, cottages and campsites have been inundated. TravelSupermarket said that clicks on UK holiday cottages increased by 274% in June versus May and by 235% in July versus June! The chief exec of Awaze – owner of Hoseasons and cottages.com – said that he is seeing a trebling of bookings versus the usual levels. * SO WHAT? * This is great for businesses that rely on tourists, but there is always the risk that when overseas travel opens up properly everyone will flock abroad again. I think that the operators have to make as much money as they can now because no-one knows how long this will last. In addition, it will be interesting to see how well camping suppliers do from this – JD Sports, for instance, owns Blacks, GO Outdoors and Millets.

Meanwhile, Hobbycraft reports 200% boom in online sales since start of pandemic (The Guardian, Miles Brignall) shows that online sales for the crafts specialist spiked massively during the pandemic, but didn’t completely compensate for the closure of their 99 stores, as people tried to do something constructive during lockdown. On the other hand, Face masks: trash talking (Financial Times, Lex) highlights a problem that will continue to build as long as the coronavirus problem persists – that of what to do about all the face masks. Ocean Conservancy says that we will be getting through 129bn masks and 65bn pairs of disposable gloves per month and most disposable masks are made from polypropylene which can’t be recycled conventionally. Unfortunately, disposable masks generate microplastics when they degrade, so reusable ones seem to be the way to go, although their efficacy is unproven and will vary widely. * SO WHAT? * Consumer behaviour has changed rapidly throughout lockdown presenting both opportunities and challenges. Some behaviours, like learning a new skill or enhancing old ones, are really positive but others, like the wearing of disposable masks,

are presenting future difficulties. I think that this will continue to evolve as we face more uncertainty going into the end of summer and into autumn – when the flu seasons starts to kick in.

Businesses hope for ‘eat out to help out’ scheme boost (The Guardian, Rachel Obordo) heralds the beginning of the ‘eat out to help out’ scheme, which launches today. Under the scheme, diners are offered a discount of up to £10 a head at participating restaurants when they eat out on Mondays, Tuesdays and Wednesdays throughout August. Fitness industry aims to get back into shape as customers make a cautious return (Daily Telegraph, Ben Gartside) also shows that gym chains such as Gym Group, Power League and Total Fitness are putting a brave face on the future as they have only just been able to open up again. * SO WHAT? * It’s too early to tell how these businesses will do for now but I fear that they will be very vulnerable to any lockdown wobble and could suffer a similar fate to travel companies following the recent reversal of travel restrictions if the government suddenly alters the guidelines.

From the management point of view, Companies fear failure after virus support ends (The Times, James Hurley) highlights a report by accountancy firm BDO which shows that more than 80% of medium-sized companies don’t think they’ll be able to trade for longer than 9 months under the current funding arrangements. Over 90% had made redundancies in response to the outbreak and nearly a third had cut at least 20% of their workforce despite the fact that the government’s furlough scheme runs until October. On the plus side, a third of the 500 respondents said that sales and revenues had remained relatively steady in the last few months, 75% of them said they’d take on more apprentices due to the new government support scheme and two-thirds of the businesses said they’d be bringing back all staff – and possibly more of them – as a result of the government’s furlough bonus. This is the scheme which gives businesses the opportunity to claim £1,000 for each member of staff they bring back from furlough. ‘New normal’ emerges for companies navigating Covid-19 pandemic (Wall Street Journal, Micah Maidenberg) shows that the management teams of companies such as McDonald’s, Chevron, Equity Residential are getting a better picture of what a post-coronavirus world looks like and redesigning pricing, store designs and production accordingly. * SO WHAT? * Everyone is constantly learning throughout this lockdown – and although everyone is trying to adapt to a longer term future shaped by changing consumer behaviour, short term survival will be the main priority for most.

Marathon Petroleum sells petrol stations and another US department store bites the dust…

Marathon Petroleum to sell gas-station chain to 7-Eleven owners for $21bn (Wall Street Journal, Rebecca Elliott) shows that US oil refiner Marathon Petroleum will be selling its chain of petrol stations to Japan’s Seven & I, the owner of 7-Eleven for $21bn in cash. * SO WHAT? * This

will give Marathon a welcome cash injection and it will increase Seven & I’s footprint in the US.

Luxury department store Lord & Taylor files for bankruptcy (Wall Street Journal, Andrew Scurria) shows that the 200-year old luxury US department store chain Lord & Taylor filed for chapter 11 bankruptcy along with its owner, fashion rental subscription service Le Tote. Lord & Taylor had temporarily closed some of its physical stores in March but continued to operate online. Another department store bites the dust! It will join J.C.Penney and Neiman Marcus on the department store scrap heap.

…in other news…

A lot of people are unfortunately out of work these days, but some would-be employers are just taking ridiculous liberties as per Influencer slammed for ridiculous job listing seeking a personal assistant (The Mirror, Luke Matthews). On a completely different note, you may recall that I recently highlighted new rules in Japan for riding rollercoasters in No screaming allowed on Japanese roller coasters, and new video shows it can be done (SoraNews24, Casey Baseel) – well Japanese amusement park offers mask stickers so guests can silently ‘scream’ on roller coasters (SoraNews24, Katie Pask) shows that operators are trying to bring back the fun with some stickers (?!?)…

1. In MACRO, MARKETS & COMMODITIES NEWS, US GDP crashes and Trump moots an election delay while the German economy shrivels and markets tumble. Shell reports a massive loss and Anglo American suffers with coal and diamonds
2. In BANKS NEWS, Credit Suisse restructures while Lloyds and Monzo reports losses
3. In CORONAVIRUS “WINNERS” & LOSERS, we see the triumph of Big Tech, UPS and Rentokil while car-makers Tui and Sky suffer
4. In INDIVIDUAL COMPANY NEWS, AstraZeneca tops forecasts and John Lewis does a big overhaul
5. AND FINALLY, I bring you a make-your-own KitKat shop and a very cheap house…

So US GDP crashes, Trump floats the idea of an election delay, Germany contracts and markets fall. Meanwhile, Shell announces losses and Anglo American suffers in diamonds and coal…

US suffers worst quarter since the second world war as GDP shrinks by 32.9% (The Guardian, Dominic Rushe) cites the latest government figures which highlight a dire performance for the US economy, which is presumably a big reason why Trump floats prospect of delay in US election (Financial Times, Courtney Weaver), although he claims it’s because the vote could be easily sabotaged in the event of more mail-in ballots due to the coronavirus. The key thing to remember here is that he doesn’t have the power to delay the election – any change would have to be approved by a vote in both the Senate and House of Representatives. Meanwhile, German economy shrank 10.1% at height of virus crisis (Financial Times, Delphine Strauss, Federica Cocco and Chelsea Bruce-Lockhart) shows that things aren’t that much better in Europe’s biggest economy as the figure was worse than analysts had been expecting. All of this dented investor sentiment and Global markets in retreat as US falls into recession (The Times, Callum Jones, Gurpreet Narwan and David Crossland) was the result as markets worldwide weakened. Much of the gloom has centred around the collapse in consumer spending, but given that shops and other businesses have only started to open once more fairly recently you would have thought this state of affairs will start to improve.

Shell reports $18bn loss as global oil and gas prices collapse (The Guardian, Jillian Ambrose) highlights a massive financial loss for the oil major due to it having to writedown the value of its oil and gas assets due to the collapse of oil prices earlier this year. It wasn’t alone in its grim assessment as French oil company Total also announced big asset writedowns as well. * SO WHAT? * I must say that I wonder whether this is an exercise in “kitchen-sinking” in that oil companies are using low oil prices at the beginning of the year to cut costs down to the bone so that they can benefit massively in the future when the oil price comes back. To be honest, it’s been hovering around the $40 a barrel mark for a while now so there’s only going to be so much time that it can use the “low oil prices” excuse. OK, so $40 a barel isn’t great, but I don’t think it’s a disaster either. I think that global trade needs to see more of an uptick before we see better oil volumes, but it seems to me that oil companies are getting all the dirty stuff done now while they can.

Anglo American’s double blow from diamonds and coal (The Times, Emily Gosden) shows that the mining giant Anglo American unveiled a massive dive in its first half profits as production took a huge dip due to coronavirus-related disruption. In addition, there was a safety shutdown at a South African platinum processing plant and two accidents at coking coal mines in Australia to contend with. Anglo’s diamonds business, De Beers, also suffered on much slower jewellery sales and production problems. On the plus side, operations are largely back to normal and China sales reached levels in May and June that were appreciably higher in May and June than in the same months of 2019.

Credit Suisse rings in the changes but Lloyds and Monzo highlights losses…

Credit Suisse launches restructuring after trading profit boost (Financial Times, Owen Walker) shows that the bank announced big changes as it benefited from a significant upswing in trading in the second quarter. The revamp reversed some of the changes brought in by previous chief exec Tidjane Thiam as “new” guy Thomas Gottstein set about putting his stamp on the business. The group announced a new streamlined investment banking division as well as a slimmer risk and compliance division. * SO WHAT? * New guy comes in, cuts costs, streamlines divisions, blah blah same old. Having said that, you’ve got to feel for Gottstein because he only started in February – just before coronavirus hit – and since then has had to contend with scandals at Wirecard (dodgy accounting) and Luckin Coffee (also dodgy accounting/dodgy number generally) – the bank had worked on deals for both. Surely he has got to do monumentally badly not to make things improve given where the company was when he started!

Meanwhile, in the UK, Lloyds reports loss after setting aside £2.4bn (The Guardian, Kalyeena Makortoff) highlights the bank’s gloomy assessment of the covid

impact as being “much larger than expected” as it set aside a large slug of money to prepare for a rising number of defaults over the coming months. It also set out a gloomy outlook (but then again, most companies are). * SO WHAT? * Given that Lloyds Bank is the UK’s biggest mortgage lender and one of the most domestically-focused banks, it is seen to be a bellwether for the wider UK economy, so its pessimistic assessment isn’t great. However, its assessment is hardly earth-shattering 😂!

Then in Monzo fears for future as crisis pushes losses to £113m (Daily Telegraph, James Cook and Matthew Field) we see that losses more than doubled, according to its latest annual report, as disruption from the coronavirus threatened its ability to do business. It expects growth to slow down in 2020 and will delay some of its new project launches because of the outbreak. * SO WHAT? * This does not sound good at all IMO. It doesn’t have the same exposure to loans as its more traditional brethren and admitting that it has doubts about how it can operate is hardly going to engender confidence among existing and potential customers. Surely this bank has to grow a pair and do all it can to grow. I think that the bank has to put more efforts into getting customers to use it as their “main” bank account and offer loan products in order to grow, but statements like this aren’t going to help. 

Big Tech, UPS and Rentokil triumph while car makers, Tui and Sky splutter…

And in the “winners” corner today, Amazon, Apple, Facebook show dominant results, grip on society (Wall Street Journal, Sebastian Herrera) highlights hugely impressive results for the Big Baaaaad Tech companies who has profited from the pandemic and Facebook continues to weather the storm of bad PR. Interestingly, Google’s parent Alphabet actually reported a fall in quarterly revenues versus the previous year for the first time ever – but it still beat analyst expectations on sales!

As consumer behaviour changed during the coronavirus outbreak, Online shopping boom drives UPS quarterly sales higher (Financial Times, Mamta Badkar) shows that UPS reported a major leap in revenues (+13.4%) that exceeded market expectations as demand for their services increased during lockdown and Sanitiser gives Rentokil helping hand (The Times, Alex Ralph) shows that the FTSE100 hygiene and pest control group benefited from increased demand for hygiene products – and will continue to do so as workplaces and other establishments

reopen. Fun fact: Rentokil generates about 90% of its revenues outside the UK as it operates in 81 countries!

On the other hand, Auto giants swing to loss during coronavirus-driven downturn (Wall Street Journal, Mike Colias and Ruth Bender) highlights the ongoing travails of the likes of Ford (a $1.9bn quarterly operating loss that was actually better than it had previously predicted) and Volkswagen (which fell into a net loss for the second quarter). Interestingly, GM didn’t do as badly, but that was because of its exposure to China, which has started to recover earlier. Renault also posted a major net loss for the first half (€7.29bn!) as it had to contend not only with the pandemic, but also the mess from its alliance with Nissan. Staying on the subject of cars, UK car dealership Pendragon to cut 1,800 jobs (The Guardian, Jasper Jolly) shows that the owner of Evans Halshaw and Stratstone announced plans to cut 1,800 jobs with 15 showroom closures as demand continues to be weak.

Elsewhere, A third of Tui stores to shut (Daily Telegraph, Oliver Gill) shows the latest loss on the high street as the world’s biggest travel firm grits its teeth in the face of a tricky summer season and Sky sees £575m fall in revenue as sport is hit by Covid-19 lockdown (The Guardian, Mark Sweney) shows that the Comcast-owned broadcaster suffered a huge hit from pretty much zero sport going on through lockdown. This also hit TV ad revenues, which fell by 43%. Not great, but hardly surprising…

AstraZeneca tops forecasts and John Lewis announces an overhaul…

In other news doing the rounds today, AstraZeneca tops forecasts as patients stockpile cancer and diabetes medicines (Daily Telegraph, Simon Foy) shows that the pharma giant beat forecast for the second quarter due to strong demand for its cancer and diabetes treatments. Now if it can make a success of that covid vaccine with Oxford University, it would cap a strong 2020!

John Lewis plan to turn empty shops into homes (The Times, Ashley Armstrong) highlights new ideas from the new boss, Dame Sharon White, about how to turn the group around. Plans include turning its closed outlets into homes, launching a new gardening business and agreeing new product distribution channels are among the ideas being considered in order to get the embattled group out of its current rut. She said that new initiatives would deliver “green shoots” in the next 9-12 months as part of a wider three-to-five year timetable. * SO WHAT? * This sounds like a tall order and Dame Sharon White is new to the retailer game – but I guess drastic measures are needed and someone from a completely different background was needed in order to make radical change happen. I hope it works! The ideas sound reasonable enough, but success will all be in the execution and whether it can do it quickly enough.

…in other news…

I thought I’d leave you today with more evidence of Japan’s incredible obsession with KitKats in World’s first make-your-own KitKat shop is opening in Tokyo (SoraNews24, Casey Baseel). WHAT?!? Then there seems to be an incredible opportunity to get onto the property ladder in Five-bedroom house with games room, wine cellar and gym could be yours for £2 (The Mirror, Paige Holland). Wow!

1. In TECH NEWS, Big Tech is roasted, Spotify strengthens podcasts, TikTok gets a chunky valuation and Qualcomm signs with Huawei
2. In CORONATRENDS NEWS, UPS and FedEx get pricing power, Shopify overtakes eBay, UK consumers pay down debt and landlords overhaul rents for retailers
3. In HIGH STREET/RETAIL NEWS, Next thrives, Aldi hires and Pizza Hut looks tricky
4. In INDIVIDUAL COMPANY NEWS, Kodak goes through the roof, GSK has good and bad news and Universal agrees a key deal with AMC
5. AND FINALLY, I bring you a lockdown song..

So Big Tech gets a roasting, Spotify beefs up, TikTok gets a price tag and Qualcomm signs with Huawei…

*** It’s Thursday today – which means it’s time for the weekly ZOOM call where I take a look at the week’s key business and financial markets news and give you the chance to ASK ME ANYTHING! Click HERE to join me at 5pm tonight. ***

Big Tech bosses told they have ‘too much power’ (Financial Times, Dave Lee, Hannah Murphy and Kadhim Shubber) chronicles the first day of grilling in front of Congress (well, virtually). Lawmakers homed in on things like Amazon’s treatment of third party sellers (they are accused of copying their ideas and/or undercutting them) and Facebook’s acquisition of Instagram (this eliminated a potential competitor) among loads of other stuff. * SO WHAT? * This is the first time that all four chief execs of Amazon, Apple, Facebook and Google have been involved in the same hearing and it is the first time that Amazon’s Jeff Bezos has had to address Congress in person. At the end of the day, the subcommittee has no authority to take direct action against any of the companies, but the report that they publish towards the end of the year after the hearing could be used to drive changes in antitrust laws.

Spotify aims to be the big noise in podcast war (Daily Telegraph, Laurence Dodds and James Cook) looks at Spotify’s efforts to build up its podcast offering as it announced yesterday that it had increased the number of monthly active users by a healthy 29% from the second quarter last year. Recently it paid Joe Rogan $100m for exclusivity on his podcast (and its share price value shot up by $1.7bn in 23 minutes after that announcement) but the Swedish company has now signed up Michelle Obama, Kim Kardashian West and the documentary show This American Life. * SO WHAT? * Interestingly, the number of users listening to podcasts only rose by 19% over the year, but the AMOUNT podcast listeners consumed has almost doubled. The company said that “podcast advertising outperformed in the quarter with momentum continuing

into July”. Apple used to be THE place for podcasts a few years ago, but given that Spotify has 138m subscribers versus Apple’s 60m, it now has a very large potential audience that it could tempt with new offerings. One of the reasons why Spotify has been able to develop so quickly on podcasts is that they have been keen to progress past the existing tech – which relied on distribution via a system called RSS that lists and directs users to audio files hosted ELSEWHERE. Spotify’s podcasts are hosted and played entirely within the app itself which means that it gets much more data on listeners and listening patterns which, in turn, allows it to have more control over the placement of personalised adverts AND gives it more to offer advertisers in the way of user data. Increased revenues will then, in turn, attract more podcasters. Nice.

TikTok valued at $50bn in run-up to potential takeover (Daily Telegraph, Hasan Chowdhury) puts a figure on what the video app might be worth by investors who are considering taking a majority ownership of the viral video app. This would imply a valuation of 50 times its estimated 2020 revenue, which would make it one of the world’s most valuable social media companies. Just to put that in perspective, rival Snap is now on 15 times its estimated 2020 revenue and is currently worth $33bn. TikTok remains under federal government review and a decision on whether to ban it or not will be made in the near future.

Qualcomm inks licencing deal with Huawei despite US-China tensions (Wall Street Journal, Asa Fitch) shows that the US mobile phone chipmaker Qualcomm has signed a long term deal with the embattled Chinese smartphone maker to licence its patented technologies for Huawei’s use despite the current tetchy relationship between the US and China. Qualcomm said yesterday that it would get a $1.8bn lump sum payment from Huawei for previously unpaid licencing fees. It added that this would give it a significant boost to future sales, but didn’t expand on how big that boost would be but its share price rose by 12% in after-hours trading on the back of this news. * SO WHAT? * This is a particularly surprising development considering what’s going on between the US and China at the moment. Clearly Qualcomm is unconcerned by any potential ramifications!

UPS and FedEx get pricing power, Shopify beats eBay, UK consumers prefer to pay off debt and landlords change tack on rents…

The coronavirus continues to alter the way we live and how companies do business and Coronavirus shifts pricing power to UPS and FedEx, and they are using it (Wall Street Journal, Paul Ziobro) shows that two of the biggest carriers are raising prices due to a major uptick in demand as online shopping activity continues to grow. Retailers need them more than ever now, but the carriers’ capacity is also being tested. * SO WHAT? * I would have thought that this is going to make things even more difficult for offline retailers who have eeked their way through lockdown by keeping online sales going but you can’t blame the carriers using such an opportunity to make a bit more money.

In Shopify overtakes eBay on sales as it swings to profit (Daily Telegraph, Matthew Field) we see that spending on Shopify, the Canadian e-commerce specialist that enables companies to build and run online stores, has overtaken eBay for the first time ever as revenues shot up by a whopping 97% as retailers flocked to it during the pandemic. Despite its success, it chose not to give out forecasts for the next quarter citing the unknown impact of the coronavirus. * SO WHAT? * Shopify has done extremely well over lockdown – and while it is remaining cautious about the near future, I would have thought that it will continue to see demand (although potentially at less frenzied levels) as retailers try to prepare themselves for a potential second wave. EBay may well have to take a long hard look at itself as it has clearly missed a trick here. Shopify’s share price has shot up by about 160% so far this year!

Nearer home, Consumer revival fizzles as households opt to clear debts (Daily Telegraph, Russell Lynch) cites the latest data from the Bank of England which shows that consumers are still preferring to pay off debts rather than spend despite shops starting to open last month.

Household borrowing is “significantly weaker” than the year preceding the outbreak and could be a sign that people are trying to clear debts ahead of an expected unemployment crisis. * SO WHAT? * This is good on the one hand, as household debts were heating up somewhat in the last few years, but the thing is that the economy needs consumers to spend in order to grow. If they just sit on the money, things will just get worse for the economy and there will be more job losses, resulting in the situation getting even more dire.

Given the tricky situation that more and more retailers are finding themselves in, Retailers and landlords do battle over the future of leases (Financial Times, George Hammond, Leila Abboud and Alistair Gray) shows how one landlord, Capital & Counties (which owns London’s Covent Garden market that is usually teaming with tourists), is having to change its normal way of doing things and offer some tenants variable leases where rents depend on how much turnover they generate. Legal & General shakes up rules of retail renting (The Times, Louisa Clarence-Smith) tells the same story, reinforcing the realisation of landlords that the days of upward-only rent reviews are over if they want to have any tenants left! Mind you, it’s not just retail that’s changing, Exodus from the office to knock chunk off rents (Daily Telegraph, Tom Rees) shows that offices are expected to see downward pressure on rents as more staff work from home. 90% of estate agents and landlords expect firms to reduce their office space in the next two years, according to findings by the Royal Institution of Chartered Surveyors. In addition, over 50% of commercial property insiders expect offices to move out of central locations, moving closer to where their staff live. * SO WHAT? * The outbreak has forced a lot of changes in behaviour and although I don’t think that offices are completely dead, their usage is definitely going to have to evolve. As for retailers, we have seen more and more gaps appear in our high streets over the last few years and I think that the catastrophe has forced previously deaf landlords to the negotiation table. It will be interesting to see whether variable rents will just prolong the agony or whether they will be enough to get retailers through this difficult period.

Next does well, Aldi wants more staff and Pizza Hut wobbles…

In mixed news today on the UK high street, Next expects to remain in profit as sales partially recover (The Guardian, Mark Sweney) shows that its second quarter sales decline of 28% was actually better than expected and it actually went on to upgrade its annual profit guidance. Stores in retail parks did a lot better than outlets in malls and town centres and pretty much everything apart from formal clothing did well under lockdown. It will continue to improve capacity of its warehouses in order to cope better with online orders. * SO WHAT? * This is a solid performance by the high street stalwart and shows that

they were largely successful in reacting well to the challenges of the pandemic. If they can consolidate this now, they stand a decent change of getting through a second wave – if there is one.

Aldi to take on 1,200 new employees in UK in expansion drive (The Guardian, Mark Sweney) highlights some rare good news in the retail sector as it continues its plans to expand store numbers, but then on the other hand, Pizza Hut considers insolvency as Covid-19 crisis threatens jobs (The Guardian, Jasper Jolly) shows that the company is considering a CVA, among other things, as it continues to suffer in the wake of lockdown. Although it hopes to benefit from the government’s “eat out to help out” voucher scheme as most of its outlets are now open, it may not be enough to ensure the company’s long-term survival given that the UK’s casual dining scene was already in dire straits before coronavirus came along.

Kodak’s share price goes moon-bound, GSK has mixed news and Universal makes a key agreement with AMC…

Talking about drugs, Glaxo warning as it agrees deal for 60m vaccine doses (Daily Telegraph, Hannah Uttley) shows that it struck a deal with the government for its potential Covid jab on the one hand, but also warned that its non-coronavirus related vaccine business was pretty weak as countries focused on the current situation.

In other bits of interesting news today, Kodak shares rise nearly 1,500% on Covid drug loan deal (Financial Times, Eric Platt and Kadhim Shubber) highlights the stellar performance of Kodak shares as the Trump administration offered the company a massive lifeline to make

coronavirus drug ingredients (it offered Kodak a $765m loan to produce the ingredients under the Defense Production Act). This is an incredible performance given that it emerged from bankruptcy back in 2013! Wow!

Then in Universal-AMC deal shrinks cinema’s ‘theatrical window’ (Daily Telegraph, Chris Johnston) highlights a potentially groundbreaking deal between AMC, the world’s biggest cinema operator (and owner of Odeon), and Universal Studios top cut the gap between when it shows movies on the big screen and when they go on premium video on demand from the current 90 days to just 17. * SO WHAT? * This could be massive. The argument here is that studios make most of their box office on the first three weekends – and they can make even more by sharing revenues from video-on-demand. Surely everyone else is going to have to follow suit, no? No doubt the success of Trolls World Tour – which made $100m online under lockdown, which is as much as its predecessors made at the box office – helped to convince them to embrace each other rather than continue to fight.

…in other news…

I thought I’d leave you today with a song, made under lockdown, by a London-based Japanese superstar that most of you will never had heard of in J-pop star Utada Hikaru filmed all of her newest video in her lockdown home, and it’s beautiful (SoraNews24, Casey Baseel).

1. In TECH NEWS, the Biggies go to Congress, we look at why Silicon Valley is interested in India and Facebook wants TikTok creators
2. In RETAIL/HIGH STREET-RELATED NEWS, UK retail sales surge, Games Workshop and B&M are sitting pretty while Travis Perkins recovers and Selfridges, Greggs, McDonald’s and Starbucks suffer
3. In INDIVIDUAL COMPANY NEWS, Nissan has a ‘mare, Peugeot’s owner posts a profit and Reckitt Benckiser cleans up
4. AND FINALLY, I bring you a brilliant builder’s note…

So Big Tech presents to Congress, we look at why they’re all interested in India and Facebook wants to lure TikTok creators…

Big Tech goes to Washington (Financial Times, Lauren Fedor, Kadhim Shubber, Dave Lee, Hannah Murphy, Patrick McGee and Richard Waters) highlights a historic meeting where the heads of Amazon (Jeff Bezos), Apple (Tim Cook), Alphabet (Sundar Pichai) and Facebook (Mark Zuckerberg) are, for the first time ever, going to be testifying in front of Congress together (over video link). * SO WHAT? * This signals the culmination of an investigation that’s taken just over a year into whether they have used their size (their combined market cap is almost $5tn!) to crush the competition. A report is expected to be published after the hearing and before the end of the year which could lead to new laws that will regulate Big Tech. Although the investigation is mainly about antitrust issues, it is highly likely that the companies will be questioned on things like what they are doing about hate speech and how they are going to cover the upcoming presidential election. Amazon and Apple are likely to be facing questions over whether they are abusing their power as gatekeepers of their own marketplace platforms. Amazon faces criticisms that it copies successful products and sells them in their Amazon Basics line and that it encourages companies to use its own delivery services over competing offerings from the likes of FedEx and the US Post Office etc. Apple is being criticised for taking too large a slice of revenues for the privilege of listing on their app store and having too much power over the apps themselves. Facebook and Alphabet will face allegations that they have become too powerful in social media on online research by either crushing rivals or buying them. Their dominance of online advertising is likely to be probed as well and their allegedly biased political coverage.

What is Silicon Valley’s plan in India? (Financial Times, Benjamin Price and Richard Waters) is an interesting article that looks at why Big Tech is pouring so much

money into India at the moment. Facebook has invested $5.7bn and Google has invested $4.5bn since the beginning of the year and chipmakers such as Qualcomm and Intel  (as well as a number of US-focused private equity firms) have all invested in one company: Jio Platforms, the telecoms and digital services arm of the Reliance Industries conglomerate. Jio only started four years ago but is now India’s biggest telecoms operator and now has designs on being the leader in the country’s digital economy. It is aiming to use the new money to push forward on all fronts, culminating in an IPO within five years. * SO WHAT? * Clearly, Big Tech wants to have a Big Slice of the action in India, arguably the market with the biggest growth potential in the world. Facebook has been working with Reliance’s on e-commerce by integrating JioMart into WhatsApp to connect customers and local retailers and Google is planning on working with Jio to produce low-cost smartphones on Android OS. Intel and Qualcomm have “only” invested $253m and $97m, but they are also collaborating with the company on engineering and product expertise. There could be huge gains for all concerned and it will be interesting to see what others, such as Apple, plan on doing.

Facebook offers money to reel in TikTok creators (Wall Street Journal, Euirim Choi) shows that Facebook’s Instagram is now offering money to TikTok stars with massive followings to use their competing service called Reels, which is to be launched next month (funnily enough, its last attempt at something similar, called Lasso, was canned this month). TikTok will try to counter this by offering a $200m fund from tomorrow that will help creators “realise additional earnings that help reward the care and dedication they put into creatively connecting with an audience that’s inspired by their ideas” (🤷‍♀️?). Interestingly, some TikTok creators say that they will be signing up to Reels whether they get asked to or not because they are concerned about TikTok’s future in the US. * SO WHAT?* This is yet another example of Facebook using its power and money to copy someone else’s ideas! Still, given TikTok’s massive popularity and the uncertainty of its immediate future, now is clearly a great time for Reels’ launch.

It’s a mixed picture when you walk down the high street at the moment…

Surge in retail sales fuels hopes of ‘V-shaped’ recovery (Daily Telegraph, Lizzy Burden and Laura Onita) cites the latest survey of business leaders by the Confederation of British Industry (CBI) which shows that retail sales grew at their fastest pace for over a year in July. The spike was powered by grocery sales but the CBI’s chief economist Rain Newton-Smith says that the figures show clear winners and losers. * SO WHAT? * At least things seem to be going in a positive direction – but I really don’t think we are in V-shaped (i.e. sudden) recovery mode at the moment.

Talking about “winners”, Games Workshop is star player as value tops £3bn (The Times, Ashley Armstrong) highlights the success of the seller of fantasy miniature soldiers and games as it unveiled a record set of results yesterday despite having to close its stores during lockdown. Its share price went up by almost 11% in trading yesterday and it is now worth almost three times Dixons and 50% more than M&S!!!

Then in B&M bargains on a successful summer (The Times, James Hurley) we see that the discount retail chain reported strong like-for-like revenue growth in the latest quarter and that its trading performance over the summer is likely to be above current expectations. The unscheduled trading update yesterday highlighted strong demand for DIY and gardening products but said that “considerable uncertainty” is facing them for the second half of the year given the unpredictability of covid. The company’s next official announcement will be in November when it announces half-year results. Talking of which, DIY group begins recovery despite shaky foundations (The Times, Robert Lea) highlights a recovery of sorts for Travis Perkins, which also owns Wickes and Toolstation, as it

confirmed the trend for people indulging in more DIY during lockdown (which was positive) but a slowdown in housebuilding and commercial construction (which was negative) in a trading update announced yesterday. * SO WHAT? * It’s so interesting to see this because it seems to me that, in the year or so leading into lockdown, home DIY was just getting a bit slow and stodgy whereas businesses more exposed to “trade” were more exciting in terms of growth. Since lockdown, however, that trend appears to have reversed – but it remains to be seen as to whether this is a blip or something that will continue.

Elsewhere, Selfridges to axe 450 to shore up cash (Daily Telegraph, Hannah Uttley and Simon Foy) shows that high street gloom continues as the luxury department store announced cuts to 14% of its employees to save cash, Greggs’ profit winning streak ends in lockdown (The Times, Ashley Armstrong) shows that shop closures during lockdown have resulted in Greggs’ first loss since it listed on the stock market in 1984. However, most stores are now back open and sales last week were at about 72% of last year’s levels. * SO WHAT? * The company said that it needs to hit 80% in order to break even – so it’s not too bad, given the circumstances. It added that it will be increasing its click-and-collect service and offer delivery via Just Eat. Chief exec Roger Whiteside said that he didn’t expect the company to suffer from BoJo’s recent fast-food initiative because Greggs doesn’t advertise on TV and has been working to broaden its healthier options. It sounds to me like the company is doing what it can to get through current circumstances.

Then in Appetite for McDonald’s suffers amid lockdowns (The Times, Dominic Walsh) we see that sales fell by 30% in the second quarter due to worldwide lockdowns, but have started to recover (although the recovery has been weaker outside the US) and Starbucks logs another sales hit from coronavirus (Wall Street Journal, Heather Haddon) highlighted that global same-store sales fell by 40% in the quarter ending in June – which was actually better than analysts had been predicting. The company said that it expects things to bottom out from now and that same-store sales will recover in the US and China by the next fiscal year.

Nissan’s woes, Peugeot’s triumph and Reckitt Benckiser cleans up nicely…

In automobiles, Nissan warns of $4.5bn annual operating loss (Financial Times, Leo Lewis) highlights the firm’s disastrous results for the first quarter and potentially massive $4.5bn operating loss for the year, which it blamed on the coronavirus. * SO WHAT? * I would go further than that and say that it’s because this company is 💩, has a boring line-up and has suffered from a laughably chaotic ousting of its previous chief exec Carlos Ghosn. It announced a turnaround plan whereby it is to streamline its model portfolio, cut production and close down its plant in Barcelona. IMO, coronavirus is just a convenient excuse for its poor results – its problems are much more deep-seated – but it remains to be seen as to whether new chief exec Makoto Uchida is deluded or incredibly astute with his predictions that the company will hit full-year expectations.

On the other hand, Peugeot owner PSA delivers unexpected profit despite pandemic (Financial Times, David Keohane and Peter Campbell) yesterday announced an unexpected profit in the first half of the year and raised cost savings forecasts in its forthcoming €44bn merger with Fiat Chrysler. The merger is currently being examined by the EU competition watchdog particularly due to its combined strength in the European small van market. The merger is going to be called Stellantis. Whoever came up with that genius name probably got paid millions 😂

Then in Reckitt gets lockdown boost from sales of cleaning products (Daily Telegraph, Hannah Uttley) we see that demand for products such as Dettol and Lysol helped Reckitt Benckiser clean up at the consumer goods giant’s first half results. Chief exec Laxman Narasimhan said that the coronavirus was likely to have a lasting effect on consumer behaviour in terms of personal and general hygiene and that strong sales in these areas would continue, albeit at a less frenetic level.

…in other news…

Today, I thought I’d leave you with something that will make you go mushy and say “ahhh” (well that’s what happened to me anyway!) in Builder leaves heartwarming note for customer’s six-year-old and ‘makes his day’ (The Mirror, Paige Holland). What a nice story!

1. In MACROECONOMIC & COMMODITIES NEWS, the dollar falls on virus fears, Chinese manufacturers profit again, an extension on Help To Buy is on the cards and gold hits record highs
2. In LEISURE/TRAVEL NEWS, the whole industry gets a massive kicking
3. In RETAIL NEWS, an online sales tax is being considered, things ain’t great for LVMH or Harrods and Amazon pressures grocery rivals
4. In INDIVIDUAL COMPANY NEWS, Moderna starts late-stage trials, AstraZeneca signs a cancer drug deal, Google tells its staff to stay home and Tesla fades
5. AND FINALLY, I bring you a DIY BBQ restaurant and some gummy bear horror stories…

So there’s European travel chaos, a banning of junk food ads and choppy waters ahead for businesses…

*** FYI, re podcasts, I’ve been doing a weekly one for the last few months that you can access via Apple Podcasts, Spotify and Google Podcasts (among others), but I started doing a daily podcast yesterday which goes into more depth on one or two of the Daily’s stories (around 5 minutes long). I will also include interviews with interesting people every now and again. I recorded one interview last week, for instance, with a lawyer who started out at a Magic Circle firm and went on to have a really interesting and varied career – I’ll put this up shortly ***

Dollar sinks to two-year low on concern over US virus toll (Financial Times, Harry Dempsey, Bryce Elder, Colby Smith and Hudson Lockett) shows that the dollar hit new lows yesterday due to investor sentiment taking a hit on the rising number of coronavirus cases. The dollar is now heading for its worst month since April 2011 as investors fear that the US is not controlling the spread of the virus particularly well. The US Federal Reserve is due to meet tomorrow and ultra low interest rates are expected to stay super-low, putting more pressure on the currency. Increasing US-China tensions aren’t great for the currency either.

Talking about China, China’s factories increase profits for second month (Daily Telegraph, Lizzy Burden) cites the latest data from the country’s National Bureau of Statistics which shows that manufacturers saw their earnings rise by the biggest margin in over a year! Manufacturers will certainly be pleased with a second consecutive month of profit. * SO WHAT? * There are worries that this rise is not

sustainable given the uncertain nature of the current US-China trade relationship, the sector’s major reliance on state-led investment and wobbly demand – both globally and domestically – as people worry about a second wave. Still, at least it’s good for now!

Back home, UK government draws up extension to Help to Buy scheme (Financial Times, Jim Pickard) shows that UK ministers are close to announcing an extension to the Help to Buy property support scheme. As things stand, it is due to end in December, but the Help to Buy Equity Loan programme looks likely to be extended in order to assist those whose purchases got caught up in the coronavirus pandemic (developers who were building their houses had to down tools for a few months). * SO WHAT? * It’s amazing to think that the programme started back in 2013, enabling people with a deposit of 5% of the property’s total value to get on the property ladder – but it has been criticised over the years as effectively handing developers money as they have just raised prices. The extension will apply to people who are already in the process but from April it will be replaced by a much stricter scheme that will only be open to first-time buyers and have region-dependent price caps. It seems to me that if you are a first-time buyer and have a cash lump sum (and a steady job/steady jobs) you are in a very strong position to buy a house at the moment as you will not only be able to take advantage of the Help to Buy scheme, you will also (probably) be able to take advantage of the stamp duty holiday! Happy days!

Then in Gold price hits record high amid fears over coronavirus crisis (The Guardian, Joanna Partridge) we see that the yellow stuff has hit new highs as investors worried about the world economy and bought something tangible instead. It has now overtaken the level of $1,920 it hit in September 2011, rising 28% this year. * SO WHAT? * Gold is seen to be a “safe haven” asset where investors park their money when other investments get too volatile/unpredictable and they are a way of hedging against falling assets such as stocks or currencies.

What a nightmare for the whole travel industry…

Further to what I was saying yesterday, European travel shares slide as new curbs hit recovery hopes (Financial Times, Philip Georgiadis and Jim Pickard) shows the immediate effect of the new travel restrictions on the €800bn European tourism industry, with the Spanish tourism industry bearing the brunt. Shares in Tui, Europe’s largest tour operator, fell by 11% while easyJet, IAG (owner of British Airways) and Lufthansa’s shares fell by 8%, 6% and 5% respectively. Tourism industry reeling as hopes to save summer season are dashed (Financial Times, Alice Hancock and Bethan Staton) also highlights the devastating effects that the latest travel restrictions have had on an already-fragile industry emerging from the pandemic and Ryanair has a few tricks left to see it through the pandemic (Financial Times, Cat Rutter Pooley) shows that, although the company’s shares fell by 4% (not too bad versus its rivals mentioned above) its quarterly results were actually quite good, all things considered. Although a second wave in the autumn could be devastating – and would result in more job cuts – but Ryanair has been hot on cost control, has a ton of cash in reserve having borrowed €600m through the Bank of England’s bond buying scheme, can borrow more money against around €7bn-worth of 737s and has the power to squeeze airports on fees by promising more passenger traffic. 2020 will be a terrible year, but Ryanair looks likely to weather it better than many others. * SO WHAT? * This is going to sound dramatic, but I think this is industry devastation on an epic scale. All the players within it are

going to have to just survive the best they can – and some will be better-equipped to do so than others. On the other hand, there is a danger here that we are overstating the impact. After all, many people have been working from home since the beginning of the outbreak and so it is possible that they could go on holiday and then come back and do the quarantine without that much impact because they have been working from home for some time anyway. Schools are out now and bosses are quite keen to get employees to take their holidays sooner rather than later so that they don’t have a massive holiday pile-up at the end of the year, so if you have been working from home anyway, have a valid passport and bit of money to spare, you will probably be able to bag yourself some bargains this summer (as long as airlines have enough flights to take you to your destination!).

Hospitality marches off a cliff (The Times, Dominic Walsh) cites the latest figures from a report by consultancy CGA which show that Britain’s hospitality industry has seen a £30bn collapse in sales in the three months since lockdown. The trade body UK Hospitality’s chief exec Kate Nicholls, noted how difficult the current situation is and added that “These figures substantiate our message that businesses still need support from the government”. * SO WHAT? * I am actually inclined to think that the whole Spain debacle could actually be a MASSIVE boost to the UK’s hospitality industry – which includes pubs, bars, restaurants, hotels and visitor attractions – because people are arguably going to be even MORE keen than normal to escape from the confines of their own home. If they feel uneasy about going abroad, I would argue that they will holiday in the UK. OK, so they won’t be able to pack visitors in like they used to because of social distancing, but surely numbers will see a marked improvement.

The government considers an online sales tax, LVMH and Harrods are having a tough time and Amazon aims to pressure grocery rivals…

UK weighs online sales tax to prop up high street (Financial Times, Jim Pickard and Chris Giles) shows that the government is weighing up a new online sales tax as part of a major overhaul of the current business rates system. Retailers had been crying out for changes in the business rates system before the pandemic hit, so this is likely to be a welcome move – although the results of the overhaul aren’t expected to see the light of day until next spring. Speculation has centred on a levy of 2% on all goods bought online in addition to a tax on customer deliveries. At the moment, it looks like the proposed online tax won’t be enough, so it is likely to run alongside business rates. * SO WHAT? * Although this is arguably a move in the right direction, it is a case of shutting the barn door after the horse has bolted. In fact, in this case, the horse has bolted, closed the door behind, galloped off at full speed into the horizon, found a mate and sired a few foals! Online retailing activity has just increased exponentially since lockdown and now that more people are used to its advantages, it is bound to continue to increase in popularity. Retailers have been going on for ages about the fact that they are being hobbled by having to pay rates and other taxes, meaning that their prices can never really compete with online rivals. An overhaul is long overdue, but at the moment it seems like the levy is just going to be an ADDITIONAL tax rather than something that will replace the current business rates system.

Elsewhere, LVMH profit plunged in first half (Wall Street Journal, Matthew Dalton) shows that the French luxury conglomerate has not been immune to the pressures of the

coronavirus as it announced yesterday that profit fell off a cliff in the first half of the year (surprise 😂!). Having said that revenues weren’t too bad considering and there were some decent performances by Louis Vuitton, Dior and its wines and spirits division. Profits got hammered, though, as the company couldn’t cut costs fast enough. Harrods fears tourists won’t be returning until 2022 (Daily Telegraph, Hannah Uttley) shows that Kensington’s little corner shop is expecting a 45% fall in annual sales due to the lack of Asian and American tourists. They account for 70% of Harrods’ revenues versus European tourists accounting for the rest. * SO WHAT? * Things are still rather tricky at the luxury end of the retail market, especially when the restriction of tourist movements are factored into the equation. They will just have to hunker down like everyone else, but it remains to be seen how quickly sales will bounce back when travel restrictions are lifted. For the moment, I would have thought luxury goods companies with more exposure to China will do relatively well as the pent-up spending power of the rich is released domestically – and Burberry has seen signs of this already.

Back in the real world, Amazon free delivery plan primed to hit grocery rivals (Daily Telegraph, Laura Onita) shows that the company is planning to offer free grocery delivery to its Prime customers as part of a massive expansion of its Fresh food network. The offer will only be available in London and the South East initially, but it will be rolled out across the country by the end of the year. * SO WHAT? * This is REALLY going to shake things up. All supermarkets currently charge for delivery at the moment, so this move is going to throw the cat among the pidgeons because offering free delivery for supermarkets will hurt their margin – their profits are virtually zero as it is from online sales due to the increased overheads which encompass extra staff, drivers etc. I think that this fear has been in the background ever since Amazon bought Whole Foods back in 2017, but it is now becoming a reality. Maybe Aldi and Lidl are better off not offering a full delivery service after all…

There are some interesting pharma developments, Google tells staff to stay at home and Tesla loses its shine…

Moderna, Pfizer coronavirus vaccines begin final stage testing (Wall Street Journal, Peter Loftus and Jared S. Hopkins) shows that two of the most advanced potential coronavirus vaccines entered the key “phase 3” trials yesterday with Moderna testing in the US and Pfizer testing in both the US and overseas. Then in Astra signs Japan deal for cancer drug (The Times, Alex Ralph) we see that the British pharmaceutical giant has signed a deal with Japan’s Dai-Ichi Sankyo to develop a potential blockbuster cancer drug worth up to £4.5bn. Great news!

In other news, Google to keep employees home until summer 2021 amid coronavirus pandemic (Wall Street Journal, Rob Copeland and Peter Grant) shows that the company has become the first major US corporation to formalise such a concrete timetable and will make other tech giants think about their own plans to return in January. Many of Google’s suppliers must be devastated by this. Then in Tesla’s market ride reflects larger forces at work (Financial Times, Eric Platt and Richard Henderson) we see that the carmaker’s share price has been cooling down since it announced a strong second quarter of results last week. No one seems to know why the shares have powered up so strongly, although some point to the effect of trading apps such as Robinhood, as retail investors just piled in on momentum stocks like Tesla.

…in other news…

I thought I’d leave you today with the rather intriguing restaurant in We sent Mr. Sato off to Yakiniku Camp, the restaurant where you cook your own food (SoraNews24, Katy Kelly) and something that I discovered last week that made me laugh so hard in Man’s disturbingly graphic review of Gummy Bears has people crying with laughter (The Mirror, Courtney Pochin). If you don’t like toilet humour, I would not recommend you read the latter story…just sayin’…

1. In BIG PICTURE NEWS, European infections cause travel chaos, junk food ads get canned and businesses consider their future
2. In RETAIL NEWS, Debenhams is up for sale again, Ben Sherman’s owner plans store closures and Boohoo is to set up a “model factory”
3. In ENTERTAINMENT NEWS, TikTok continues to face uncertainty and BritBox announces a bigger rollout
4. In NEWS ON “CORONATRENDS”, Gousto does a roaring trade and e-scooters are about to hit our streets
5. AND FINALLY, I bring you a potential side-hustle and some mask chat…

So there’s European travel chaos, a banning of junk food ads and choppy waters ahead for businesses…

*** JUST A QUICK ONE – I know that some of you like podcasts. I’ve been doing a weekly one that you can access via Apple Podcasts, Spotify and Google Podcasts (among others), but I’m about to bring in more content. I will soon be doing a daily podcast which goes into more depth on one or two of the Daily’s stories (it’ll be a 5-minute one, so not too long!) and will include interviews with interesting people every now and again. I recorded one interview last week, for instance, with a lawyer who started out at a Magic Circle firm and went on to have a really interesting and varied career – I’ll put this up shortly ***

In Infection surges force countries to curb European travel (Financial Times, Guy Chazan and Alice Hancock) we see that European tour operators have had to respond quickly to an uptick in coronavirus cases as the UK government announced that Britons coming back from Spain would have to self-isolate for two weeks on their return. The French government is also imposing mandatory testing at airports and ports for travellers arriving from a list of 16 countries and is now strongly advising against travel to Catalonia. Interestingly, Mediterranean resort fund raises €680m in show of faith in European travel (Financial Times, Alice Hancock) highlights a fund raising by a Spanish real estate company, called Azora, that will enable it to invest in “sun and beach” hotels around the Med. There are likely to be rich pickings here as 62% of hotels are independently owned, versus 30% in the US. * SO WHAT? * I think that this latest development in Spain is an absolute disaster for holiday travel globally. It is a stark reminder that the coronavirus has not left the building and that going abroad is, effectively, a lottery. I think that this will kill demand for foreign travel (not stone dead, as there will be some die-hards out there) for at least the rest of this year – and this will give Azora even BETTER opportunities to buy hotels for a steal. I think that this could be a MASSIVE boon for domestic travel-focused operators (people will still want to go on holiday) and potentially a boost for Airbnb. OK so Airbnb has lost business from people travelling into the UK, but I would have thought that it will do very well from Brits wanting a holiday that isn’t too far away (and that won’t have all the hassles that you might get at a hotel – no breakfast buffet?!? Nooooo! 😱). I bet that retailers selling camping goods will do well from this!

Elsewhere, Online junk food ads face total UK ban in drive to tackle obesity (Financial Times, Laura Hughes and Sarah Neville) shows that Boris Johnson is bringing in a number of restrictions on the sale of unhealthy foods in Britain that will make it one of the most restrictive markets in the world. There will be a 9pm watershed on TV and online adverts but the government is also looking at a total ban on online adverts and considering putting calorie labels on alcoholic drinks. Restaurants, cafés and takeaways with over 250 employees will have to put calorie labels on menus and there will be limits on price promotions like multi-buy deals and BOGOF. There will also be restrictions placed on putting naughty foods near supermarket checkouts, store entrances and the end of aisles. * SO WHAT? * Critics like the Food and Drink Federation says that the new restrictions will increase food prices, reduce choice and threaten jobs whereas others say that the measures don’t go far enough (or say that they are, at least, not very well co-ordinated). I would have thought this will hurt supermarket sales and the makers of confectionery and comfort food such as Mondelez (which owns Cadbury’s, among other brands) and Coca-Cola.

Then we see increasing pressures on businesses in Small businesses cut jobs as furlough scheme winds down (Financial Times, Daniel Thomas) which identifies a potential increase in job losses as the government furlough scheme starts to taper off from next week. The number of start-ups (businesses of three years or under) in distress has risen by 18% over the last quarter, according to Begbies Traynor’s Real Business Rescue service – and the Federation of Small Businesses (the FSB – not to be confused with the FSB that is the successor of Russia’s KGB 😂) says that around 20% of small companies expect business performance to be “much worse” for the next quarter. Mind you, there are pressures of another kind in Businesses eye exit over capital gains tax reforms (The Times, Tom Howard) where entrepreneurs and small business owners are potentially going to accelerate plans to sell up as Rishi Sunak mulls over an overhaul of capital gains tax. Business owners are charged 20% of the profits they make from selling their companies although entrepreneurs’ relief means that they “only” have to pay 10% on the first £1m over their lifetime (it used to be £10m until it was changed in March). Some think that Sunak will bring in changes in the autumn budget expected in October and are making moves to exit before any changes are made. * SO WHAT? * The government has got to make money from somewhere, but this is not going to go down well with those who are affected. I’m not sure what sort of effect that this will have on jobs, but if there are more businesses being sold I would have thought that this will be negative because, generally speaking, there are likely to be overlaps/repeat functions that will mean job losses.

The gloom continues with Debenhams and Ben Sherman while Boohoo tries to make amends…

Debenhams up for sale in last-ditch bid to save stores (The Guardian, Julia Kollewe) shows that the department store appointed investment bank Lazard this weekend to try to find a buyer before the end of September in a bid to avert the possibility of liquidation. They already called in the administrators in April for the second time in a year (it brought them in back in April 2019) and things ain’t looking pretty. The gloom continues in Ben Sherman owner plans store closures to avoid collapse (Financial Times, Patricia Nilsson) as Baird Group, which also owns Suit Direct and Jeff Banks, filed for a CVA on Thursday and is planning to close over a third of its stores and renegotiate rent with landlords. It was hit particularly badly by store closures at

Debenhams, where it had a lot of concessions, and presumably because fewer people are buying smarter clothes for the office and/or weddings.

Boohoo to set up ‘model garment factory’ in Leicester (The Guardian, Julia Kollewe) shows that online fashion retailer Boohoo is trying to respond quickly to criticisms that it buys its garments from sweat shops by announcing plans to set up its own “model factory” where everything is done proper, like. The company said that it would be employing 250 people at the new Leicester factory and aims to produce clothes for its PrettyLittleThing and Nasty girl ranges by September! * SO WHAT? * I think that this latest move will kill two birds with one stone. Firstly, it will be good PR and help the company get back on track by showing a physical example of “best practice”, but it will also help it to achieve quick turnaround for fast fashion – something that Zara-owner Inditex is well known – and admired – for. Producing domestically means that it will only take days to get garments on the shelves, something that would normally take a few weeks.

The TikTok intrigue continues and BritBox has bigger overseas ambitions…

TikTok’s time is running out over Chinese security fears (Daily Telegraph, James Titcomb) does a good job of highlighting the efforts that have been made so far to avert a ban on the wildly popular video app that has so far been downloaded over 2bn times worldwide. TikTok could be tougher target for Trump administration (Wall Street Journal, John D. McKinnon) looks at how America might ban the app whilst trying to reduce user backlash. The administration could unwind the cross-border merger that gave the app a strong presence in the US (ByteDance bought Shanghai-based Musical.ly, which built up a strong US user base, in 2017),  invoke international emergency powers to ban social media apps with ties to foreign enemies, include TikTok in rules that are under

development by the Commerce Department to ban the use and installation of foreign technology that threatens national security and/or put it on the “entity list”, the trading blacklist. * SO WHAT? * The clock is ticking (it’s actually going “tick, tock” 😂) but some feel that a complete ban on the app would be a shame in that it is probably Facebook’s biggest challenge in social media at the moment. Zuck’s made a few attempts in the past to make similar versions of the app, but they have failed thus far. If it is bought by a consortium of American investors, this could create an American-owned challenger to Facebook but another option is to float the company. Whatever happens, though, TikTok is unlikely to survive in its current ownership structure. 

Meanwhile, BritBox expands to launch in 25 more countries (Daily Telegraph, Ben Woods) shows that there a bigger plans for the BBC/ITV streaming service BritBox as it prepared to launch in up to 25 countries across EMEA and South America. No-one expects that it can realistically challenge Netflix’s global dominance, but I think that there is room for niche players such as this.

Gousto gorges and e-scooters are around the corner…

In news on trends that have emerged during lockdown, Food box provider Gousto set to recruit 1,000 extra staff (Financial Times, Daniel Thomas) shows that the UK-based recipe box company is looking to hire 1,000 more staff to meet rising demand for its meal kits. There will be new roles in software and tech as well as its manufacturing and delivery operations. At the moment, the company provides meal kits for over 50 recipes and just became profitable this year, eight years after starting up. It is now aiming to triple capacity by 2022. * SO WHAT? * I just don’t get it, personally, but then again I love cooking

and maybe I’m not the target market. I’m also not a fan of what will happen to all the packaging that this sort of business entails. Anyway, it will be interesting to see whether its winning streak under lockdown will continue as customers get back to more “normal” habits.

There’s some electric fun just around the corner as E-scooter giants wheel out their fleets for UK invasion (The Times, Robert Lea) shows that we are getting nearer to seeing electronic scooters whizzing around our British town centres as we are one of the last adopters in the developed world! What is particularly interesting, though, about this article, is that it says that most of the big players in the market, such as Lime and Bird, rely on Chinese tech for their scooters. Xiaomi (better known for its mobile phones) and Ninebot (which acquired Segway a few years ago) will be among those benefiting from a new e-scooter boom!

…in other news…

I thought I’d leave you today with a potential job in You can now get paid £250 to drink wine – here’s how to apply (The Mirror, Paige Holland). Nice! Given the recent crackdown on mask usage in the UK, I thought One second test that will let you see whether your face covering is effective (The Mirror, Paige Holland) would be useful, but sometimes you just have to concede that there are people like the woman in Woman casually wears KFC box as makeshift face covering while out shopping (The Mirror, Courtney Pochin) who just want to strike out on their own and go against the herd. You go girl.

1. In CONSUMER & CONSUMER GOODS NEWS, UK spending stalls but some are trading and bidding at auctions. We also look at Unilever’s triumph and BoJo’s war on fast food
2. In TECH NEWS, the EU gets tough on Google/Fitbit, Intel’s profits rise and Twitter adds users
3. In INDIVIDUAL COMPANY NEWS, Tesla gears up for a hiring boom, Dyson announces job cuts and Paris announces e-scooter licences
4. AND FINALLY, I bring you a pointless yet fascinating world record…

So we look at consumer spending, how Unilever has benefited under lockdown and how BoJo will be clamping down on fast food ads…

Latest spending data shows pause in UK economic recovery (Financial Times, Chris Giles) cites unofficial data which shows that the economic recovery which started in April has paused for breath and could even have faltered in July. Figures from the Bank of England as well as card and payments data gathered by Fable Data show that spending slowed down in the middle of July versus the start. This would suggest that the opening of the hospitality sector on July 4th had a negligible effect on spending as households remained cautious. Although spending on air tickets and food and drink outside the home increased, spending on groceries and in hardware and garden centres decreased. * SO WHAT? * This pours cold water on recent comment that we are in the midst of a V-shaped (i.e. sudden) recovery – at least for the moment. Concerns about health, a second wave and job security seem to be overriding the desire to spend for now.

That said, there are pockets of spending such as those identified in Small investors take to high-risk punts amid UK lockdown (The Guardian, Kalyeena Makortoff), where the likes of online investment firms such as IG Group and AJ Bell are seeing a major uptick in new customers on their trading platforms and What soaring auction prices say about the Covid-19 economy (Financial Times, Gillian Tett), which shows that there are some pockets of spending on luxury goods. Although luxury names such as Richemont and Chanel have reported weakness, the prices of boats, exclusive rural properties and fine wines are all seeing strong sales. Interestingly, art is seeing a massive surge in interest online. Last month, Sotheby’s held a digital-only, live-stream auction for top end art and it sold $234.9m worth of postwar and modern pieces – right at the top end of their expected price range! It had previously been extremely reluctant to go digital like this, but clearly

there was demand for it. Christie’s did it this month and also found the same thing. * SO WHAT? * It will be interesting to see whether these trends continue because I do think that there is a certain amount of the “boredom” factor at work here – as many online gambling companies have found recently. Those with spare money hanging around have had limited spending outlets, but I guess that if the experiences they have had have been enjoyable, at least some of them will return.

Unilever rises to top of FTSE after cleaning up on Covid hygiene (The Times, Ashley Armstrong) shows that Unilever has now become the most valuable company on the FTSE 100 after it issued a very strong trading update yesterday. Demand for bleach, soap and hand sanitiser offset a fall in demand for some other products. The company also said it was going to sell most of its tea assets, including PG Tips, Lipton, Brooke Bond etc. and there appear to be a large number of potential private equity buyers lining up to buy. * SO WHAT? * Unilever makes those things that you need to live your life – and under lockdown, we’ve used more of them! Strong interest in their tea sale would imply that they’ll be able to extract a decent price, so the immediate future looks alright for this stalwart.

Then in Johnson rushes to put UK junk food advertising on a diet (Financial Times, Alex Barker, George Parker, Judith Evans and Sarah Neville) we see that Boris Johnson is preparing to unveil a raft of measures to limit how unhealthy foods are sold in the UK. Plans are expected to be announced as early as next week and will ban online advertising of unhealthy foods, a pre-9pm watershed on TV ads and a clampdown on in-store promotions (I wonder whether this will cover those ridiculous offers you get in WH Smith where you randomly get offered the chance to buy a chocolate bar the size of your head for a pound?!? 😂). * SO WHAT? * This will obviously make things trickier for the fast food industry, but it will also make it even tougher for broadcasters such as ITV and Channel 4 to make money from advertising – something that is already becoming more difficult. The fact is, though, that previous government initiatives to address the obesity problem have not worked, so I guess that a new initiative is needed.

The EU gets tough on Google/Fitbit, Intel sees higher profits and Twitter adds users…

EU demands major concessions from Google over Fitbit deal (Financial Times, Javier Espinoza) shows that the EU is demanding major concessions from Google in order to approve the company’s $2.1bn acquisition of Fitbit. Many consumer groups and regulators have had doubts about the tie-up due to Google’s potential access to Fitbit’s health data. The EU regulators want Google to promise that it won’t use the information to enhance its search capabilities and that it will grant equal access to third parties. If Google refuses to comply with the new requests, it is likely that the EU regulators will take much longer to conduct their investigation. * SO WHAT? * Data, who has access to it and how it’s used is a thorny issue at the moment – but I think that people’s health data is particularly contentious because of its highly personal nature. I think that this type of data should have particularly stringent measures attached as its misuse could have all kinds of nasty consequences. We’ll just have to see what happens here, but it’s possible that Google will be willing to string this out given that EU regulators just recently got kicked in the teeth by the court decision to throw out their Apple tax judgment.

Intel reports profit surge but warns of further delays on advanced chips (Wall Street Journal, Asa Fitch) highlights

Intel’s strong earnings for the second quarter which have been supported by the whole working-from-home phenomenon that caused a spike in demand for computing power. It also talked about the outlook for the third quarter (weaker than current market expectations) and gave guidance for the full year. On the other hand, the company said that there were more delays on its new chips which are now running at about 12 months behind internal targets. * SO WHAT? * It’s good, in a way, to see that the company is confident enough to map out its forecasts for the rest of the year, but its future growth will no doubt take a bit of a dent after Apple shifts away from using Intel chips and starts making them in-house. Rival AMD continues to make ground in the mass-production of advanced chips.

Advertising dip fails to stop rise in Twitter users (Daily Telegraph, Hannah Boland) shows that Twitter had record growth in user numbers in the latest quarter but saw sales figures decline on advertisers cutting budgets. The company said that it grew user numbers by a healthy 34% year-on-year, the largest such increase since it started reporting this number four years ago. One of the possible reasons why it saw a rise in user numbers was because people used it to keep up-to-date with the coronavirus. * SO WHAT? * Advertising spend fell by almost 25%, which is a very big deal for Twitter because this is where it gets 80% of its revenues from. It will be hoping that this is a temporary phenomenon and says that it expects a “gradual, moderate recovery” even after that recent hacking of high profile accounts.

Tesla aims for a hiring boom, Dyson announces job losses and Paris signs of e-scooter licences…

In other interesting news today, Tesla prepares for hiring boom as Elon Musk targets manufacturing expansion (Wall Street Journal, Tim Higgins) highlights the implications of the company’s announcement on Wednesday of a new factory outside Austin, Texas. It is one of the few new major car production facilities to be built in the US and is happening at a time where most of its “traditional” rivals are battling with falling sales. The factory is set to start production next year and will employ at least 5,000 workers to build the Cybertruck and other vehicles. A bit of rare good news for an industry in crisis!

Meanwhile, Dyson to cut 900 jobs worldwide as firm blames Covid-19 (The Guardian, Rob Davies) heralds some

bad news for mainly UK employees, blaming changes in consumer behaviour. The cuts of 600 represent about 15% of the company’s 4,000 employees and this will anger many of them, considering that founder James Dyson is now the richest man in Britain. The remaining 300 will be from oversees.

On a more fun note, Three companies win e-scooter licences in Paris (Financial Times, Leila Abboud) heralds the granting of licences to Lime (American), Tier Mobility (German) and Dott (French) in Europe’s biggest market for the devices. Each of them have been given a two-year licence and each of them will be able to operate 5,000 electric scooters within the city. Paris will also create 2,500 designated parking areas for scooters in order to address concerns of them just being abandoned everywhere. * SO WHAT? * Given that everyone is paranoid about public transport at the moment for commuting, I suspect that other cities – including London – will be watching what happens in Paris with interest.

…in other news…

Some people just like doing pointless things. Take the fella in this endeavour for example: Martial artist breaks Guinness record with 322 punches in one minute (UPI, Ben Hooper). He is barely moving the pad, but his arm speed is impressive! But why?!? Ah well, something to do during lockdown I guess. I don’t think he’d stand much chance against this 54 year-old geezer, for instance 😂.

1. In MACROECONOMIC NEWS, we see reaction to the EU bailout deal
2. In TECH NEWS, Microsoft’s revenues rise but it’s facing a lawsuit with Slack. US investors try to buy TikTok
3. In AUTOMOTIVE NEWS, Tesla announces its 4th consecutive quarter of profit and Fiat Chrysler signs a deal with Waymo but gets investigated over omissions
4. In INDIVIDUAL COMPANY NEWS, Stagecoach paints a bleak picture, Kingfisher benefits from lockdown DIY and there are contrasting fortunes for Chilango and Chipotle
5. AND FINALLY, I bring you a noodle-themed hotel room and how to make Domino’s garlic and herb dip…

So we see reaction to the EU bailout deal…

*** IT’S THURSDAY TODAY – WHICH MEANS THAT IT’S ZOOM CALL TIME! Please feel free to join me at 5pm today in a Zoom call where I start by going through some of the week’s key business and financial markets stories and then open it up to YOU to ask me any questions! Click HERE to take you to the call ***

Investors cheer euro’s prospects after ‘milestone’ EU deal (Financial Times, Eva Szalay) shows how the agreement on the EU’s bailout recovery fund has been received positively by investors and signals a potential shift in preference away from US assets to European ones. Before the deal was announced on Tuesday, consensus estimates for the Euro/Dollar rate according to Bloomberg were $1.15 by the end of the year – but it reached that level just after

the agreement over the $750bn fund was announced.

Mind you, Despite historic EU deal, deep rifts remain (Financial Times, Mehreen Khan, Sam Fleming and Jim Brunsden) highlights continued rifts despite the agreement as it turns out that Finland joined the Frugal Four during negotiations in resisting the proposed deal but the now-Frugal Five were calmed down by late-night talks with Angela Merkel and Emmanuel Macron. However they got there, Recovery fund marks ‘breakthrough’ for EU debt ratings, says S&P (Financial Times, Tommy Stubbington) shows that the agreement the EU reached should lift credit ratings of member states as they are now involved in a joint response to the pandemic-induced economic crisis and the massive increase in debt issuance to finance everything will make the Euro more attractive as a reserve currency. * SO WHAT? * Like I said before, it’s good that the EU member countries managed to reach an agreement. The devil will be in the detail – but mostly in how it is all executed.

Microsoft’s revenues climb, but Slack slaps it with a lawsuit and US investors try to buy TikTok…

Microsoft revenue surges though cloud growth slows (Wall Street Journal, Aaron Tilley) shows that Microsoft reported strong sales growth due to ongoing demand for its cloud computing services as more customers moved online during the pandemic. Although sales for Azure, Microsoft’s cloud computing service, were up by 47% versus a year ago, this signalled a bit of a slowdown. The company’s profit margin for the latest period took a bit of a hit as it made investments in growing its cloud capacity. On the other hand, Slack accuses Microsoft of copying (The Times, Tom Knowles) highlights allegations by Slack, the messaging app, that Microsoft unfairly bundles its rival Teams app with Office 365. It alleges that Microsoft is “force-installing it for millions, blocking its removal and hiding the true cost to enterprise customers”. This is potentially going to get ugly.

I mentioned this yesterday but US investors try to buy TikTok from Chinese owner (Financial Times, Henny Sender, Arash Massoudi, Miles Kruppa and Hannah Murphy) goes into more detail as to who’s involved and

what they are trying to do. Basically, a group of investors led by venture capital (VC) firms General Atlantic and Sequoia Capital are talking to the US Treasury and other regulators about spinning out TikTok from ByteDance and firewalling it. In return, ByteDance, will retain a minority stake in TikTok and non-voting shares. * SO WHAT? * Given that the White House is currently debating whether to put TikTok on its “entity list” (its trading blacklist), the current talks have a bit of an edge. I have to say that I think that this sounds like it would be a workable solution and that maybe the current parent, ByteDance, would be better off owning a bit of something (a US-owned TikTok) rather than 100% of nothing (which is what would happen if the US decided to ban it). I presume that ByteDance will want to wait until they know for sure whether the US will slap a ban on it before making a decision, but you never know – maybe the company will take exception at the Americans essentially buying a Chinese success story on the cheap (cheap if you assume that the app is yet to hit maturity). Maybe even the Chinese government will get involved saying that this was a plan concocted by the US government all along to get TikTok for itself and that they are just jealous of its success. If the Americans DO end up getting it, they really will have most of the most popular tech out there right now! This will just make them even more dominant in the tech that most of us use on a regular basis!

Tesla does it again and there’s mixed news for Fiat Chrysler…

Tesla posts fourth consecutive quarterly profit, defying pandemic shutdown (Wall Street Journal, Tim Higgins) shows that Tesla, for the first time in its 17 years of existence, has managed to report a fourth consecutive quarter of profits. It added that it still aims to deliver 500,000 vehicles this year – up by over 36% versus last year – but that this would be difficult (it had previously said that it wanted to deliver more than that number, but then coronavirus happened). * SO WHAT? * As I said yesterday, this latest development means that Tesla is now eligible for inclusion in the S&P 500 index. If it does go into the index, it is highly likely that its share price will get an immediate uplift as index funds will have to buy it – amazing when you consider that its share price has already risen almost fourfold so far this year!

Elsewhere, Fiat Chrysler signs deal with Waymo as it steers away from Aurora (Financial Times, Peter Campbell and Patrick McGee) highlights a new “exclusive” deal

between Fiat Chrysler Automobiles (FCA) and Google’s self-driving specialist Waymo, which essentially brings an end to FCA’s 18-month relationship with Amazon-backed Aurora. FCA was the first car group to work with Waymo back in 2016, but since then Waymo has worked with Jaguar, Volvo, Renault and Nissan. * SO WHAT? * Having now signed the deal, FCA can now use Waymo tech across ALL of its global portfolio. The great thing here is that it won’t now have to develop it itself – and it has been seen as a bit of a laggard in self-driving tech up until now.

There’s some bad news for FCA, though, in Fiat Chrysler and Iveco offices raided in ‘dieselgate’ investigation (Daily Telegraph, Alan Tovey and Hasan Chowdhury) as investigators raided offices in Germany, Switzerland and Italy in 10 properties looking for evidence of whether firms fitted “defeat devices” to their vehicles to cheat emissions levels. VW has already been hammered with fines running into the tens of billions. * SO WHAT? * This is clearly not great, but it all depends on what the investigations find. I would have thought this will take some of the shine off FCA shares, but it could well do without being subject to humongous fines when car sales aren’t great and economies are struggling.

Staegecoach has a bleak outlook, Kingfisher benefits from lockdown DIY and there are contrasting fortunes for Mexican restaurants…

In news on trends that have emerged during lockdown, Stagecoach plans job cuts and predicts bus passenger reduction is long term (The Guardian) shows yet another bus company getting a kicking from the coronavirus. It’s not alone as rival FirstGroup is also having problems and it said that it did not expect passenger numbers to return to 2019 levels for a number of years.

Elsewhere, Kingfisher cashes in on lockdown DIY boom (The Times, Ashley Armstrong) shows that strong sales of gardening products and decorating supplies has emboldened the company enough to say that it will refuse

to accept a taxpayer bonus payment to retain staff (the government said recently that companies are entitled to get £1,000 for every member of staff they bring back from furlough if they keep them on for a certain time period). The company which owns Screwfix and B&Q said that sales momentum continues to be strong but added that it’s not so sure about what will happen for the rest of the year. Still, good news for now, though!

There are contrasting fortunes for Mexican restaurants in Burrito dining chain Chilango prepares to enter administration (The Guardian, Sarah Butler) as the chain faces potential closure of its 12 Mexican-themed restaurants in yet more evidence of the slow death of chain restaurants on the UK high street while Chipotle’s online sales surge amid coronavirus (Wall Street Journal, Heather Haddon) shows that the tripling of online sales during lockdown helped to get it through this tough period, although it declined to give full year guidance on its figures. Still, at least some are doing OK out there!

…in other news…

I thought I’d leave you today with an unusually-themed hotel room in Sleeping with the noodles – Ramen-themed hotel room now accepting guests in Japan (SoraNews24, Casey Baseel) – this looks brilliant, no?? – and a recipe that you might like if you’re a fan of Dominos in Man shares simple replica recipe for Domino’s famous Garlic and Herb dip (The Mirror, Paige Holland). My kids demand pizza on Fridays, so I think I will try this recipe out and report back to you!

1. In MACROECONOMIC & MARKETS NEWS, we take a look at how the European bailout plan will work, TfL looks at funding and markets rise on vaccine hopes and EU agreement
2. In SOCIAL MEDIA NEWS, Facebook looks at racial bias, LinkedIn axes 6% of its staff, Snap’s revenues weaken (but ad sales are picking up) and TikTok could separate from its parent
3. In HIGH STREET NEWS, Tesco wants to clean itself, Ted Baker celebrates online sales and high streets could go residential
4. In INDIVIDUAL COMPANY NEWS, Tesla continues to accelerate, Coca-Cola loses its fizz and Robinhood cancels its UK launch
5. AND FINALLY, I bring you some delivery bants…

So we have a closer look at the European bailout plan, TfL reviews its options and markets rise on hopes and relief over Europe…

EU recovery fund: how the plan will work (Financial Times, Jim Brunsden, Sam Fleming and Mehreen Khan) looks at the deal that was hammered out by EU leaders over the weekend. In short, the agreed deal is a watered-down version of what was originally proposed in May – the grants component of the recovery fund was reduced from the proposed €500bn to €390bn. It will now give Brussels massive power to borrow hundreds of billions on the markets and distribute it to member states. The proposal, called Next Generation EU, will involve the European Commission borrowing up to €750bn in the financial markets, of which €390bn will be distributed as grants with the rest being in loans. Member states need to come up with a recovery plan to get access to this funding, which will be distributed between 2021 and 2023. The allocation of recovery money  will be in proportion to the amount of economic harm done by the pandemic and there will be oversight of how the country is doing versus its plan. There are still more details to be agreed upon, but this is the bones of what will be happening. The Frugal Five have been unmasked but they’re not done yet (Daily Telegraph, Ambrose Evans-Pritchard) has a more cynical spin on what has been achieved saying that some of the money would have been spent anyway and that the extra is spread thinly over a number of years. This article argues, however, that the biggest thing the recent agreement has achieved is not the amount of money in the bailout – it’s all about the increasing power of Europe, which has now been given the green light to raise tons of money and the wherewithal to distribute it all as it sees fit (not bad for an entity that is unelected!). Overall, though, I think that a European crisis has been averted but whether it will all hang together will depend on further detail and success of the plan’s implementation.

TfL launches review into funding of transport in UK capital (Financial Times, Bethan Staton) highlights the launch of an independent review – in addition to the government’s own review – of its long term financing options as lockdown has decimated its business. The government is doing its own review as a condition of the £1.6bn rescue package it doled out in May, so I suspect Sadiq Khan is doing his own review to limit any cuts that the government review may recommend. The current funding model depends on fare revenues – clearly a massive weakness when the pandemic hit. The government, as part of the conditions of the rescue package, has told TfL to reduce concessionary fares and put a number of central government people onto TfL’s board. Unions warn of a danger that the government is using the crisis to privatise the Tube network. * SO WHAT? * This is clearly a messy situation that needs resolving quickly considering that lockdown cut passenger income by 90% and that TfL continued to spend £600m a month. The government got its people into the board of TfL ostensibly to represent the taxpayer, but I have no doubt that they will be using this opportunity to clip Sadiq Khan’s wings. This needs resolving sooner rather than later as more people will be starting to commute to work over the coming months.

Then in World markets surge on promising Covid-19 vaccine and EU deal (The Guardian, Rob Davies) we see that investors powered markets around the world higher on relief that the EU wasn’t going to implode and on positive developments in vaccine trials. * SO WHAT? * As I have said on numerous previous occasions, markets are likely to rise and fall on sentiment news like this, leading to more volatility – which in turn should translate into healthy trading revenues at investment banks as investors continue to try to second-guess the peaks and troughs. Having said that, I would expect volatility to be less extreme in the next few months versus what happened at the beginning of the outbreak given that economies are continuing to edge towards some kind of normality.

Facebook studies, LinkedIn cuts, Snap’s revenues slow and TikTok ponders its future…

Facebook creates teams to study racial bias, after previously limiting such efforts (Wall Street Journal, Deepa Seetharaman and Jeff Horwitz) shows that Facebook is putting more effort into studying and addressing racial bias on its core platform as well as on Instagram. The new “equity and inclusion team” will look at how Black, Hispanic and other minority users in the US are affected by its algorithms versus white users. In the past, internal analysis revealed that black users were 50% more likely to have their accounts disabled under new guidelines. * SO WHAT? * I guess this is all part of a general move to make Facebook more responsible but of course, they’ve only just started doing something to address previous criticisms. It’s good PR, but too early to tell whether it will have any effect at this early stage.

LinkedIn to lay off about 6% of its workforce (Wall Street Journal, Martin Mou and Ben Otto) says that the Microsoft-owned professional networking site is to cut about 960 jobs due to the falling demand for its recruitment services. * SO WHAT? * The irony of a platform that wants to render recruiters obsolete by cutting them out of the loop is that it makes most of its money through ads and fees paid by recruiters. If fewer employers are

employing and fewer recruiters are placing ads and subscribing to expensive search functionality such as “Recruiter”, then it is unsurprising that the axe is falling. I guess that the company will just have to hunker down for the moment.

Snap revenue slows but sees advertisers ramping up (Wall Street Journal, Georgia Wells) highlights a mixed bag of news for Snap. On the one hand, it reported slower revenue growth for the second quarter but on the other hand it said that advertisers had started to spend more in recent weeks. * SO WHAT? * Snap’s observations on advertisers may be taken as a sign that the same is true elsewhere. Given advertising’s increasing importance to the company, an uptick will definitely be welcome! The company added that its daily user base increased by 4% from the previous quarter – also good news.

Embattled TikTok could be sold to US investors (Daily Telegraph, Laurence Dodds) shows that TikTok might be split off from its Chinese parent ByteDance and sold to US investors in order to swerve a potentially massive regulatory crackdown. Talks are said to be at an early stage, but clearly drastic action could be needed to avoid the US following India in banning TikTok. * SO WHAT? * Major action could well be needed as Trump and his gang are currently discussing whether or not to ban TikTok due to data security concerns and its links to China. This isn’t going to be easy as a completely new structure will be needed – and buying TikTok will not be cheap given its burgeoning popularity. This is definitely a story worth following!

Tesco ditches cleaners, Ted Baker does well online and high streets may get more residential…

Tesco staff in nearly 2,000 stores to clean shops after contractors axed (The Guardian, Zoe Wood) shows that the supermarket is cutting the number of contract cleaners in its 1,920 Tesco Metro stores starting from August 24th. Existing staff will be taking on new tasks like cleaning floors, windows, shelving, fridges, their own break rooms and toilets. Tesco will train staff to carry out these new tasks but it will continue to used contract cleaners for things like cleaning external signage, pressure washing etc. * SO WHAT? * Tricky times, but I guess that it will save more Tesco jobs from being axed – at least for the time being.

Shift from formal dress doesn’t suit ailing Ted Baker (Daily Telegraph, Laura Onita) shows that Ted Baker’s revenues have dropped since lockdown as it has found, like Asos, that people just aren’t buying smart clothing. On the other

hand, online sales strengthened by 35% although this was mostly due to discounts. * SO WHAT? * Although the company is clearly in turmoil at the moment, Ted Baker: worth a rummage (Financial Times, Lex) argues that it is making improvements in things like stock management as part of its overall turnaround plan and that there is potential upside to come.

UK high streets could be turned into housing, says thinktank (The Guardian, Phillip Inman) highlights a report by think tank Social Market Foundation, which recommends that the government should trying to create residential hubs in town centres rather than put their efforts into encouraging new types of shops. It argued that more home-working and online shopping will inherently lead to lower footfall that will mean ongoing difficulties for retailers. * SO WHAT? * I think that town and city centres will need to be more open to change as some of the behaviours that we have already seen building up over the years have been accelerated by the pandemic. Discussions are ongoing but surely every option should be on the table!

Tesla accelerates, Coca-Cola goes flat and Robinhood sheaths its bow…

In other interesting news today, Elon Musk aims Tesla at fourth straight profitable quarter (Wall Street Journal, Tim Higgins) shows that the electric car company continues to surprise on the upside as it turns out that the nightmare second quarter that everyone was predicting because of lockdown turned out to be smaller than expected when the company announced delivery figures recently! Everyone is waiting in anticipation of another positive announcement in today’s results – that it will report a profit for the quarter! * SO WHAT? * If it DID manage to report a profit, it would mark the first time of doing so for four consecutive quarters – and this would qualify it for inclusion in the S&P 500. This would pump up its share price even more because index funds would then be forced to buy it. This is getting interesting!

Elsewhere, Coca-Cola sales fall 28%, but it says the worst is over (Wall Street Journal, Jennifer Maloney) highlights the suffering of the fizzy-drinks producer as about 50% of its revenues come from pubs, restaurants, bars, cinemas etc. – and they have all been shut down. However, sales have started to recover as lockdown has been lifting.

Then in Robinhood shoots down British plan (The Times, Ben Martin) we see that the American trading app that got wildly popular recently announced yesterday that they would postpone a push into the UK indefinitely in order to focus on its domestic business. The app had been due to launch this year and the waiting list to join had reach 250,000! * SO WHAT? * Basically, the arrival of Robinhood scared the bejeezus out of other more established online brokers and trading platforms because it doesn’t charge commissions! It makes money instead by selling customer orders to high-frequency market traders, getting paid for margin loans and investing unused money lying around in customer accounts to invest. Interesting stuff! Shares in Hargreaves Lansdown and AJ Bell, who would have potentially suffered from Robinhood’s arrival rose in relief yesterday.

…in other news…

I thought I’d leave you today with a bit of amusing banter between a delivery driver and his customer in Delivery driver leaves man in tears with note on where to find ‘hidden’ parcel (The Mirror, Luke Matthews). Good work 👍

1. In MACROECONOMIC & COMMODITIES NEWS, the EU has a breakthrough on the bailout package, Chevron buys Noble Energy, Halliburton cuts costs and some say gold could hit $2,000
2. In VACCINE NEWS, the UK buys shed loads while GSK and AstraZeneca place their bets
3. In CONSUMER TRENDS & RETAIL NEWS, UK households are nervous about spending but house prices rise, as do secondhand car sales. Walmart mulls the sale of Asda and M&S cuts jobs
4. In FINANCIALS NEWS, Ant Group approaches its IPO and Julius Baer makes big profits
5. AND FINALLY, I bring you a profitable DIY tip…

So a deal is struck at the EU summit, Chevron buys Noble, Halliburton cuts and the gold price could go further…

EU leaders strike deal on recovery fund after marathon summit (Financial Times, Sam Fleming, Jim Brunsden and Mehreen Khan) shows that Europe’s leaders have managed to overcome their differences to agree on a €750bn post-pandemic bailout package. The fund will include €390bn of grants to weaker member states, which is smaller than the original €500bn earmarked for this purpose. At least they managed to hammer something out!

Chevron agrees to $5 billion takeover of Noble Energy (Wall Street Journal, Cara Lombardo and Christopher M.Matthews) highlights a major all-paper bolt-on acquisition (i.e. no cash will change hands and it does the same sort of stuff and therefore just adds to existing business) by Chevron at a 7.6% premium to Friday’s closing price. The acquisition will give Chevron more presence in the DJ Basin in Colorado and Permian Basin (the Permian Basin is the biggest oil field in the US) covering West Texas and New Mexico while also giving it access to eastern Mediterranean and West African assets. * SO WHAT? * A lot of oil companies have been having problems since the pandemic as oil prices weakened significantly. This means that, for the companies left standing, it may be tempting to

buy struggling rivals. However, at the moment, it seems that we are yet to see an avalanche of deals forthcoming. Having said that, I am sure they will start to pick up again when confidence starts to gather momentum.

Talking of struggling oil companies, Halliburton takes severe cost-cutting action as it sinks to $1.7bn loss (Financial Times, Myles McCormick) shows that Halliburton, one of the world’s biggest oilfield service providers, announced a painful $2.1bn writedown yesterday due to the ongoing repercussions of a low oil price. Analysts believe that many companies are going to have to make big writedowns on their balance sheets like this for the rest of the year. * SO WHAT? * Oilfield services groups drill wells, install pipes, supply sand and make roads for the oil majors and so when those oil companies decide to cancel or mothball projects (usually due to low oil prices), oilfield services companies feel the pain particularly keenly. I suspect that investors will applaud the company’s willingness to get this out of the way early, but then again there’s no guarantee that it won’t get worse from here. Still, you would have thought that the “worst” writedown is now out of the way.

Moving on to a commodity of a different colour, Gold may top $2,000 in safety flight (Daily Telegraph, Tom Rees) shows that some analysts believe that the price of gold could breach the $2,000 per ounce this year for the first time ever as economic uncertainty continues. Savers tend to buy gold when things are going badly as it is seen as a “safe haven” investment. The gold price has risen by 23% since the lows of March and we are now seeing levels not reached since 2011.

The UK loads up while GSK and AstraZeneca place their bets…

Britain signs up for 90m doses of German and French vaccines (Financial Times, Joe Miller and Clive Cookson) shows that the UK government is getting involved in putting bets on various vaccines in the hope that at least one of them works out. It was one of the first to buy supplies of a vaccine developed by Germany’s BioNTech and America’s Pfizer and it also committed to buy supplies of a vaccine being developed by France’s Valneva, which works in a different way. This follows the government’s agreement to buy 100m doses of the vaccine being developed by Oxford University and AstraZeneca. * SO WHAT? * According to the WHO, 23 coronavirus vaccines are in clinical trials at the moment, with over a hundred more being in earlier stages of development. Everyone is trying not to get too excited as many treatments fail the clinical stage, but at least there appears to be some hope! Coronavirus vaccines: top shots (Financial Times, Lex) takes a look at some of the vaccine candidates on offer currently and says that, from a company’s point of view,

making money from vaccines is very difficult due to the high risk of failure, the costs of getting them approved and moving markets. This is why it’s wise for governments and investors to back different horses in order to make it to the finish line.

If all this stuff on vaccines gets you wondering, GSK shown up by AstraZeneca yet again (Financial Times, Cat Rutter Pooley) shows that AstraZeneca is currently leaving GSK choking on dust as it continues to make ground on its coronavirus vaccine despite it not being a vaccine specialist! GSK announced yesterday that it was paying £130m for a 10% stake in CureVac, a German group that’s also working on other vaccine candidates, but given that GSK is an £83bn market cap company, this is chump change. * SO WHAT? * AstraZeneca’s share price is up by 40% over the last year whereas GSK’s is flat, but its recovery has been six years in the making. GSK is doing all the right things under the leadership of chief exec Emma Walmsley but it still has a way to go. It’s difficult to judge which one has more upside potential – and I guess it will come down to who develops the most effective treatment first! Given recent newsflow, though, you would have thought this is more priced into AstraZeneca’s share price than GSK’s at the moment.

UK households remain cautious on the one hand but house prices and secondhand car sales rise while Walmart considers other ways of ditching Asda and M&S cuts jobs…

In Job cut fears holding back household spending (The Times, Gurpreet Narwan) we see that the latest survey by IHS Markit shows that pessimism is rife among households despite the economy reopening. At the moment, they are more focused on paying down debt and boosting their savings – but then again, Gloom goes out the window as house prices lift (Daily Telegraph, Melissa Lawford) highlights the fact that asking prices in July are now at a new high, according to Rightmove. There are reports of a big uptick in buyer demand, which implies that there will be a rise in completed transactions over the next few months – and if that happens, prices are likely to go up. In addition to this, UK public transport fears drive more online demand for used cars (The Guardian, Jasper Jolly) shows a big hike in used car sales as people continue to swerve public transport to limit their exposure to the coronavirus. There has been particularly strong demand for smaller cars worth less than £5,000 and now dealers are buying from private individuals to boost their stock. * SO WHAT? * It’s interesting to see that the picture really is mixed at the moment. I guess that those who have been fortunate enough to hang on to their jobs through the pandemic have more money to spend and are able to make bigger ticket purchases – but it remains to be seen as to how long this will last. IMO, if we get a vaccine this side of

Christmas, activity will continue to snowball as confidence increases of a recovery. On the other hand, if no vaccines are on the horizon until at least next year, I would expect activity to calm down after a relatively frenzied few months over the summer!

In retailer news, Walmart restarts talks on selling Asda (The Guardian, Sarah Butler) shows that US retail giant Walmart is having another crack at offloading Asda after its most recent attempt to hive it off to Sainsbury’s failed. It said that it was in conversation with a number of third-party investors, but nothing has been sorted out yet. A number of private equity groups threw their hat into the ring earlier this year, but the bidding process stopped in April as the coronavirus pandemic gripped the UK. The talks are now ongoing. * SO WHAT? * As it happens, now is probably not a bad time to sell as supermarkets – including Asda – have seen sales skyrocket during lockdown. Having said that, costs have increased and growing profits is notoriously difficult in this most competitive of sectors. Still, it may be seen to be attractive as an investment due to its relative stability, but I’d be willing to bet that any PE buyer is just going to chop stores and jobs if and when they buy.

The gloom continues in M&S cuts 950 jobs in another blow for ‘radically changed’ high street (The Times, Louisa Clarence-Smith) as the retailer announced more job cuts in the latest M&S overhaul. The cuts will be made at HQ as well as the property and store management divisions. Middle management also seems to be in the crosshairs and it seems that operating in extreme circumstances has given the company a clearer picture of what it could potentially do without. * SO WHAT? * This is obviously very bad news for employees, but given the problems that the company is having, it is unsurprising that it is joining others on the high street in making deep and painful cuts to survive.

Ant makes a splash and Julius Baer makes big profits…

$200bn float for Alibaba’s payment arm (Daily Telegraph, Matthew Field) heralds the imminent flotation of Chinese mobile payments giant Ant Group (which used to be known as Ant Financial and was originally part of Alibaba) with a dual listing in Shanghai and Hong Kong. The timing is not yet finalised, but the group is thought to be valued at $200bn and 10% of its shares are likely to be on offer in the sale that will be one of the largest ever floats by an Asian company.

Elsewhere, Julius Baer profits soar as turbulent markets lift trading activity (Financial Times, Owen Walker) shows that heavy trading by the bank’s wealthy clients has resulted in record profits for the Swiss private bank. * SO WHAT? * This would seem to reflect similar activity reported last week by American banks including Goldman Sachs and Morgan Stanley who benefited from clients trading market volatility.

…in other news…

I thought I’d leave you today with a DIY tip from the guy who won the first series of Big Brother in Simple trick with your front door can add thousands to the value of your home (The Mirror, Paige Holland). If you are selling your abode in today’s rising market, why not make a bit more money?!?

1. In MACROECONOMIC NEWS, the EU summit proves to be tricky and Network Rail could be in the driving seat
2. In HIGH STREET AND CONSUMER GOODS NEWS, Ted Baker announces job cuts, Ask and Zizzi get sold and Levi Strauss warns of more retail strife
3. In WORKING-FROM-HOME NEWS, cloud businesses and Zoom continue to benefit
4. In INDIVIDUAL COMPANY NEWS, car makers accelerate their electric plans and TikTok stops talks on a London HQ
5. AND FINALLY, I bring you a calming life hack and a beautiful aquarium…

So the EU summit isn’t going well and Network Rail could get more responsibility…

EU leaders struggle to break summit logjam over virus recovery fund (Financial Times, Sam Fleming, Mehreen Khan and Jim Brunsden) shows that things aren’t going well at the moment in the big meeting going on at the moment between Europe’s leaders who are trying to come to an agreement on bailout terms for a big coronavirus bailout package. All the kerfuffle is due to a small group of richer countries (the “frugal four” – Austria, Denmark, the Netherlands and Sweden) wanting to issue the money in the form of loans versus everyone else who wants to issue it in the form of grants. Interestingly, the “frugal four” have actually softened their previous stance of saying that none of the money should be distributed in grants – they have opened the door, but still want more loans. This has not gone down well. Global stocks fall as EU recovery fund talks stall (Financial Times, Hudson Lockett) reflects market reaction to the impasse, although the prospect of the expiration of unemployment benefits for Americans due at the end of this month was another potential negative for investors to consider. The drama continues…

Network Rail could be handed control of railways (The Times, Robert Lea) highlights a possibility currently being considered by the Department for Transport (DfT) – that Network Rail could take charge of running the railways in England. Network Rail overseas the track and signalling infrastructure and has been part of the state since 2012 when it was nationalised. Private companies who operate regional franchises are likely to object strongly to having the state looking over their shoulder. * SO WHAT? * The train industry has taken a massive hit during lockdown as the normal flow of passengers has fallen dramatically. Train operators are currently thought to be running 85% of their services but with passenger numbers only at 20% of normal levels. This has pushed a lot of train operators close to the brink of collapse. It’ll be interesting to see how this one pans out because I guess that, in many ways, current circumstances offer a unique opportunity to make a massive overhaul of the whole thing. Whether that opportunity is taken, of course, is another matter! However, I think that the coronavirus outbreak has led to a massive rethink in working practices and COULD have a profound effect on passenger numbers in future as flexible working becomes more established. 

Ted Baker announces cuts, Ask and Zizzi are scooped up and Levi Strauss warns of more gloom to come…

Ted Baker to cut 500 jobs as pandemic losses add to financial woe (The Guardian, Rupert Jones) shows that troubled retailer Ted Baker is going to axe about 25% of its UK workforce as it continues to struggle with current market conditions. Around 200 of the 500 are to go at HQ, but the rest will be from its shops and store concessions. * SO WHAT? * Ted Baker has had a disastrous few years – particularly since its founder, Ray Kelvin, stepped down following allegations of inappropriate behaviour towards staff. Since then, his top management team has been cleared out due to the discovery of a MASSIVE accounting error and Toscafund, the hedge fund, has overtaken him to become the company’s biggest shareholder. A turnaround plan was launched last month, but it’s too early to see any returns from that yet. Investors had seen Ted Baker in the past as a one-man band – that man being Ray Kelvin – and always had a concern over what would happen if he left. Those worries have proved to be well founded…

In Ask and Zizzi sold with further job losses for restaurant sector (Financial Times, Kaye Wiggins and Alice Hancock) we see that the restaurant chains have been sold in a £70m prepack administration deal to TowerBrook Capital Partners. The two brands were part of Azzuri, which itself was owned by Bridgepoint. By the way, if you are interested

in who owns who and who sold who you MUST read this article. There is a superb chart in there that lays it all out. Information like this is VERY hard to come by in one place like this! Anyway, new owners TowerBrook are expected to close 75 outlets and cut 1,200 jobs. * SO WHAT? * The casual dining sector’s demise has already been ongoing for the last few years, but the coronavirus has accelerated its downfall. Private equity firms piled into the sector (they invested £4.5bn between 2011 and 2019, according to Refinitiv) over the years and powered a massive proliferation of outlets. This has come back to haunt them in the last couple of years and now they face the difficult decision of whether to open them with vastly reduced customer numbers, to leave them closed or to get out now while they can (and while Sunak’s recent VAT cuts are providing a short-term boost). The tough times continue. IMO, this could lead to the opening of more independent restaurants in the high street as vacancies increase and government initiatives encourage small businesses (this hasn’t happened overtly yet, but it tends to happen in an economic downturn to get people back to being economically active).

Retail bankruptcies ‘tip of the iceberg’, says Levi Strauss boss (Financial Times, Alistair Gray) highlights a warning from the chief executive of Levi Strauss only two days after two of its competitors in denim, Lucky Brand and the US division of G-Star Raw, filed for Chapter 11 protection. Although its second quarter was the weakest in at least twenty years, its balance sheet is actually in better condition than many of its peers – it has $1.5bn sitting around in cash – which may mean that it can shop around for “bargains”.

Cloud businesses and Zoom continue to benefit from lockdown…

Cloud business reaps rewards of the work-from-home revolution (Financial Times, Richard Waters) takes a look at how working practices around the world have changed under lockdown, what with the massive rise in videoconferencing, online shopping and gaming. The cloud computing services that provide the backbone to these businesses have been growing over the last twenty years or so but, as Microsoft’s chief exec Satya Nadella said in April, the pandemic has already resulted in “two years’ worth of digital transformation in two months”. * SO WHAT? * Companies such as Amazon Web Services and Oracle are among those to have been able to provide much-needed additional capacity to help companies do what they do and many have said that demand has been brought forward as clients accelerate moves to cloud-based

systems. Although some demand will fall as people return to work, lockdown will have ingrained online habits enough to continue the ongoing migration to the cloud.

Zoom-mania key to using tech to boost productivity (Daily Telegraph, Tom Rees) says that the government wants to continue to surf the wave of “Zoom-mania” by introducing new policies that will help to accelerate the adoption of tech to solve Britain’s productivity problems. Officials are currently discussing ways to stimulate companies’ sluggish digital adoption rates by introducing new grants, tax incentives and education. Apparently a third of SMEs have very low levels of digitisation, according to findings by the Entrepreneurs Network – and it is believed that their productivity could be boosted in a meaningful way by the adoption of cloud computing and web-based accounting, among other things. * SO WHAT? * I’m sure there will still be a certain amount of inherent scepticism, but incentives from the government in the wake of this outbreak will surely help to convince laggards to catch up on the tech front! I have to say, if they don’t do it now they probably never will!

Car makers continue to electrify and TikTok London HQ talks stop…

Auto makers charge ahead with electric vehicle plans (Wall Street Journal, Ben Foldy) shows that the likes of General Motors and Volkswagen are seeing increased pressure to deliver on their electric vehicle plans as massive share price rises in the likes of Tesla and the lesser-known Nikola (named after the same scientist and specialist in electric trucks) show that investors are betting heavily on electric dreams. GM said last week that it is developing 20 new electric models by 2023 (including a new electric Hummer!?!), Ford will start selling its electric Mustang SUV and Jeep will be a plug-in hybrid version of its Wrangler. * SO WHAT? * It’s interesting to see how the momentum continues to build for electric vehicles, but

there is still a while to go as, for instance, VW is currently having problems with the release of its ID.3 that is now being delayed from its intended European summer launch to September at the earliest. This has been due to coronavirus-related production problems as well as software glitches. I haven’t got any data on this, but I would have thought that the demand for home chargers and related parts and materials will also be increasing over time.

TikTok halts talks on London HQ amid UK-China tensions (The Guardian, Phillip Inman) highlights a tricky situation as TikTok’s parent ByteDance has halted talks to build a non-China business HQ in the UK. Relations between China and the UK have been deteriorating of late and the recent ban on Huawei by the UK government has been cited as a reason for the suspension, with 3,000 future jobs hanging in the balance. This will no doubt be a useful bargaining chip for ByteDance as it will probably seek more concessions to put an HQ in London…

…in other news…

I thought I’d leave you today with a life hack for people who keep on wondering whether they’ve left the gas on when they leave the house in Expert explains why you should always take photos of your appliances before going out (The Mirror, Courtney Pochin) and then the strangely beautiful sights you can see in Tokyo aquarium’s reopening showcases a revamped, ethereally beautiful jellyfish chamber (SoraNews24, Katy Kelly).

1. In SOCIAL MEDIA NEWS, Europe rejects US data sharing and Twitter has a nightmare
2. In CORONAVIRUS “WINNERS” & LOSERS, we see how AstraZeneca, Morgan Stanley, Zoom and Netflix have benefited from and how Pizza Express, Genting and Hays have struggled with the pandemic
3. In INDIVIDUAL COMPANY NEWS, Airbnb gets back on track, BMW signs a battery contract with Northvolt and Boohoo bosses buy
4. AND FINALLY, I bring you a toothy fish and a platform vinyard…

So the ECJ rejects a US data sharing deal and Twitter has a nightmare…

*** BTW, did you know I do a podcast? You can listen to it on Apple Podcasts, Spotify and Google Podcasts. At the moment it’s a weekly roundup, but there will be more content to come…Also, if you DO like the podcast please write me a nice review with a few comments as to WHY you find it interesting/useful! It REALLY helps and I would appreciate your input 👍***

Europe’s top court throws out US data sharing deal (Daily Telegraph, Hannah Boland and James Crisp) heralds a major decision by the European Court of Justice to reject a US data-sharing deal, effectively ending privileged access for US companies to personal data from Europe. The case had originally been instigated by allegations made by ex-CIA contractor Edward Snowden back in 2013 that the US government was poking around in people’s online data. * SO WHAT? * This is going to affect thousands of companies – including Facebook – and will mean that the US and EU will have to renegotiate their data privacy deal. It also makes it more likely that UK-EU negotiations over continued data transfers will get trickier as we approach the Brexit deadline of December 31st.

FBI investigates Twitter hack amid broader concerns

about platform’s security (Wall Street Journal, Robert McMillan and Dustin Volz) shows that the FBI has now launched an investigation into the hacking of Twitter on Wednesday which resulted in accounts of the likes of Elon Musk, Kanye West, Barack Obama and Apple Inc sending out bogus messages asking for bitcoin to be sent to designated accounts. Twitter takes ‘nuclear option’ to disarm hackers (Daily Telegraph, Olivia Rudgard and Margi Murphy) shows that Twitter was forced to prevent all “blue tick” verified users from tweeting as it was unable to contain the attack. * SO WHAT? * One interesting observation made here was that President Trump appeared to remain spam-free while those of prominent liberals such as Barack Obama, Bill Gates, Joe Biden and Warren Buffett DID spew out cryptorubbish – and Twitter itself was, funnily enough, recently lambasted by Trump for labelling his tweets with “fact check” messages as he slagged off mail-in ballots a couple of months back. Whoever did the hack did not use it for generating much money despite the power it wielded (only tens of thousands of dollars), which seems rather unusual. If you put this all together it makes for an interesting conspiracy theory (oooh, Roger Stone had his prison sentence commuted only a week ago – could HE have been the evil mastermind behind it all?!?), but it is interesting isn’t it! On a more serious note, Twitter: verified problem (Financial Times, Lex) points out that recently uncovered plans being made by the company to offer a subscription service may suffer a setback as a result of this hack as potential customers may be less willing to hand over money if they can’t be protected.

AstraZeneca, Morgan Stanley, Zoom and Netflix benefit from the coronavirus while Pizza Express, Genting and Hays suffer…

In the “winners” corner today, Delivering vaccine would be shot in arm for AstraZeneca…and the world (Daily Telegraph, Hannah Uttley) shows that the company has benefited recently from its tie-up with the University of Oxford on a potential coronavirus vaccine – the snappily-named AZD1222. The idea is that the Oxford Uni scientists will develop the drug while AstraZeneca will licence and distribute it on their behalf. Investors lapped up the news that it would supply two billion doses of its jab in September – half of which would be going to low and middle-income countries. The jab triggers an immune response to the virus, but a full report on the Phase I clinical trial is expected to be published in The Lancet on Monday. * SO WHAT? * Although AstraZeneca would not benefit as much as it COULD do if its efforts led to a coronavirus vaccine (it has promised to ensure fair supply of the potential vaccine – and, importantly, AT COST), it could actually benefit longer term by laying the foundations for a response platform for future pandemics and become the “go-to” for governments and the WHO – for which it could charge a nice fee. Interestingly, AstraZeneca is not known for its vaccines – GSK, Sanofi, Merck and Pfizer are all more dominant in this market – but a successful vaccine here may change all that.

Then in Morgan Stanley profits lifted by trading bonanza (Financial Times, Laura Noonan and Robert Armstrong) we see that Morgan Stanley announced record profits on the back of a massive trading boom, much like competitor Goldman Sachs, as its investment bank produced a standout performance. Trading revenues were up by 68% – and that included a 168% increase in fixed income revenues and a 39% uplift in investment banking fees. * SO WHAT? * I think that it would be fair to say that this week’s US bank results have highlighted a sharp contrast between those with less exposure to loans (like Morgan Stanley and Goldman Sachs – who have done well) and those with more (like Bank of America, for instance, who has suffered). Morgan Stanley: winner, winner, chicken dinner (Financial Times, Lex) points out, though, that the debt trading and issuance boom is unlikely to continue – a

sentiment reflected by JP Morgan – but wealth management is likely to push on to make up the slack. 

Formula One strikes Zoom deal in bet on virtual corporate hospitality (Financial Times, Samuel Agini) highlights a really interesting deal that has been struck between Formula One and Zoom, the video meeting platform, to create a virtual substitute for the corporate hospitality business that has evaporated under lockdown. This will be Zoom’s first move into recreating corporate hospitality, but not its first move in sport – as it has already worked with Arsenal and Manchester City. The idea is to try to recreate some of the experience of the Paddock Club, which generated $358m of F1’s $2bn in revenue in 2019. Under normal circumstances, Paddock Club tickets cost $3,800 for two days! The new initiative won’t actually replace the Paddock Club, but there will be benefits like getting virtual access to certain locations, the ability to vote in polls and hear from F1 drivers and management across the weekend. * SO WHAT? * What a great idea! The beauty of this is that it can probably generate an audience now, giving it a greater potential base from which to grow in the future as this is unlikely to be a one-off IMO. It also shows that there may be more growth potential in sports and giving fans access to what they love in a different way to what they get from TV, for instance. It’ll be interesting to see how they price these offerings but I thought that this offering would be eminently scaleable.

Netflix loses star appeal with warning over viewers (The Times, James Dean) shows that although the streamer saw strong growth in subscriber numbers in the second quarter (during lockdown) it is predicting a rather weaker third quarter. The company said that some of the third quarter growth had been brought forward to the second quarter as a result of the lockdown.

Then in the “losers” corner, Pizza Express to close up to 75 restaurants, risking 1,000 jobs (The Guardian, Sarah Butler) shows that the troubled pizza chain is to close up to 75 of its outlets, putting over 1,000 jobs on the line. The chain is currently negotiating a Company Voluntary Agreement (CVA). More than 1,600 UK jobs at risk at casino firm Genting (The Guardian) signals further doom, this time in casinos, and Recruitment group Hays warns profits will almost halve this year (Financial Times, Antonia Cundy) further reflects the current malaise in recruitment more broadly as it cut 1,000 of its own staff. Paul Venables, its chief financial officer, observed that “Without a doubt these have been the toughest trading conditions that we’ve faced in 14 years”.

Airbnb shakes up management, BMW signs a battery deal and Boohoo owners back themselves…

Airbnb shakes up management and revives IPO plans (Financial Times, Dave Lee) shows that the accommodation rental specialist has had a management shake-up and is focusing once more on plans to do an IPO. The company said that guests had booked over 1m nights in one day for the first time since the pandemic hit, but around 50% were for locations less than 300 miles away and were for an average of below $100 a night. * SO WHAT? * Although there’s still a way to go yet, I am sure that Airbnb will be doing all it can to shape itself up for an IPO. I think it will want to do this in order to give itself more currency, but also to potentially offer the investors who injected $2bn into the company when things were looking at their worst a way out.

BMW agrees €2bn battery cell contract with Northvolt (Financial Times, Joe Miller) highlights the latest battery deal struck by BMW as it signed up with Swedish battery cell manufacturer Northvolt to supply its new gen electric models as competition for core parts intensifies. BMW has already spent €10bn on battery cell contracts with China’s CATL and Samsung’s SDI. It will also work with Northvolt to source raw materials such as cobalt and lithium from more ethical sources. * SO WHAT? * All the makers are trying to secure their sources – so the whole market is going to get hotter. I always think that investing in car companies, trying to guess their potential sales – and especially EV sales – is a risky business. Batteries, on the other hand, may be more interesting as they often supply a range of makers and other industries. This is just an opinion, though!

In another bit of interesting news today, Boohoo ahead as bosses fill their boots (Daily Telegraph, LaToya Harding) shows that the chairman and co-founder of Boohoo both bought 7m shares between them in the recent share price collapse. They are either backing themselves to get out of the current issues or trying to reflect confidence to the market!

…in other news…

I thought I’d leave you today with the bizarre and heebie-jeebie-inducing Bizarre fish pictured with eerily human-like teeth caught by angler in Malaysia (The Mirror, Alex Cope) and an idea that I am sure would catch on over here: Japanese train station grows wine grapes on the platform (SoraNews24, Oona McGee). Civilised or what??

1. In MACROECONOMIC, MARKETS & OIL NEWS, Q2 China GDP grows, Europe has some dramas, UK inflation rises and markets perk up on vaccine hopes while Russia and Opec are set to end production cuts
2. In RETAIL/HIGH STREET NEWS, Walmart and Kroger require shoppers to mask up, the UK high street continues to evolve, Next closes in on Victoria’s Secret and Asos benefits from the lockdown look
3. In INDIVIDUAL COMPANY NEWS, Google becomes the latest giant to invest in India’s Reliance and Goldman Sachs benefits from bond trading
4. AND FINALLY, I bring you the latest crazes in masks…

So China GDP returns to growth, Europe has a LOT going on, UK inflation rises and markets perk up on vaccine hopes while Opec and Russia talk production…

Just in case you didn’t know, I do a Zoom call on Thursdays at 5pm. I kick off by talking about the week’s business and markets news and then open it up to any questions from YOU! If you would like to join, the details are in your morning e-mail (check spam for some) or just click THIS link. Hopefully, I’ll see you there!

Chinese GDP grows 3.2% in second quarter (Financial Times, Thomas Hale and Xinning Liu) highlights the Chinese economy’s return to growth as it pulls itself out of the coronavirus pandemic. This coincided with a steep drop in the number of new reported cases and concerted government support for the industrial sector. I think it would be fair to say that no-one’s taking this for granted, given there’s no virus cure – but at least things are going in the right direction.

Europe’s leaders gear up for crunch summit (Financial Times, Darren Dodd) heralds the start of a key summit of European leaders tomorrow as they meet to discuss the proposed €750bn coronavirus recovery package. Leaders will face continued resistance from the “frugal four” – Denmark, Sweden, Austria and the Netherlands – but we’ll just have to see how this pans out. * SO WHAT? * Usually, I would expect this sort of thing to drag out given the number of countries involved but I think that a lot of countries are desperate to get their hands on any kind of aid they can find – and they want it now. There is a LOT riding on this meeting. Spanish Prime Minister Pedro Sanchez described its significance thus: “Europe was the answer to the great crisis of the second world war and Europe once again has to be the answer to the great crisis caused by the pandemic”.

The drama continues in EU watchdog to probe German regulators after Wirecard collapse (Financial Times, Matthew Vincent, Jim Brunsden and Olaf Storbeck) as the European Securities and Markets Authority has now launched a fast-track investigation into Germany’s supervision of disgraced payments group Wirecard. The review covers both BaFin (the German financial regulator) and the FREP, which is a private sector body that overseas German companies’ accounts. I suspect that this will end up being an exercise in finger-pointing, blame avoidance and back-stabbing IMHO! I wonder who will be thrown under the bus on this one…

AND THERE’S MORE drama for Europe as Apple tax ruling deals blow to EU (The Times, Bruno Waterfield) shows that the European Court of Justice ‘s general court (the EU’s second highest court) has rejected a 2016 Brussels competition ruling that ordered Apple to hand over €13bn

in back taxes to the Republic of Ireland. * SO WHAT? * Although Ireland could do with €13bn from Apple to put a sizeable dent in its budget deficit, it sided with the company saying that “The correct amount was charged in line with normal Irish taxation rules”. This sounds like 🐂💩 to me! It’s only my opinion of course, but Ireland is understandably trying to defend its status as a low-tax regime and if Apple gets slapped with this massive fine, other big hitters (who are already jittery because of the coronavirus effect) may use it as an excuse to leave. I don’t think that this is the end of the matter but it’s not looking good for Margrethe Vestager, who Trump calls “the tax lady”. I would have thought that it will weaken the EU’s negotiation stance in the whole digital services tax debate. Silicon Valley: 2 (she lost last year when she took on Starbucks) – EU/Vestager: nil points in this round. It is a shame because I think the world could do with a strong regulator to reign in the excesses of Silicon Valley – because I doubt the Americans are going to do much about it. 

Meanwhile, UK inflation rises as game console prices increase in lockdown (The Guardian, Richard Partington) shows that the UK inflation rate has risen for the first time this year, fuelled in part by strengthening prices of games consoles. The latest stats from the Office for National Statistics show that the consumer price index (CPI) measure of inflation increased from 0.5% in May to 0.6% in June versus economist consensus forecasts of a drop to 0.4%. I’ve got nothing against economists – I’ve worked with some really good ones – but this goes to show how wrong “experts” can be when, let’s be honest, this whole thing is a complete crap-shoot, especially during this pandemic. A bit like trying to predict the oil price 😂. * SO WHAT? * I just don’t think you can believe a lot of the figures that are coming out at the moment. The collection of reliable data has been much more difficult during lockdown and so I would imagine that we will continue to see wild differences in predictions. Of course it is many people’s job to predict such things, but at the moment you might as well just put a blindfold on and make your predictions throwing darts at a dartboard.

Fresh hopes for Covid vaccine give markets a shot in the arm (The Times, Alex Ralph) highlights a rise in the stock markets yesterday as the market cheered up on vaccine news from Moderna and encouraging data from a vaccine being developed at the University of Oxford. AstraZeneca is working with Oxford’s Jenner Institute on the manufacture and distribution of the vaccine. If all goes well it hopes to make it available in September 😱👍👍👍. That’s a big “if”, though – but wouldn’t it be great!

Then in Opec and Russia primed to unwind historic supply cuts (Financial Times, Anjli Raval, David Sheppard and Derek Brower) we see that the oil supply cuts agreed earlier this year will be coming to an end, meaning that production will start to rise. * SO WHAT? * The cuts helped oil prices to rise from around $20 a barrel to the current $40 level, so everyone will be waiting to see whether a rise in demand as economies restart will be able to soak up the extra oil or whether the price will start to fall again.

Masking-up becomes the norm, the drama continues in the UK high street, Next gets closer to Victoria’s Secret and Asos benefits from lockdown…

Walmart, Kroger to require shoppers to wear masks in all US stores (Wall Street Journal, Dave Sebastian and Sharon Terlep) shows a change in mood in the US as more businesses push to get people to wear masks. The two giants have over 8,000 stores across the country and have decided to take the initiative to protect staff and customers. * SO WHAT? * Good on ’em, I say. I’m not sure whether this is going to affect the number of customers who go to their stores, but I think it’s good to see some positive action being taken as local guidance has been rather variable.

Then on the UK high street, Pret passes on VAT cut to customers to boost sales (Daily Telegraph, Hannah Uttley) shows that prices at Pret will come down and On the side of the angels (Daily Telegraph) shows that Next is on the verge of taking over Victoria’s Secret in the UK after beating competition from M&S and others. On the other hand, PizzaExpress set to fall into lenders’ ownership (Financial Times, Daniel Thomas) shows that the embattled purveyor of pizzas is about to see a change of ownership as Chinese owner Hony Capital looks likely to take on the Chinese operations while the bond holders take the rest. Meanwhile, Nearly half of Britain’s shops have yet to reopen (Daily Telegraph, Laura Onita and Russell Lynch) cites the findings of a survey from the Local Data Company which says that only 52% of shops that have so far been allowed

to open actually have. It’s probably too early yet to guess how many of the 48% will stay permanently closed, though…

That said, UK high streets set to swap shops for retirement homes (Financial Times, George Hammond) shows an interesting direction that emptying UK high streets could take as the government is currently trying to reform the planning system. Changes would make it easier for developers to turn commercial property into residential property. Currently, senior living provider McCarthy & Stone says that it would welcome changes that would give them more scope to develop in such locations. * SO WHAT? * This is great for the potential for senior living – but TBH, if the government relaxes the current rules it could open up all sorts of possibilities (and be a shot in the arm for construction at the same time). I think it is really important for regulations to change on the high street, because if the current rules and regulations remain as they are our town centres are going to become ghost towns. They had already been going that way before the coronavirus hit…

Moving to online retailers, Lockdown fashion opens doors for Asos (The Times, Ashley Armstrong) announced strong sales yesterday as shoppers bought the “lockdown look” (I’m presuming that’s not the “watching-Netflix-all-day-in-my-pants-and-eating-pizza” vibe). This helped it to rebound from lows in March as Generation Z customers bought more sneakers, beauty products and exercise clothes. * SO  WHAT? * Although Asos is missing out from people buying clothes to go to weddings, festivals and clubs they have actually done well from having fewer returns because exercising clothing is more forgiving fit-wise than, say, party dresses. Asos is currently talking a good game on the dodginess of its suppliers, but I’m sure it is scrambling around and double-checking just to make sure it is squeaky-clean on that front.

Google invests big and Goldman Sachs benefits from bonds…

In other interesting news today, Google to pour $4.5bn into Reliance’s digital business (Financial Times, Benjamin Parkin and Anjli Raval) shows that Google is the latest high profile company to invest into the fast-growing Jio Platforms digital business in India. Other big investors, including Facebook, have put $20bn into the group over the last few months. $4.5bn buys Google a 7.7% stake in Jio.

Facebook put $5.7bn into it in April. * SO WHAT? * This is serious money being put in by serious players! It just goes to show how much people believe in the future growth of data and online services in India.

Then in Volatility help lift Goldman Sachs revenues by 93pc (Daily Telegraph, Lucy Barton) we see that Goldman Sachs is the latest US bank to announce that it had benefited greatly (trading revenues up by 93% over the second quarter!) from the trading bonanza during lockdown. Overall revenues were up by 41% versus a year ago. What a performance by the company that has been referred to in the past as the “great vampire squid wrapped around the face of humanity”!

…in other news…

Ah, face masks. It seems that if you take some face masks and cross them with some mischief-making teenagers looking for viraldom on TikTok, this is what you get: Teenagers are using face masks to dress up as old people and buy alcohol (The Mirror, Joseph Wilkes). However, I think that you’d be hard-pressed to find a mask that is as epic as the one in Ramen face mask from Japan fogs up your glasses, looks like a steaming hot bowl of noodles (SoraNews24, Oona McGee).

1. In MACRO & POLITICAL NEWS, Macron promises more money for recovery, the UK’s economic output rises and Johnson announces a Huawei ban
2. In CONSUMER TRENDS & RETAIL NEWS, the stamp duty holiday raises interest in the ‘burbs, VAT cuts might not be passed on, Ocado and AO are sitting pretty and Asos cancels suppliers
3. In AIRLINES & CAR NEWS, Virgin gets rescued, Delta pushes retirement, GM focuses on China and LG Chem’s battery orders are massive
4. In INDIVIDUAL COMPANY NEWS, Moderna moves to the next stage and Fevertree gets a boost
5. AND FINALLY, I bring you Lego Nintendo and some interesting “masks”…

So Macron flashes the cash, UK economic output increases and Huawei gets banned…

*** BTW, did you know I do a podcast? You can listen to it on Apple Podcasts, Spotify and Google Podcasts. At the moment it’s a weekly roundup, but there will be more content to come…Also, if you DO like the podcast please write me a nice review with a few comments as to WHY you find it interesting/useful! It REALLY helps and I would appreciate your input 👍***

Macron promises extra €100bn for France’s post-pandemic recovery (Financial Times, Victor Mallet) highlights French president Macron’s new additional pledge of €100bn on top of the €460bn already earmarked to stimulate France’s economic recovery from the pandemic. He made the pledge in a televised address yesterday, vowing to continue with his economic reforms (including the country’s incredibly complex and expensive pensions system). * SO WHAT? * Macron has alienated a lot of people since he became president in a landslide victory in 2017 (he is often criticised as being a president for the rich). Everyone suffers mid-term blues, but clearly the coronavirus has really made things much harder for everyone. He comes up for re-election in 2022, so there is still chance for him to make up ground and heal some of those divisions.

UK economic output rises 1.8% in May after historic April plunge (Financial Times, Valentina Romei) cites the latest

figures from the Office for National Statistics which show a lower-than-expected increase in economic output. * SO WHAT? * This figure fell way shorter than market expectations of a 5.5% rise in GDP. It would suggest that a recovery will take longer than everyone had been predicting and that hopes of a V-shaped recovery were just a pipe dream.

UK orders ban of new Huawei equipment from end of year  (Financial Times, George Parker, Nic Fildes, Helen Warrell and Demetri Sevastopulo) shows that Boris Johnson has indeed gone back on his original plans and has decided to ban Huawei as a supplier, meaning that Britain’s 5G rollout could be delayed for up to three years. He said that telecoms operators had up to 2027 to remove Huawei equipment from their networks and that a ban on their new equipment would take effect at the end of the year. Network ban triggers gold rush as rival suppliers eye bumper payday (Daily Telegraph, Hannah Boland) highlights what will be happening after the ban as Huawei currently has a massive 44% share of the UK’s full-fibre equipment market. Nokia and Eriksson are already in the space, but Samsung and NEC will also now be stepping up. * SO WHAT? * Clearly this is a massive pain for Huawei, especially after BoJo had originally backed them but Fact-checking: How much kit needs to go? (Daily Telegraph, Hasan Chowdhury) points out that most UK 5G networks depend on existing equipment including antennas and base stations used for 4G. Interestingly, much of the stuff that was installed in 2012 and 2013 is now getting to the end of its life cycle – so a lot it would have had to be replaced anyway. No doubt this new government stance will help in ongoing UK-US trade negotiations!

The stamp duty holiday and VAT cut kick in, Ocado and AO benefit and Asos cuts suppliers…

Stamp duty cut fuels surge of interest in London commuter belt (The Guardian, Patrick Collinson) says that the raising of the stamp duty threshold last week has led to a spike in interest in the southern England commuter belt, according to the UK’s biggest property website Rightmove. Funnily enough, the biggest rise in activity has been in homes costing between £400,000 and £500,000 (£500,000 is the new limit at which stamp duty starts to kick in again) and enquiries have just shot up. * SO WHAT? * Buying within this bracket under the new guidelines saves people around £15,000 and the areas that have seen particularly strong interest include places like Chelmsford, Swindon and Bromley. Given that working from home is likely to become a more permanent option, it makes sense that people would look to the ‘burbs for more space (=home office) and more bang for your buck.

Hospitality VAT cut may not be passed on to UK consumers (The Guardian, Hilary Osborne and Rebecca Smithers) shows that although the government cut VAT for the hospitality sector, those cuts may or may not be passed on to the end consumer. Many have lost money as a result of the pandemic and so are hanging on to the extra – so don’t expect cheaper prices everywhere! The Treasury said that it would rather businesses pass on the benefit to customers but acknowledges that “many of these businesses have been closed and without income for months, and decisions on prices are ultimately for businesses rather than the government”.

In retailing, Ocado has waiting list of 1 million customers wanting to sign up (The Guardian, Sarah Butler) says that although it has done well during the pandemic as people shopped more online, it could have increased sales by five times but had been limited by its warehouses and delivery network. Sales rose by 40% in May and Ocado but it only signed up 14% more shoppers in the six months leading up to it due to capacity constraints. CEO Tim Steiner said that he expected online grocery shopping would double in the next few years having already doubled in size during

lockdown. * SO WHAT? * Although sales were up, the company fell into a pre-tax loss of £40.6m due to investment in its overseas expansion and profit margins were hit because it had to bring in extra staff to cover absences and buy virus tests and PPE. Supermarkets were able to take more advantage of the sudden uptick in online grocery demand because of their existing networks. Although Ocado is impressive, it will always be held back by the fact that its cutting edge warehouses take a lot of time to become properly operational.

Online sales ‘make John Lewis price promise irrelevant’ (The Times, Ashley Armstrong) shows that the CEO of AO World, John Roberts, was in a bullish mood yesterday as his company posted a 15.9% rise in sales for the year. Despite a rise in online shopping and an improved performance by its German business, the company remained cautious for the rest of the year. The company said that “Although around 70 per cent of electrical purchases are replacement in nature, a fall in consumer confidence may lead to a delay in the purchase of big-ticket items”. * SO WHAT? * The quote in this article’s title touched on the fact that offline shopping continues to be trounced by online shopping – and is personified by veteran retailer John Lewis’ anachronistic price promise of “Never Knowingly Undersold”. John Lewis admitted recently that 70% of its sales are now online – and so it is actually already underselling itself! Anyway, it’s interesting to see how AO has made a turnaround following the return of the founder last year. Coronavirus and the strong demand for chest freezers, breadmakers and laptops have got it out of a rut, but ebbing confidence in household finances as we head into the end of the year would suggest that caution is the sensible option here.

Asos axes UK suppliers’ contracts over ethics worries (Daily Telegraph, Laura Onita) shows that another fast-fashion firm – this time Asos and not Boohoo – has cut ties with a number of clothing suppliers after it found potentially serious threats to workers’ health, safety and human rights. A leaked document, dating as far back as May 2018, identified supply chain concerns after carrying out inspections which found problems in 25% of the companies it audited. * SO WHAT? * As I said before, I suspect that the Boohoo thing is just the tip of the iceberg – and that it is not the only one that has its hands dirty in matters related to workers and conditions.

Virgin finds a solution, Delta pushes early retirement, GM looks to China and LG Chem has enough battery orders to be getting on with…

In a quick scoot around airlines and car-related news today, Virgin Atlantic lands rescue without taxpayer support (Daily Telegraph, Oliver Gill) highlights a victory of sorts for Sir Richard Branson as he agreed a complicated £1.2bn rescue deal with US hedge fund Davidson Kempner to keep Virgin going and Delta steers 17,000 staff into early retirement (Financial Times, Claire Bushey) shows that the high number of employees opting for early retirement at the Atlanta-based airline will help it impose fewer furloughs than some of its rivals. The airline industry continues to suffer, though…

Then in GM faces battle in China to regain lost ground (Wall Street Journal, Trefor Moss) we see that the US car manufacturer is feeling the pressure particularly keenly on doing business in China as almost 50% of its global unit sales come from there, making it more exposed than most of its rivals. GM is trying to pep up its market share by introducing new models after seeing a 25% downturn in sales in the last two years. On the plus side, the latest official figures from the China Association of Automobile Manufacturers show that the auto market is bouncing back faster than expected – so good luck to GM!