Category: Uncategorized

1. In POST-CORONAVIRUS NEWS, China picks up, fears of second-wave job losses persist and companies provide social distancing gadgetry
2. In AIRLINE-RELATED NEWS, Buffett sells out of airlines, Rolls-Royce suffers from lack of air time and leasing companies brace for turbulence
3. In TECH & MEDIA NEWS, big tech firms reap the rewards while media firms suffer
4. AND FINALLY, I bring you fake airpods with a twist and a questionable invention for escaping Zoom…

So Chinese tourism picks up, brands pin hopes on Chinese consumers, job loss fears increase and various companies provide social distancing gadgetry…

China tourism numbers bounce back during Labour Day holiday (Financial Times, Thomas Hale) shows that Chinese travellers stretched their legs after lockdown and went to see famous tourist sites over the May Day holiday, which runs until the end of tomorrow. It is hoped that this uptick in tourism, albeit in muted numbers compared to usual circumstances, is an early signs of a return to normality. Last week, Beijing announced that inward travellers from most areas of China would no longer have to spend two weeks in quarantine – which also helped to ease normal business and tourism activity. China reported only two new cases of coronavirus to the end of Saturday, but lingering concerns remain about a second wave, especially in Heilongjiang, which is in China’s north-east.

In Global brands need China’s consumers to spend. They might have to wait (Wall Street Journal, Trefor Moss and Stella Yifan Xie) we see that global brands are crossing their fingers for a return of Chinese consumers as companies such as Lego and Domino’s Pizza say they are experiencing a definite gathering of momentum versus the last couple of months. However, unsurprisingly, a return to normal is expected to take some time given that many people have lost their jobs or taken a dent in their income and want to build their savings back up. * SO WHAT? * Given that China is the world’s largest retail market, with $5.8tn in retail sales in 2019, you can understand why brands are hoping for a major pick-up. Online retailers like JD.com have done best during the course of the pandemic, but then some traditional retailers also did well (Nike, for instance, reported a 5% INCREASE in quarterly sales in China) and luxury goods makers such as LVMH and Kering (parent of Gucci) have said that their customers seem to be keen to return “to their previous patterns of consumption”. At the end of the day, everyone is still shell-shocked and I think that a strong bounce-back at this stage is unlikely. The good thing is that it’s not all a total disaster at the moment.

Virus-hit economies brace for second wave of job losses (Financial Times, Delphine Strauss) highlights ongoing concerns that a second wave of job losses could hit developed economies despite lockdown lifting as businesses are forced to reassess their priorities. While

advanced economies around the world have already reported huge job losses following a generally prolonged trend of increasing employment, the International Labour Organisation, a UN agency, reckons that the fall in working hours in the second quarter of 2020 will equate to the loss of over 300m full-time jobs. Although initial government efforts have focused on preserving as many businesses as possible, the next major concern is whether people will be able to return to their jobs and/or whether they will be able to find new ones otherwise unemployment costs will continue to be considerable.

Meanwhile, companies are coming up with interesting ways to enable returning workers keep to social distancing guidelines. Fitbit offers virus help as it chases Google deal (Daily Telegraph, Margi Murphy) shows that Fitbit (which Google is currently trying to buy for $2.1bn) is planning on turning its fitness bands into social distancing and coronavirus symptom monitors. From a cynical point of view, you wonder whether it’s mainly doing this to earn brownie points from regulators to let the Google-Fitbit deal to go ahead (some are sceptical of putting medical data from Fitbit users into the hands of Google), but given that the company has sold over 100m devices and has 30m active users, you can see why they might have the scale to help in the effort against the coronavirus. Then in Returning office workers could reserve lifts using Salesforce tool (Daily Telegraph, James Titcomb) we see that Salesforce has come up with some online tools designed to help employers get their staff back to work in the form of lift/elevator reservation and daily health assessments, among other things. However, I think that Hopes for hi-viz hit with ‘don’t stand so close to me’ (The Times, Robert Lea) is the most interesting idea as a Midlands-based company called Wearable Technologies has developed a special high-visibility jacket that contains sensors that warn co-workers when they come within four metres of each other, with an alarm going off at two metres. This has the double benefit of showing that employers are protecting their workers as well as giving employees peace of mind. It will also give employers better quality information about where problem areas might be in the workplace, giving them the opportunity to address them in a more informed manner. * SO WHAT? * I suspect that there will be some SERIOUS money to be made in providing software and other more tangible products that help to enforce and enhance social distancing. I know that this is maybe a bit early in the day for philosophy, but as Plato once said “Necessity is the mother of invention” – so coronavirus may well be the mother of profitable gadgetry IMO. 

The nightmare continues for those in the air travel industry…

You may recall what I was saying last week about the nightmare the airline industry is going through at the moment – well it’s getting worse. Warren Buffett dumps US airline stocks, saying ‘world has changed’ (The Guardian, Martin Farrer) highlights the actions of the world’s most famous investor (aka the “Sage of Omaha” and/or the “Oracle of Omaha”) who has sold off his holdings in Delta, American, Southwest and United “at a substantial loss” because he thinks that the future is too uncertain and that the companies will just burn cash for the foreseeable. Rolls-Royce runs into trouble as flying hours collapse 90 per cent (The Times, Emily Gosden) shows that the lack of flying hours is going to hit the engineering company badly as last year payments based on this metric accounted for about 25% of its group revenues. It announced last month that flying hours had already fallen by 50% in March. * SO WHAT? * At the

moment, the company employs about 52,000 people around the world in civil aviation, defence and power systems, but a massive fall in engine orders and dismal prospects for the industry for the next few years will no doubt prompt a wave of job cuts (it’s currently in negotiations with unions over as many as 8,000 cuts).

I did touch on this last week, but Aircraft leasing sector feels the weight of global grounding (Daily Telegraph, Alan Tovey and Simon Foy) shows that aircraft leasing companies (ALCs), who now own just under 50% of the world’s 27,000 airliners operating right now, are facing the decimation of their business model (renting out planes on long contracts) due to the coronavirus outbreak. Around 80% of airlines have asked them for payment holidays, but a few months of going rent-free is unlikely to cut it longer term and the ALCs are probably going to have to repossess planes from airlines that can’t make the payments. * SO WHAT? * If doomsday forecasts for the airline industry come true, demand will just disappear and the ALCs may have no alternative other than to break up the planes for parts. Smaller ALCs are thought to be most vulnerable as they may have less access to extra capital to tide them over. It looks like ALCs are in for a dramatic shake-up…

Big tech wants to feel the love but media firms suffer…

Big tech firms charge up for new era after lockdown ends (Daily Telegraph, Laurence Dodds) is a really interesting article that looks at the ways Big Tech has been helping us through the current lockdown and how they will probably emerge from it even richer and more dominant than ever. Sir Martin Sorrell, the original founder of WPP who now owns internet-focused ad agency S4 Capital, said that he is seeing clients turning increasingly to digital media with their ad spend (Marty must have been reading last week’s Watson’s Daily where I said the same thing 😜). He said that he expects the current 45-50% of global ad spending that goes to digital will increase to about 57.5% by 2022 and to over two thirds by the end of 2025, which will power the likes of Google, Apple, Microsoft and Amazon to new highs. * SO WHAT? * Online is pretty much where it’s at at

the moment and tech companies will probably be able to weather this crisis better than many because of the huge amounts of cash they have at their disposal (although Amazon has less than the others I mentioned). I suspect that they will use this to scoop up weaker players to further consolidate their own strength.

Media firms hit by cuts in advertising (The Times, Simon Duke) confirms weakness in advertising as ITV and Reach (the biggest regional news publisher) are due to publish trading updates shortly that will show how dire the situation has become. Companies have been trying to hang on to as much cash as they can in the downturn and have cut marketing budgets right back. In fact, figures from the Advertising Association and WARC, the trade body, show that spending on TV adverts this year is likely to be cut by 20% while ad spend in newspapers and magazines is likely to be down by 20-25%. * SO WHAT? * This is just more evidence of trouble for traditional advertisers. Until companies see a recovery, ad spend is unlikely to increase in a meaningful manner and I don’t see that happening for quite some time.

And finally, in other news…

Many of us are shopping online at the moment. Some people want to cheer themselves up with a bit of e-tail therapy so imagine the surprise the woman got in this story: Woman in hysterics after receiving fake AirPods that were bigger than her head (The Mirror, Paige Holland https://tinyurl.com/y9o47avb). Priceless 😂. Then I thought I’d alert you to a new useless invention for people who want to end a Zoom call early in Japanese genius invents a machine just to help you get out of unwanted video chats (SoraNews24, Casey Baseel https://tinyurl.com/yalgeq36). This could be The Next Big Thing under lockdown IMO…

1. In MACRO, MARKETS & OIL NEWS, demand for Chinese goods falls, the Eurozone heads for recession, markets falter and Shell cuts its dividend
2. In TECH NEWS, Apple gains, Twitter suffers and Zoom makes another gaffe
3. In RETAIL NEWS, Macy’s reopens, J Crew files for bankruptcy, Amazon’s profits come at a cost and Sainsbury’s is downbeat
4. In INDIVIDUAL COMPANY NEWS, Disney adapts, Quibi hangs on and Lloyds Bank makes loan loss provisions
5. AND FINALLY, I bring you some brain teasers…

So demand for Chinese goods falls, the Eurozone faces recession, markets wobble and Shell has a gloomy outlook…

Global lockdown drains demand for Chinese goods (The Times, Philip Aldrick) cites the Caixin/Markit purchasing managers’ index (PMI) as showing contraction last month, reflecting sluggish manufacturing activity. The Caixin survey covers small and export-focused businesses so weak global demand was clearly the culprit – a trend that was confirmed by official government figures that were also released yesterday. Export orders shrank at their fastest pace since the 2008 global financial crisis, leaving China vulnerable to a potential recession if things don’t improve over the next quarter.

European Union heads for recession after record slump (Daily Telegraph, Tim Wallace and Tom Rees) cites ECB president Christine Lagarde as saying that eurozone GDP fell by 3.8% in the first quarter and warned that it could actually fall by up to 12% by the end of the year. Other figures show that France and Italy are already in recession and things are likely to get worse because the current data does not include the full force of the lockdown as there is still some “normality” mixed in. The ECB has increased measures to help the economy and will now lend to banks at an interest rate of -1% if they commit to increasing lending to households and businesses across the eurozone. No-one knows the full extent of the coronavirus impact yet and trying to guess it is, as they say, like catching a falling knife.

Meanwhile, Global stocks slip as coronavirus hits corporate earnings (Financial Times, Hudson Lockett) shows that markets around the world faltered after a rash of disappointing US corporate earnings releases hit investor confidence. * SO WHAT? * Some will say that this could be a turning point for the market after US stocks had their biggest monthly rally since 1987, but I just think this is volatility caused by investors grabbing at straws and trading on sentiment. Let’s face it, stocks were powered up by flimsy hopes on some drug that Gilead has made that

hasn’t been fully tested. It has ramped up production massively and will feel stupid in doing so if studies subsequently find that these hopes have been misplaced. As I keep saying, drugs normally take AGES to go through the approval process and although governments and the pharmaceutical industry are co-operating on a scale I’ve never seen before, they can still fail. You will hear LOADS of noise on treatments from now on because we are all desperate to see concrete progress, but it’s anyone’s guess as to which ones will actually work. If I were an investor, I would try to block out the noise and think about which stocks will do well in the aftermath of all this and then buy when market volatility takes them lower. In terms of areas I find interesting (and I do not trade stocks myself), anything related to working from home is obviously worth looking at (although it’s a crowded trade – mind you Zoom keeps shooting itself in the foot, so may be more volatile than other companies in this area), Ocado could also benefit longer term because the attractiveness of its online capabilities could suddenly become even more alluring for retailers who have found their own capabilities lacking under the lockdown (and so they may sign Ocado up as their online partner as per M&S etc.) and outsourcing companies might see increasing demand (cleaning companies, for instance, could surely do well from increased need for companies to provide a hygienic working environment), among other areas. I would hasten to add, by the way, that what I say in Watson’s Daily does NOT constitute investment advice! I am merely voicing my opinions!

Oil woes continue in Shell cuts dividend for first time since 1945 amid oil price collapse (The Guardian, Jillian Ambrose) as Royal Dutch Shell (its full company name!) has cut its shareholder dividend for the first time since WW2, warning that it is experiencing a “crisis of uncertainty”. The dividend is being cut by 66%. The company is the biggest dividend payer in the FTSE100 and so yesterday’s 11% share price fall following the dividend news means that its market value has now dropped by 44% so far this year. * SO WHAT? * This is just more evidence of the carnage being felt at the moment in the oil industry as prices per barrel continue to be weak. The company is preparing itself for a “weaker for longer” oil price. 

Apple gains, Twitter suffers from ads and Zoom makes another mis-step…

Apple sales rise slightly, showing resilience in pandemic (Wall Street Journal, Tripp Mickle) shows that Apple managed to report higher revenues for the latest quarter despite all the factory shutdowns and evaporation of sales as the lockdown hit. Results came in above expectation and Apple’s move towards services and wearables proved to be key in its success. Apple did not, however, announce forecasts for the current quarter – for the first time since it started doing so in 2003 – which will mean that it won’t have anything to revise as the magnitude of the coronavirus becomes clearer. * SO WHAT? * Apple has the enviable position of just having tons and tons of cash, so it is able to weather the current storm AND still announce share buy backs and dividend payment increases. It’s also good to see that the services side of its business continues to look robust.

Boom in traffic but slump in adverts clips Twitter’s wings (The Times, James Dean) shows that the company’s monetisable user base (i.e. the number of people who are shown ads) grew by 14 million over the first quarter to 166

million but ad sales fell by over 25% in the last three weeks of March. * SO WHAT? * Twitter warned that ad sales could continue to be weak, which stands in contrast to what Facebook and Google have said this week – that ad sales are now stabilising. It also announced its first Q1 loss for two years, but the good news is that it was less than analysts had been expecting – and its revenues were ahead.

Zoom rewinds on claim it now has 300m daily users (Daily Telegraph, Margi Murphy) shows yet another gaffe by Zoom as it turns out that its boast last week of having 300 million daily users is bogus. It said on April 23rd that it had reached this level after having “only” 10m in December. There is a difference between users and participants – participants are counted each time they join a meeting throughout the day (which means that they can be counted more than once) whereas users are just counted once. For comparison, Microsoft’s Teams has 75m daily users and 200m daily participants. * SO WHAT? * OK, I don’t think this is a biggie, but after recent problems with security and Zoom-bombing I think it goes to show the problems this relative newcomer is having with making a sudden switch to being a major player. It’s clearly not a smooth road for the videoconferencing specialist, so let’s hope it doesn’t keep shooting itself in the foot otherwise it might as well shut up shop and hand victory to Microsoft!

Macy’s returns, J Crew files for bankruptcy, Amazon weighs up the cost of its success and Sainsbury’s downplays…

In a quick look at retail developments in the US and UK, Macy’s to begin reopening stores on Monday (Wall Street Journal, Suzanne Kapner) shows that the ailing department store is aiming to reopen 68 of its store on Monday and all of its 775 stores within six weeks as lockdown restrictions are gradually lifted. There will be all sorts of restrictions in place (“no-touch” consultations and demonstrations, increased use of hand sanitiser and fewer available fitting rooms etc.) but no-one knows how consumers are going to react.

J.Crew prepares to file for bankruptcy (Wall Street Journal, Suzanne Kapner and Soma Biswas) highlights the latest retailer preparing to file for bankruptcy. It was taken private in a leveraged buyout in 2010 but has struggled over the years as customers moved towards “fast-fashion” while the company’s debt problems continued to get worse. * SO WHAT? * Clearly, J.Crew was in a weakened state already, but the coronavirus may be the last straw. There will be other clothing retailers out there without J.Crew’s problems and investors will be fighting over the ones that look like they could survive.

I referred to this yesterday, but Virus safeguards to eat Amazon profits (The Times, James Dean) gives us more detail on Amazon’s situation as chief exec Jeff Bezos warned that its second-quarter profit could be wiped out by higher costs involved in providing enhanced protection measures and higher wages for its workers. First quarter sales were up by 26% versus the same period a year ago but profits were lower than expected and forecasts for the second quarter weren’t stellar. Sales at its cloud computing division, Amazon Web Services, broke through the $10bn barrier for the first time. * SO WHAT? * OK so its not that pretty, but I think Amazon has come out of this pandemic pretty well and has probably learned a lot of lessons in a short space of time that will be very useful for its long term development. Things may not be brilliant now, but I think that Amazon is going to get through this stronger than it was going into it.

Queues are here to stay, warns Sainsbury’s boss (Daily Telegraph, Laura Onita) sounds a rather downbeat tone as retiring boss Mike Coupe says that long queues will continue to be the norm for the foreseeable future. After getting through the panic buying stage at the beginning of this crisis where shoppers spent more than they did at Christmas for five days in a row, things have slowed down. The outgoing chief exec said that strength in groceries was dragged down by lower sales in general merchandise and banking as well as higher staff costs. Uncertainty is likely to continue for the foreseeable future.

Disney adapts, Quibi plugs away and Lloyds ramps up loan provisions…

Disney+ in programming crunch due to coronavirus shutdown (Wall Street Journal, Erich Schwartzel) shows that Hollywood’s effective closure during the pandemic is having knock-on effects on the Disney+ content pipeline. Although the streaming service part of its business is doing really well from people being stuck at home, many releases that were meant to go to its platform have not been finished because of the lockdown. In order to keep the party going, it is going to move some major theatrical releases to the streaming service ahead of schedule, like The Rise of Skywalker, for instance. It is also trying to encourage viewers to re-watch/discover classics. * SO WHAT? * I think that this isn’t just a Disney problem – all the streamers (and satellite/cable TV companies, for that matter) will be panicking over the shrinking amount of content that they will be able to offer. Mind you, if major Hollywood studios start to offer their content and bypass cinemas (which is what I wrote about yesterday), it might help a bit.

Staying on the subject of content, Quibi, Jeffrey Katzenberg’s on-the-go streaming bet, adjusts to life on the couch (Wall Street Journal, Benjamin Mullin and Sahil Patel) looks at what’s going on at Quibi – the short-form

video platform designed for busy people that launched just as everyone was sent home from work! Some say that Quibi’s launch at the beginning of April was brave – I’d say it was monumentally stupid/arrogant. But then again, when you’ve got so much riding on it, I guess there’s not much else it could have done. So far, the app has been downloaded over 3.1million times – but it is currently free. The real test will be who is really going to bother paying at least $4.99 a month for it after the trial is over. * SO WHAT? * I downloaded this thing to see what all the fuss was about. TBH, there is a lot of rubbish on there and a few gems – but it is incredibly frustrating to watch because it’s so fragmented. I’d say that the main problems with it are that a) you can only see it on a mobile phone, b) that the “alternative camera angle” thing is gimicky and, frankly, useless and c) that new shows are incredibly annoying to watch because they are not all released at once – they are drip fed to you on a daily basis. At the moment I think this looks like an expensive dud vanity project. Let’s hope it improves.

Given that this week has been a week for banking results, I thought I’d mention Lloyds reeling as profits plummet 95% due to virus (Daily Telegraph, Lucy Burton), but it’s pretty much the same as all the others – profits have plummeted (in this case by 95%) as it took a hefty charge to cover potential loan defaults. The real test is going to be the bank’s performance over the current quarter.

And finally, in other news…

I thought I’d leave you today with something to test you a bit in Tricky brain teaser challenges leave people baffled – see if you can solve them (The Mirror, Paige Holland https://tinyurl.com/yc6a5etk). If you really want to test yourself, though, you need to have a go at the Watson’s Daily quizzes 😜! This week’s edition will be coming out later…

1. In MACRO, MARKETS & REOPENING NEWS, we see US and China difficulties, French and German protectionism, market hope and varying degrees of bids to reopen
2. In PHARMACEUTICALS-RELATED NEWS, Gilead is on the up again, GSK highlights delays and AstraZeneca is looking good
3. In TECH NEWS, Facebook, Microsoft and Spotify put in strong performances
4. In INDIVIDUAL COMPANY NEWS, the Boeing and Airbus nightmare continues, WPP announces cuts, Amazon looks set and Odeon pouts
5. AND FINALLY, I bring you an impressive marble run and a nation’s call to eat chips…

So US GDP craters, China’s hopes look tricky, France and Germany get protective, world markets climb and Musk issues a rallying cry while UK high street players plan a return…

US GDP falls 4.8% in worst economic decline since 2008 (Financial Times, Mamta Badkar, Eric Platt and Demetri Sevastopulo) puts a figure on what we probably all expected. This preliminary estimate from the Bureau of Economic Analysis marks the sharpest fall in GDP since the 8.4% drop at the end of 2008 and is worse than consensus estimates of 4%. Personal consumption, which is the biggest driver of US GDP growth, fell by 7.6% – the steepest fall since 1980. Things could well get worse over the next quarter because the US economy was powering along nicely before coronavirus hit – and this is obviously included in the headline number. The next quarter will not have that support to mitigate the economic damage.

China slowdown puts Xi in political bind (Financial Times, Don Weinland) shows that the coronavirus outbreak is making President Xi Jinping’s goal of achieving xiaokang shehui (“moderately prosperous society”) by the Communist Party’s 100th anniversary next year much more difficult. The plan originally called for a doubling of GDP from 2010 to 2020 and an end to extreme poverty. China was on track to achieve this by the end of this year as it would have had to get 5.6% GDP growth to hit the target – and no-one doubted they would. Interestingly, the government has been downplaying the goal since the outbreak began, but it certainly looks unattainable at the moment.

France and Germany lock out foreign ‘predators’ (The Times, Adam Sage) shows that Europe’s top two economies are getting protective as French authorities are aiming to beef-up their powers to prevent foreigners from buying businesses in “strategic” sectors such as defence, transport, energy, aerospace, cybersecurity, robotics, telecoms and biotechnology. At the moment, the government can stop a non-European investor from buying a stake of over 25% in such a sector but the economy minister, Bruno Le Maire, wants to reduce this threshold to 10% during the outbreak. Interestingly, Spain already did this last month. Meanwhile, in Germany, the government is now allowed to block acquisitions of stakes in companies if it is deemed not to be in the public interest and will result in “likely harm” – whereas previously, they could only do so if there was a “danger” to the national interest. * SO WHAT? * This is an interesting one as ailing companies will no doubt be willing to accept money from pretty much anyone under the current circumstances. However, it would seem rather unfair for governments to stop foreign investors from building up big stakes in companies if they are not actually helping them as it would almost imply that the government would rather a company die than let someone

from another country take it on. If you take away with one hand, I think it’s only fair to have to give with the other. I expect more of this type of protectionism to come.

Meanwhile, World’s stock markets soar on treatment hopes (The Guardian, Larry Elliott) highlights that hopes of a Covid-19 treatment breakthrough powered stock markets upwards. Although recent test findings from Chinese scientists were disappointing, the US Federal Drug Administration looks like it will allow emergency use of Gilead Science’s drug remdesivir in the treatment of the coronavirus following large-scale clinical trials by the US government. * SO WHAT? * Without wishing to sound like a party-pooper, I would say that you should be very wary of relying too much on drug news at the moment. In more “normal” times, drug testing takes place pretty much behind closed doors, but because everyone is so desperate to find a cure/vaccine/treatment, the results of such trials seem to be available for all to see even while they are still ongoing. This is good to hear, but it is not the final word and so we will probably keep seeing market volatility as markets lurch up and down on investor hopes and fears.

As you know, many people are getting pretty antsy now about lockdowns – and it’s getting worse as some of the most affected countries around the world are now making tentative steps towards normality. This is making us all feel like a kid pressing their nose up against the window of a sweet-shop looking in. Elon Musk: ‘Give people back their goddam freedom’ (Wall Street Journal, Tim Higgins) shows that Tesla’s colourful founder is stirring things up and pushing for a relaxation of the rules (on Tuesday night he tweeted “FREE AMERICA NOW”). If you recall, he’s the one who told his followers on Twitter that “the coronavirus panic is dumb” at the beginning of March and the one who also fought tooth and nail to keep his Fremont factory open despite local authorities telling him to shut it down. As an aside, his company reported surprise first quarter profits on Wednesday although it was cautious on the outlook. This is notable given it is the first time Tesla has had three consecutive profitable quarters in the 16 years of its existence.

Back in the UK, preparations are being made for a relaxation of lockdown. Wetherspoon targets June reopening despite lockdown restrictions (Financial Times, Alice Hancock) shows that the pub chain is pushing ahead despite a lack of government guidance – although founder Tim Martin said that plans were still fluid (actually, he said that it was “complete cobblers” to suggest that the company had firm plans). Dixons Carphone plans drive-through and contactless shops (The Guardian, Sarah Butler) shows that the electrical retailer is working on adapting its offering to Covid-19. Its share price rose by 16% in trading yesterday on the news that it only saw a 3% sales decline in the five weeks to April 25th due to strong online sales. You should also read Britain’s tourist hotspots set to flourish after lockdown (Daily Telegraph, Tom Rees) if you want to take note of other potential trends once coronavirus panic calms down as it talks about “staycations” becoming the norm for the foreseeable as Brits get more cautious about foreign travel.

Gilead rides a wave of optimism and we get the latest on GSK and AstraZeneca…

I’ve already touched on this above but US explores emergency-use approval for Gilead drug after study found it helped recovery from Covid-19 (Wall Street Journal, Joseph Walker) goes into more depth about remdesivir, which the National Institute of Allergy and Infectious Diseases said helped patients recover faster. Although recovery was only four days faster with the drug than without, it was taken by many as a positive development although another study from China published yesterday came up with negative results for the drug. * SO WHAT? * As I said above, be wary of news stories about cures and vaccines etc. because testing is ongoing.

Among the pharmaceutical giants, Delays for drugs trials (Daily Telegraph, Hannah Uttley) shows that

GlaxoSmithKline has admitted that most of its clinical drug trials are being delayed in some way because priority is being given to finding treatments for the coronavirus. Chief exec Emma Walmsley said that around 87% of its clinical trials would probably be delayed by between one and three months.

Having said that, No pain but plenty of gain as Glaxo meets pandemic challenge (The Times, Alex Ralph) highlights strong first quarter results for GSK as it benefited from increased demand for pain relief treatments and vitamins and minerals while Astra’s star on the rise with new drugs and blockbusters (The Times, Alex Ralph) also benefited from bigger prescriptions, more assiduous adherence to treatments by patients and stockpiling. Revenues rose for the quarter and were supported by demand for newer medicines as well as a decent pipeline. * SO WHAT? * It’s good to see the pharma companies do well – and I would imagine that they will continue to do so as I would have thought that there may even be an upswing in demand for medicines as people venture back out to their GPs as lockdown restrictions lift.

Tech giants continue to do well…

Facebook shares soar on ‘signs of stability’ (Financial Times, Hannah Murphy) highlights good news for Facebook, which says that it is seeing “signs of stability” after a dramatic drop-off in advertising revenues. Revenues rose by about 17% in the first quarter (and advertising is the main part of that) and although it was its slowest pace of sales growth since Facebook listed in 2012, it seems that we could be at the floor. Investors seems to think so as the share price rose by 10% in after-hours trading. * SO WHAT? * As I said yesterday, even if advertising budgets are slashed everywhere, I actually think that DIGITAL advertising won’t suffer as badly as, say, advertising in newspapers because you arguably get more bang for your buck in that it is more targeted. FWIW, I wonder whether TV advertising will make a bit of a bounce-back as people will probably be glued to their TVs for a while yet as social distancing etc. continues to confine people to their homes more than before.

Microsoft earnings jump, aided by cloud-computing demand during pandemic (Wall Street Journal, Aaron Tilley) shows that the tech behemoth is continuing to benefit from the working from home trend as it announced strong growth in quarterly sales and profits – which came in above market expectations. I thought that chief exec Satya Nadella put it perfectly when he said “As Covid-19 impacts every aspect of our work and life, we’ve seen two years’ worth of digital transformation in two months”. Its videoconferencing software, Teams, now has 75million daily active users – over double the number it had in early March. Amazing.

Then Music streaming during pandemic boosts Spotify paying users (Financial Times, Anna Nicolaou) shows that Spotify has now reached 130m paying subscribers in the first quarter, ahead of analyst expectations, and is about a third more than it was last year. Listening behaviours have changed during the outbreak as 40% of US customers were listening to music more than normal in order to manage stress, according to a Spotify survey. * SO WHAT? * I think that the more users use services provided by the likes of Facebook, Microsoft and Spotify the more integrated they will get in people’s daily lives. And if that continues to evolve, it will mean even more success for them as time goes on.

Boeing and Airbus’s nightmares continue, WPP announces cuts, Amazon is all set and Odeon goes into a sulk…

In a quick scoot around some of the other stories doing the rounds today, Boeing and Airbus lose $2bn (Daily Telegraph, Alan Tovey) highlights more woes for the plane manufacturers as Boeing announces major staff and production cuts while both warn that the industry will take years to recover.

WPP cuts jobs as it leans on taxpayers for support (Daily Telegraph, Christopher Williams) highlights the travails of one of the world’s biggest “traditional” advertising agencies as it tries to cope with massive losses in business. It has applied for £600m of government support under the Covid Corporate Financing Facility (CCFF) which should supplement their credit reserves of £2.7bn. * SO WHAT? * WPP was already looking to slim down its vast global operations before this crisis, but the impetus to cut deeper will get even greater. As I have said above, I believe that traditional agencies like WPP will get hit much harder than the purer digital advertisers out there because digital advertisers can target audiences more precisely.

Amazon ready to deliver blockbuster sales at a high cost (Financial Times, Dave Lee) shows that Amazon is about to announce stellar sales, albeit involving higher costs, as it continues to be a life-saver to many stuck at home. Costs have increased because it has hiked staff wages, employed more people and purchased more equipment (e.g. thermal cameras to monitor staff health), but I think that investors will have little to complain about really.

I thought I’d include Odeon bans all Universal Pictures films as studio skips cinema releases (The Guardian, Mark Sweney) because it’s a good example of a company going into a sulk! The cinema chain said it has banned screenings of all Universal Picture films after the studio said it would skip cinema releases and make them available to streaming and on-demand services. Interestingly, this follows on from the massive success NBCUniversal had with the release of its Trolls World Tour release, which has actually generated $100m in sales so far! The studios get a bigger cut of revenues from streamers versus the cinema box office. * SO WHAT? * This is just a storm in a teacup. Once social distancing is a fading memory, Odeon will be back playing their movies to get the punters in. Not doing so would be the biggest ever case of cutting one’s nose off to spite one’s face! In fact, I’d even go so far to say that the studios will use the threat of going streaming-only to negotiate themselves a better deal with the cinema chains.

And finally, in other news…

It seems that some of us are using lockdown very productively as per Japanese elementary schooler creates amazing infinite loop device for marbles (SoraNews24, Shannon https://tinyurl.com/y6wsjucy). Very impressive! Then there is a call to action in Do your bit for farmers and eat more fries, Belgians urged (Reuters, Bart Biesemans and Christian Levaux https://tinyurl.com/yde6pvy6). I heard recently that beer is on the verge of going off at the moment because it’s just sitting around in kegs under lockdown. Now if we could somehow combine a national appeal for volunteers to drink beer and eat chips for the national good, I think we could be on to a winner 🍻🍟👍…

1. In LOCKDOWN & OIL NEWS, Putin extends, Trump forces meat processors to stay open and BP has a ‘mare
2. In BANKS NEWS, it’s a mixed bag for UBS, HSBC and Santander
3. In RETAIL NEWS, M&S is “never the same again” while Tesco sees a rise of the silver surfers and Travis Perkins, Nando’s, Burger King and Starbucks fire up for a new normal
4. In INDIVIDUAL COMPANY NEWS, Google’s revenues climb, Ford delays new product launches and BA announces major job losses
5. AND FINALLY, I bring you the world’s most coronavirus-friendly restaurant and a practical home craft project…

So Putin extends Russia’s lockdown, Trump orders meat processors to stay open and BP continues to suffer…

Putin extends Russia coronavirus lockdown and warns worst to come (Financial Times, Henry Foy) shows that Putin has decided to extend Russia’s lockdown until May 11th, adding that “a hard and difficult path lies ahead”. The government is concerned about the virus spreading outside Moscow to provinces that may be less well-equipped to deal with it – to the extent that Putin said yesterday that some regions may be on lockdown longer than others.

Following on from what I’ve been saying about meat processing in the US, the fact that Donald Trump orders meat processing plants to stay open (Financial Times, Demetri Sevastopulo, Aime Williams and Gregory Meyer) shows just how serious the problem is getting as concerns increase over the viability of America’s food chain following a number of major closures. He invoked the Defense Production Act (also known as the DPA) – something that dates back to the Korean war era (!) – that allows the government to force companies to take action for security reasons. * SO WHAT? * Trump has used this act a few times over the past month – he made General Motors

manufacture medical ventilators – and continues to use it to threaten other industries and companies with. Its invocation will effectively shield affected companies from any legal liability that could come from remaining open during the outbreak. Unions are concerned that this will effectively remove the incentive for companies to provide a safe workplace and that people will not be keen to work under such conditions.

The dark cloud hanging over oil continues in First-quarter loss with worse to come puts job cuts in pipeline at BP (The Times, Emily Gosden) which highlights a “tough” first quarter for the oil major and expectations for an even tougher second quarter as BP faces a “perfect storm” of weak oil prices and ongoing coronavirus repercussions. When the chief exec of one of the biggest oil and gas companies in the world, Bernard Looney, says “Nobody knows what the price of oil is going to be in the future. Nobody has seen anything like this before”, you know things aren’t good. Stripping out one-off charges, underlying profits fell by two-thirds – which was actually better than analysts were expecting. On the other hand, it has cut capex on fracking in the US. * SO WHAT? * Things are bound to get worse for the company as the average price of a barrel of oil in the first quarter was $50, whereas it actually needed it to be above an average of $56 a barrel over the course of 2019 to cover capex and its dividend payout. The company is hoping to bring this break-even price down to $35 a barrel by next year, but in the meantime, Brent Crude is hovering around $20 a barrel and WTI is around $13. 

European banks report mixed results this week…

It’s European banks’ reporting season at the moment and UBS profits jump 40% as wealth unit performs robustly (Financial Times, Sam Jones and Stephen Morris) shows that the Swiss bank’s first quarter loan loss-related expenses jumped more than 13-fold versus the same period last year. On the plus side, it reported a 40% rise in net profits to $1.6bn as its wealth management business and investment bank put in strong performances. Interestingly, its main wealth management division had its best quarterly revenues since the 2008 financial crisis, its investment management division saw profits soar by 242% and even its asset management division reported a 52% hike in profits! On the other hand, its core equity tier one capital ratio (this is a measure of balance sheet strength for banks) suffered, but it isn’t yet at disastrous proportions.

HSBC quarterly profit halves as pandemic hits loans (Financial Times, Stephen Morris and Primrose Riordan) shows that Europe’s largest bank saw its first quarter profits halve due to loan reserves rising by 417% as it

readies itself for all the bankruptcies and defaults caused by the global lockdown. Execs warned that the situation would get worse and be a major hit on profitability in 2020. As a result, it suspended its dividend, cut expenses and reduced the bonus pool by a third. In terms of current market conditions, the bank says it is seeing some signs of recovery in Asia but remains cautious on the overall outlook for the rest of the year.

Santander profit plunges on loan loss provisions (Financial Times, Nicholas Megaw) shows that Spain’s Banco Santander saw a massive 82% drop in profits in the first quarter due to an 80% increase in loan loss provisions. It said that the impact in the first quarter was actually relatively limited and the CEO, José Antonio Alvarez, said he was optimistic that the global economy would rebound quickly but added that a slower recovery could be painful for his bank. * SO WHAT? * OK, so maybe I’m over-simplifying this a bit, but it seems to me that everyone and their dog are hiking up their loan loss provisions as they expect the worst. Business overall for banks doesn’t seem to have been that bad in the first quarter. HOWEVER, the second quarter is going to be a real test and they are all bracing themselves for a massive storm. The magnitude of that storm will depend on how quickly economies can open up again and so the pressure will continue on politicians and businesses to weigh up economic needs and deaths.

M&S reviews while other high street players start making a return…

In Fresh slogan for M&S vows radical break from the past (Daily Telegraph, Laura Onita) we see that M&S has adopted the new slogan “never the same again” for its turnaround plan as it announced dividend cuts for this year and next in a bid to save £210m. Given the collapse of non-food sales over the current period, many fear that more store closures and job losses are to come. Plans to sell groceries online via Ocado still appear to be on track for September and its banks have agreed to relax rules around its borrowing until September 2021. * SO WHAT? * M&S has been in trouble for quite some time now and although its food offering has done OK during the outbreak (others have done better), there are still serious issues for it to deal with. I guess that the coronavirus is going to become the go-to excuse for drastic store and staff pruning not only for M&S, but for pretty much everyone.

Elsewhere, Tesco breaks online record as silver surfers fuel demand (Daily Telegraph, Chris Johnston and Laura Onita) cites an interesting trend identified by Kantar as it turns out that the over-65s spent almost double previous levels on home deliveries over the latest quarter versus the same period last year. I suspect that now this demographic

has got the hang of it, many of them will continue! Other than that, Travis Perkins to build up trade again (The Times, Robert Lea) signals a return to some kind of normality for the DIY retailer that owns Toolstation and Wickes as it says that 70% of its outlets are now open for business under new trading rules. Like many other businesses, it will be applying strict social distancing and moving to contactless transactions. Nando’s and Burger King fire up grills to trial reopening (Daily Telegraph, Hannah Uttley) heralds a limited return for the two popular chains – with the obligatory social distancing measures in place – as they make a tentative return in a handful of sites and Starbucks logs first quarterly same-store sales drop in 11 years (Wall Street Journal, Heather Haddon) shows that the coffee giant has suffered under the lockdown although it continues to eek out some business via drive-throughs, delivery and pick-ups. * SO WHAT? * It’s good that these businesses are starting to open up once more in a responsible manner, but just how much consumers are willing to spend on non-essential items is a big unknown. As I have said before, I expect that people will WANT to spend initially as they get more freedom back in their lives, but many will be restricted by dented household budgets. Maybe “affordable luxuries” will be able to sustain a reasonable level of business as customers want something to lift the spirits, but we will just have to see. Everyone is fearing the worst, so the danger is actually that we are overestimating the downside and not taking into account any upside.

Google reports higher revenues, Ford delays new launches and BA announced big job losses…

Google revenue climbs, but company warns of ‘Tale of two quarters’ (Wall Street Journal, Rob Copeland) shows that Google’s parent, Alphabet, posted solid results as strength in advertising revenues early on in the quarter offset the impact of the coronavirus lockdown. Although many expect tech companies to weather the Covid-19 storm relatively well, Alphabet execs cautioned that company performance fell sharply as the crisis gathered momentum and that they could not predict how the next few months will look. * SO WHAT? * Any companies surfing the wave of advertising revenues is likely to look vulnerable

as companies do the traditional thing and cut ad budgets in a downturn. Having said that, I do wonder whether DIGITAL advertising will not fall as badly as, say TV and print advertising, because there is an argument to be made that digital advertising is more easily targeted and therefore more important. 

In other news, Ford to delay new product launches (Financial Times, Claire Bushey) highlights Ford’s decision to delay launches for this year and next due to disruption caused by plant closures (and probably the fact that sales are likely to be dented badly by the global lockdown anyway) and BA to axe 12,000 jobs as air travel collapses (Daily Telegraph, Oliver Gill and Chris Johnson) shows the inevitable consequences of a widely expected major slowdown in the aviation industry. BA’s chief exec Alex Cruz said in a letter to staff that there is going to be no taxpayer-funded bailout and that the furloughing of staff is not a long-term solution. This is going to get painful.

And finally, in other news…

I thought I’d leave you today with the interesting restaurant concept in A one-person restaurant is opening in the middle of a field in Sweden, delivering food from a rope out of the kitchen window (Insider, Sophie-Claire Hoeller https://tinyurl.com/y9s7hh3c) and the latest what-the-hell-is-that invention from Japan in Japan’s latest work-from-home innovation: The wearable video conference background (SoraNews24, Casey Baseel https://tinyurl.com/ycqzpr2f). What?!?

1. In MACRO & OIL NEWS, Sunak promises more money and oil price prospects look poor
2. In INDUSTRIES IN CRISIS NEWS, anything to do with planes looks pretty bad and meat processing nightmares aren’t good for pigs
3. In INDIVIDUAL COMPANY NEWS, Apple decides to delay its 5G iPhone and Tesco starts to cut staff
4. AND FINALLY, I bring you a lockdown idea you can try…

So Sunak promises more money and oil prices weaken…

Sunak backs down and offers small firms 100% loan guarantees (The Guardian, Richard Partington) shows that UK Chancellor Rishi Sunak has relented and will now offer some of Britain’s smallest businesses 100% government-backed rescue loans. This move will enable businesses to apply for “micro-loans” worth up to 25% of their turnover with a £50,000 limit and they can apply in high street banks from next Monday. Sunak plans ‘gradual’ wind-down of job support scheme (Financial Times, George Parker and Daniel Thomas) highlights the Chancellor’s intention to wind state support down gradually in order to avert what would be a sharp rise in unemployment if the current scheme (where taxpayers pay 80% of furloughed staff’s wages) were to stop abruptly on the current June 30th deadline. As things stand, the official line is that no decisions have been taken on when and how to end the current scheme, but the government is surely thinking about it.

Meanwhile, oil is having a nightmare. Oil price heading for another plunge into the negative (Daily Telegraph, Ed Clowes) shows that the price for West Texas Intermediate (WTI – the US benchmark for oil) fell by over 27% and Brent Crude (the European benchmark) fell by over 8% as demand stays weak because OPEC-led production cuts aren’t

enough to turn the price around. The fact that oil storage is nearing capacity on a global scale means that negative oil prices could potentially happen again (where producers pay customers to buy the oil to take it off them) if the supply-demand balance doesn’t improve. In the meantime, buyers have got to store their oil somewhere and as land storage is particularly difficult to come by Tanker rates boom as refiners turn to floating storage (Financial Times, Neil Hume) shows that the demand for “smaller” tankers that can carry around 800,000 barrels of oil is now shooting up, as per their larger VLCC cousins. Customers are hoping to buy oil at current cheap prices, stick it on a tanker and park it off the coast somewhere until oil prices go up again, whereupon they will sell it. If you are thinking of doing this, it will cost you $173,000 a day to rent a Long Range 2 tanker – double what it cost around a week ago! According to Vortexa, an oil analytics firm, there are 72m barrels of oil floating (in tankers!) around the world at the moment – a hefty increase on the 33.7m barrels of floating stock just a month ago. * SO WHAT? * All this means that the whole industry is suffering and Oil collapse puts 30,000 jobs at risk (The Times, Greig Cameron and James Dean) shows the number of British individuals who could potentially be paying the price over the next 12 to 18 months, according to a report by Oil and Gas UK. The longer oil prices stay weak, the more we’ll see project cancellations and company bankruptcies – not to mention job losses in the companies that support the oil  industry.

The air travel industry continues to look turbulent and meat processing problems are growing…

Norwegian Air says most of fleet will stay grounded until 2021 (The Guardian, Gwyn Topham) highlights a gloomy outlook for the airline which had to ground its fleet in the middle of last month and has temporarily laid off over 80% of its staff. The article also looks at some of the other airlines like Virgin Atlantic (which is trying to get money from the UK government at the moment), EasyJet (which said it’s able to survive for about 9 months after it got a £600m loan from the government and Bank of England), Lufthansa (which looks likely to get a state bailout), Air France-KLM (which is going to get around €10bn in total from the French and Dutch governments) and US carriers (who are in line to get a slice of two pots of $25bn, depending on their needs). As far as the plane makers themselves go, though, Airbus warns it is ‘bleeding cash’ and may need more job cuts (The Guardian, Kalyeena Makortoff) as the company announced it was putting thousands more of its staff on furlough. It recently said that it would slash production by a third and rumours are circulating about more job cuts being announced tomorrow. Boeing CEO sees slow recovery for global aviation (Wall Street Journal, Andrew Tangel and Doug Cameron) shows things aren’t much better at its American rival as Boeing’s chief says that he doesn’t expect air traffic levels to get back to normal for two or three years. He added that when things do calm down, the commercial market will be smaller and customers’ needs will change. And if that’s not bad enough, Jets from bust airlines set to flood the market (The Times, James Dean) shows that things could be even worse for the plane makers as thousands of cheaper planes could suddenly be available as airlines around the world go bust and the aircraft they have been leasing become available. Some in the industry believe that 10% of the world’s fleet of aircraft (about 2,400 planes) could be repossessed or put into storage and around half

of the world’s 800 airlines could go bust by the end of next month, according to forecasts from the Centre for Asia-Pacific Aviation. Aercap, Avolonand GE Capital Aviation typically rent out three to seven year old planes from Airbus and Boeing for between ten and fifteen years but many customers are asking for help, including payment deferrals. * SO WHAT? * This is an absolute nightmare for the whole industry and until travel restrictions are fully lifted there’s no chance of a return to normality IMO. I would have thought that individual customers may be less inclined to fly as household budgets have been squeezed for many. There may also be a lingering reticence about travelling too far afield given the recent experiences of travellers when the coronavirus hit initially. In addition to this, I would expect fewer travellers on business class as companies get used to using more videoconferencing and cut travel budgets to save on costs. All of which doesn’t bode well. Everyone in the whole chain from airlines to hotels to travel agents will surely have to discount heavily to tempt back numbers – but how long can they do that for?

Largest US meat company warns food supply chain is breaking (Financial Times, Gregory Meyer) follows on from other companies having to shut down their processing plants as staff are increasingly affected by the virus – now Tyson Foods has had to shut three slaughterhouses and partially reopened a fourth over the last week for the same thing. Currently, around 30% of US pork processing capacity and 14% of beef capacity has been shut down, but poultry appears not to have been as badly hit thus far. * SO WHAT? * Clearly, the lack of processing capacity has consequences and Pork Industry USDA discuss euthanazing hogs after coronavirus closes plants (Wall Street Journal, Jacob Bunge and Kirk Maltais) shows that, ultimately, pigs in particular could be slaughtered in huge numbers to ease the resulting bottleneck as new piglet deliveries fall due. It ain’t pretty and it’s kind of ironic given that pork was in great demand before the outbreak as China had to cull around half of its pig population last year due to an outbreak of African Swine Fever. Some of the methods people are talking about re killing the pigs are pretty shocking…

Apple postpones and Tesco starts to cut staff…

I would say that Apple delays mass production of 2020 flagship iPhones (Wall Street Journal, Yoko Kubota) is a somewhat unsurprising headline given likely manufacturing issues caused by the coronavirus and the prospect of launching at a time when customers might be not be feeling rich enough to splash out on a new iPhone. That said, Apple is going ahead with plans to launch four new phones, some of which will have 5G connectivity and all of which will have OLED screens. The company normally launches mid-September, which means that production starts to ramp up in early summer, but it’s thought that the launch will now be delayed by about a month. * SO WHAT? * At this moment in time, it’s anyone’s guess as to how any 5G iPhones will be received by consumers given Apple’s expensive price tags. I originally thought that the

introduction of a 5G-compatible iPhone would give Apple a huge uplift in sales going into the end of the year, but now I am less sure because it’s difficult to tell how consumers will behave. Will they splash out anyway to cheer themselves up or will they just battle on with their current handsets? It’s too early to tell at the moment.

Tesco starts laying off workers hired at peak of pandemic crisis (Daily Telegraph, Hannah Uttley, Tim Wallace and Laura Onita) heralds a rather interesting development as the supermarket has started to lay off the first batch of the 45,000 workers it hired at the peak of the coronavirus outbreak due to lockdown measures starting to ease and employees who were laid low by the virus starting to return. * SO WHAT? * A number of businesses are making preparations to get back to work and the Confederation of British Industry (CBI) wants schools and public transport to start operating so that parents can return to work. This is obviously likely to go down badly with transport workers and teachers’ unions, but it sounds like thoughts are turning to a phased return to some kind of normality.

And finally, in other news…

I thought I’d leave you today with a little project idea you could do at home if you are lucky enough to be feeling bored at the moment 😜: Girl swaps family portraits for crayon drawings and no one notices for 11 days (The Mirror, Paige Holland https://tinyurl.com/yaxxzdb9). I mean, why bother learning a new language, musical instrument, catch up with long-lost friends etc. when you can do something as pointless as this 😂??

1. In CORONAVIRUS & OIL NEWS, Europe eases lockdowns and the US considers it while weak oil price fallout continues
2. In RETAIL NEWS, John Lewis faces tough times and retail faces new rules
3. In NEWS ON “WINNERS”, Qatar scopes for bargains and meat substitutes get a boost
4. AND FINALLY, I bring you some amazing grass graffiti…

So the cautious easing of lockdowns starts and oil weakness continues to hit…

Leaders across Europe prepare to ease lockdown (Financial Times, Daniel Dombey, David Keohane and Miles Johnson) highlights plans from the Spanish, French and Italian governments regarding coronavirus lockdown easing. It’s obviously a delicate balance between getting the respective economies back on track and avoiding a second wave. Spain started with letting children outside for the first time in six weeks this weekend and plans on taking a sector-by-sector phasing out of lockdown measures, France is going to be outlining its exit strategy tomorrow with a focus on “health, school, work, shops, transport and gatherings” and a gradual re-opening from May 11th while Italy said that it would unveil a plan – by the start of next week at the latest – to reopen businesses. Italian schools would, however, remain closed until September.

German shops reopen but celebrations in Berlin muted (Financial Times, Guy Chazan) shows that although Germany made a tentative start on opening shops last week after a five-week shutdown, things are still looking uncertain for retailers as business is proving to be extremely slow. Footfall is very low as shoppers continue to avoid crowded areas and many are also feeling the financial pinch, meaning that they are less inclined to spend on things other than essentials. At least closed shops get government aid – open ones will be left on their own and there will be slim pickings even if they are selling goods at big discounts. Meanwhile, Bosses appeal to the government for a lockdown exit plan (The Guardian, Zoe Wood) highlights increasing calls from UK businesses for more visibility regarding the road to “normality” as the Institute of Directors appealed for more visibility so that companies can do some planning. Across the Pond, US states move to reopen as coronavirus job losses

mount (Financial Times, Katrina Manson) shows US Treasury Secretary Steven Mnuchin talking a good game on the economy saying that “as we begin to reopen the economy in May and June, you’re going to see the economy really bounce back in July, August, September”. Many state governors are pondering a lifting of coronavirus restrictions (some have already done so) – and even New York governor Andrew Cuomo is looking at doing so after May 15th. * SO WHAT? * It’s interesting to see the cautious lifting of restrictions going on now and no doubt everyone will be watching each other and monitoring their successes (or not). It seems to me that although the UK appears to be unmoved in its lockdown plans, I would have thought that we will start to lift restrictions soon because I suspect that UK citizens are already getting antsy and the more they see of other people around the world getting out and about the antsier they will get. I wonder whether there will be public order problems if full lockdown goes on too long – and so the government will have to weigh this up with how many more coronavirus deaths they can cope with.

It may take three years to work off excess stocks and higher prices are far off, experts say (Daily Telegraph, Ed Clowes) highlights ongoing gloom in the oil sector as price weakness continues. Trump’s talk of supporting the industry and oil producer cuts just aren’t doing much to help the cause as current measures aren’t going far enough to make up for the current lack of demand. Shutting down production until better market conditions prevail is not as easy as it sounds – and for some, it actually costs more to do than pumping oil at a loss. * SO WHAT? * For now, the US Department of Energy said last week that producers will be able to store some oil in the Strategic Petroleum Reserve (SPR), a load of salt caverns near the Gulf of Mexico, but this won’t be a permanent solution. When you consider that the US shale industry really needs oil prices to be above $50 a barrel to be be profitable and that current prices are way south of that, you just know that things like Diamond Offshore Drilling files for bankruptcy (Financial Times, Laura Noonan) are going to be increasingly common. 

John Lewis faces some tough decisions and retail faces new shopping etiquette…

John Lewis seeks outside backer for services move (The Times, Ashley Armstrong) shows just how bad things have got for the venerable retailer as it is now looking at bringing in an outside investor to fund and launch a joint venture to increase services and reduce retail operations in a potentially new business mix. Other measures currently under consideration include not reopening some of its less profitable outlets once the lockdown ends, giving a floor back to landlords in some of its larger stores, relocating some shops to places where rivals have vacated and putting Waitrose food halls in the middle of John Lewis stores to help footfall. * SO WHAT? * John Lewis clearly needs a right old spring clean in order to position itself favourably for the future. In choosing Dame Sharon White – someone who had NEVER worked in retail before (although she has had a VERY impressive career generally) – as chairman very recently, I do wonder whether the company is hoping that she will do a hatchet job on the company, get rid of all the troubled bits of it (because she has no baggage) and then get someone else in with the requisite

retail background to do a proper job. Previous top management John Lewis “lifers” like Paula Nickolds have been booted out so everyone is bound to be feeling on edge. Dame Sharon has got a real job on her hands. Making more of a push into services sounds like a nice idea, but is not something that can be done easily overnight – what she really needs to do is to sort out the old-fashioned retail business!

For everyone else on the high street, however, New rules proposed to limit customers in shops and keep staff safe on return (Daily Telegraph, Laura Onita) cites guidelines from the British Retail Consortium (BRC) designed to keep both staff and consumers safe. Measures include having extra barriers, getting customers to shop alone, keeping changing rooms closed and screens to protect cashiers. DIY stores, garden centres, toy shops and electrical goods retailers are expected to be among the first to open when restrictions are lifted (and some have already started a limited reopening). * SO WHAT? * This all sounds good in theory – and although I suspect that there may be a boom initially as everyone rushes out to buy paint, pot plants and gadgets, footfall will go back to being pretty low if what retailers in other countries are saying proves to be true here as well. For those lucky enough to be relatively unscathed financially by the outbreak, I expect there to be huge amounts of bargains to be had.

Qatar itches for bargains and meat substitutes are making inroads…

Qatar sovereign wealth fund seeks health and tech deals (Financial Times, Andrew England) highlights intentions of the country’s sovereign wealth fund as it is among fellow cash-rich Gulf investors sniffing around for bargains. The country’s finance minister said that the $320bn Qatar Investment Authority’s “main focus” would be on building up international investments and buy up targeted assets that have recently become very cheap due to the coronavirus outbreak. The fund has in the past bought trophy assets like Harrods and The Shard in London and it invested heavily in the wake of the financial crisis of 2008-9. * SO WHAT? * If you are a cash-rich investor at the moment – whether you are a hedge fund, a private equity fund or a sovereign wealth fund – you will have the pick of the best businesses. Clearly, the most obviously attractive ones will get the most bids, but there will be a lot of due diligence going on in the background to make sure they won’t be backing duds. Mind you, I think some businesses

have become SO cheap currently that investors almost can’t fail if they have a long enough investment horizon.

Pandemic accelerates shift to meat substitutes (Financial Times, Emiko Terazono and Gregory Meyer) highlights an interesting phenomenon at the moment – sales of plant-based meat substitutes are rising as the closure of meat processing plants and slaughterhouses continues. Interestingly, sales of meat substitutes shot up by 200% in the week ending April 18th versus the same period last year and by 265% over an eight-week period, according to consumer data group Nielsen. This compares rather favourably versus meat sales rising by 30% and 39% over the same time period. * SO WHAT? * OK, so this is from a low base as meat-substitute sales are still a fraction of “real” meat sales, but the momentum from last year appears to be continuing. The industry is benefiting not only from production problems with meat, but also from the fact that plant-based substitutes required less labour, meaning that there are less staff shortages to contend with. Beyond Meat’s share price shot up by over 40% last week on news of meat factory closures and Starbucks deciding to use its products in its Chinese stores! The plant-based revolution continues!

And finally, in other news…

I thought I’d leave you today with the incredibly impressive Massive coronavirus-themed grass graffiti is unveiled in Swiss Alps (Reuters https://tinyurl.com/y9vvkt23). This really is quite something 👍

1. In MACRO & LOCKDOWN NEWS, the French ban state aid for some, Merkel cautions on lockdown relaxation while carmakers and builders plan a return
2. In RETAIL/CONSUMER NEWS, Amazon stiffs its own sellers, shopping habits change and the US is facing a meat shortage
3. In DRUGS NEWS, Gilead’s hope falls flat, Chinese companies are accused of price gouging and drugmakers prepare to ramp up production
4. In TECH NEWS, Apple looks at when to launch its 5G phone and Intel benefits from WFH
5. AND FINALLY, I bring news of a new song…

So the French government gets its own back and Merkel urges caution while carmakers and builders plan a return to work…

France bans firms based in tax havens from state aid (Daily Telegraph, Henry Samuel) shows that France is getting its own back on companies based in tax havens by stopping them from getting any government aid during the outbreak. The country has also said that companies who do share buybacks or pay dividends over this time will also be banned from receiving state aid. * SO WHAT? * You would have thought that this measure would be an instant crowd-pleaser in that it is the state getting back at companies who thought they were being clever by basing themselves in places that “optimised” their tax payments. That’s as maybe, but if they collapse, jobs will be lost all the same. 

Merkel warns against lifting Germany’s lockdown too quickly (Financial Times, Guy Chazan) shows Germany’s chancellor urging her fellow citizens to exercise endurance and discipline as the country prepares to relax social distancing rules. Shops with retail space of up to 800m² will be allowed to reopen from Monday and some kids will go back to school from May 4th. Germany has the fifth largest number of Covid-19 infections worldwide behind the US, Spain, Italy and France – but it has a much lower

death-to-confirmed-cases ratio, mainly due to the success of testing and contact-tracing. The world will be watching closely.

Meanwhile, in the UK, Carmakers and builders start the road to recovery (Daily Telegraph, Alan Tovey and Tim Wallace) shows that carmakers such as Aston Martin and Jaguar Land Rover (JLR) are making preparations to open their factories early next month and Taylor Wimpey is also working towards resuming work. B&Q also opened yesterday as did some Five Guys outlets for collection orders (I noticed the Five Guys thing last night when I took my dog for a walk! The familiar smell of chips caught me by surprise!). Apparently, road traffic is now rising after falling to levels not seen since the 1950s and we are now at 40% of normal levels as 49% of adults are now working from home, according to the Office for National Statistics. Aston Martin is planning on opening its St Athan plant on May 5th, VW-owned Bentley is planning on starting up production on May 11 (and ramping up thereafter) and JLR is starting production in Solihull and Wolverhampton on May 18th while Nissan will start work at its Sunderland plant with only 1% of its normal staff levels. Builder Taylor Wimpey is talking about a phased return from May 4th. * SO WHAT? * I expect there to be a steady trickle of companies returning to work as management will be keen to get back to normality as soon as possible whilst still ensuring the safety of their staff. Clearly, a balance has to be struck between safety and getting the economy started so that people can earn again.

Amazon plays dirty, shopping habits are changing and the US is potentially facing a meat shortage…

Amazon scooped up data from its own sellers to launch competing products (Wall Street Journal, Dana Mattioli) shows that Amazon have seemingly been going against stated policies and ripping the face off independent sellers on their site. They seem to have done this by using data on their platform to develop competing products. Amazon obviously denies this. * SO WHAT? * This information has helped Amazon to price products, which features prove to be more popular and which categories have the most earnings potential – according to a Wall Street Journal investigation that involved over 20 former employees of the company’s private-label business. Grocery chains and drugstores all indulge in a bit of “own-brand” shenanigans with products similar to established names but at a lower price, but if what this investigation says is true, it is very serious given the detailed nature of the information that Amazon has access to. Although Amazon has been able to portray itself as a “national resource” to deliver essential goods where they are needed, the fact is that until this crisis unfolded the company was under investigation by the EU for potentially abusing its role as a marketplace AND a seller in its own right while in the US, it was being investigated along with other big tech companies by the Justice Department, Federal Trade Commission and Congress on antitrust issues. Because 39% of US online shopping occurs on Amazon, the outcome of any investigation on their potential abuse of power will be watched very closely.

Shift in shopping habits here to stay, says Unilever (The Guardian, Zoe Wood) cites Unilever as saying that the current crisis will accelerate the growth of online food shopping and that there will be a sustained uptick in demand for soap and other cleaning products. The company has seen demand for its ice-cream (with brands

like Cornetto and Magnum) fall due to a lack of sales to cafés and restaurants and grooming products such as shampoo and deodorant have also seen poorer volumes as people wander around unshaven and in their pants whilst working from home (not me, I hasten to add. I am always fully dressed 😂 🎩👔👖). More cooking, less shampooing: the coronavirus consumer starts to emerge (Wall Street Journal, Saabira Chaudhuri and Sharon Terlep) adds findings from companies like Proctor & Gamble and L’Oréal into the mix which identify trends such as more frequent clothes washing, higher demand for disposable cleaning products and weaker demand for skincare and beauty products. Following on from what I have been saying about American food processors having difficulties, Grocers hunt meat as coronavirus hobbles beef and pork plants (Wall Street Journal, Jacob Bunge, Sarah Nassauer and Jaewon Kang) shows that the problem is continuing to get worse to the extent that execs at grocery stores such as Walmart and Costco are getting increasingly concerned that supply of products could get very low just as demand is picking up. The stores are currently rushing to find more suppliers in order to head off a shortage. Some say that meat inventories will get much tighter over the next fortnight as recent factory closures hit supply. * SO WHAT? * It’s interesting to see how shopping habits are changing as the coronavirus continues to affect established behaviours. I’m not sure whether I agree with Unilever’s boss saying that the cleaning trend will continue for the long term. Sure, people will clean while they are stuck at home now, but when they start going back to work I suspect that they will slide back into old habits. Presumably demand for handsoap and sanitiser will continue as this has become more of a part of our daily routine but I’m not sure about cleaning products (they also last quite a long time as well). Also, I would expect sales of personal grooming products to bounce back as consumers smarten up with renewed vigour! As for meat in US supermarkets, this is clearly a problem and I presume it will result in panic buying if news of this situation takes hold. Meat processors will need to ensure that the plants that are currently open stay open otherwise the situation will get worse.

Gilead disappoints, Chinese suppliers are accused of price gouging and drugmakers ramp up production capability in anticipation…

Gilead antiviral drug remdesivir flops in first trial (Financial Times, Donato Paolo Mancini and Hannah Kuchler) just illustrates why it is so dangerous to put too much hope in early stage drug development. The fact of the matter is that the process to develop something that works is very long and in our desire to beat Covid-19, we can get too emotionally over-invested. A Chinese trial of Gilead Science’s remdesivir showed that the drug neither improved the patients’ condition nor cut the pathogen’s presence in the bloodstream. There were also significant side effects in some. Maker of drug touted as coronavirus cure accuses China of gouging (Financial Times, Stephanie Findlay and Sun Yu) shows that makers of the drug that was being touted by Donald Trump as a potential coronavirus cure, hydroxychloroquinine, are complaining that Chinese factories are price gouging it on key ingredients. India is the world’s biggest producer of the antimalarial drug (which experts are very circumspect about regarding efficacy against coronavirus), but Sharvil Patel of drugmaker Zydus Cadila said that Chinese suppliers were charging between 10 and 20 times normal

prices. One Chinese supplier said it had been forced to increase prices because of massive demand from Indian buyers as well as Chinese local governments – with the latter getting higher priority than the former.

Despite current disappointment with the drugs being tested, Drugmakers prepare to make coronavirus treatments (Wall Street Journal, Peter Loftus and Joseph Walker) shows that companies like Johnson & Johnson and Pfizer are hiring large numbers of extra staff to work in reconfigured manufacturing plants in anticipation of a huge upswing in activity when they start churning out coronavirus cures. Clearly this won’t be for a while yet, but it’s nice to know they are making preparations! * SO WHAT? * In order to be ready for a major surge, companies have to act now in order to line up their supply chains for key ingredients and install new equipment. Under normal circumstances, pharmaceutical companies tend to wait until a drug is in the advanced stages of testing and looks like succeeding before ramping up production capacity. However, given the unpredictable nature of pandemics, they have decided to act early bearing in mind what happened with Ebola – which faded sharply by the time the drugs designed to treat them were tested fully and allowed to go on sale. At the moment, it looks like Gilead may have jumped the gun as it started ramping up production of remdesivir in January with a view to producing 140,000 treatment courses by the end of May (production as at the end of March has yielded over 30,000 treatment courses so far).

Apple wonders when to release a 5G iPhone and Intel benefits from working from home…

Apple’s tough call: how long can it delay the new iPhone? (Daily Telegraph, James Titcomb) is a really interesting article that takes a look at Apple’s current situation. Funnily enough, Apple’s reliance on China was seen to be a major weakness at the beginning of the year as factories making the iPhone were shut and Trump put pressure on it for not “reshoring” more of its production as part of the China trade war, but now production is starting up once again. Apple’s main manufacturer, Foxconn, started production again two weeks ago and of the 43 Apple stores opened in the entire world, 42 are in China (and one is in South Korea). Given that Apple has traditionally unveiled a new flagship phone in September, expectations have been building for Apple to join the 5G fray by launching its own compatible handset. However, it seems like the company is

thinking about a delayed launch as their usual processes have slowed down and there are presumably worries about whether customers will welcome the launch of a (no doubt) very expensive trinket. If you have 20% unemployment, it doesn’t say much about the financial health of your potential customer base! * SO WHAT? * It seems to me that Apple has form in delayed launches anyway, so this wouldn’t be a shocker. It may even work to Apple’s advantage IMO because supply chains are bound to have suffered. A delay would also give people time to build up their finances again. 

Intel’s earnings rise as it profits from work-at-home computing demand (Wall Street Journal, Asa Fitch) shows that the chip making giant has seen a major rise in its Q1 earnings due to increased demand for its data centre business that is being powered by the WFH trend. On the downside, it was cautious about full-year guidance and sentiment was also hit by You’ve had your chips, Apple to tell Intel (The Times, Tom Knowles), which said that Apple is moving to use its own chips and not Intel’s from next year. It has used Intel processors for 16 years.

And finally, in other news…

I thought I’d leave you with news about a group of old duffers making some new music in Rolling Stones release new song ‘Living in a Ghost Town’ (AFP, https://tinyurl.com/y9svapuo). How DO they keep on going???

1. In COMMODITIES, CORONAVIRUS & MACRO NEWS, Trump gets involved in oil, Cornwall finds high-grade copper, we look at anti-coronavirus efforts in parts of the US, South Korea and France and UK inflation falls to 1.5%
2. In M&A NEWS, Facebook invests big in India’s Jio while acquirers try to back out of Moss Bros and Victoria’s Secret deals
3. In INDIVIDUAL COMPANY NEWS, Boohoo is on the prowl and Fever-Tree benefits from home drinking
4. AND FINALLY, I bring you Dalgona coffee and dogs being trained to detect Covid-19…

So oil continues to be entertaining, a copper discovery in Cornwall excites, we look at a few anti-coronavirus measures around the world and UK inflation drops to 1.5%…

Modest lift in oil prices as Donald Trump rattles sabre (Daily Telegraph, Ed Clowes) shows that Trump’s aggressive tweeting (“I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea”) lifted oil prices. Oil prices tend to rise on the threat of conflict because oil consumption usually increases as a result, but surely this is going to be a fleeting rise because there’s tons of oil sloshing around in storage at the moment – which is why the oil price is so weak currently. In addition to this, US oil blockade could strand Saudi tankers (The Guardian, Jillian Ambrose) shows another way that Trump is trying to “help” his domestic oil industry – by potentially blocking all incoming tankers and/or putting massive tariffs on oil imports. US senator Ted Cruz indulged in a bit of Trump-like Twitter diplomacy on Tuesday saying “My message to the Saudis: TURN THE TANKERS THE HELL AROUND”. Nice. All this oil price weakness continues to have repercussions as per ‘We pulled the plug’: as oil prices plunge, drillers in the Gulf of Mexico shut off wells (Wall Street Journal, Collin Eaton), which highlights yet more examples of oil companies shutting down operations due to the ongoing low oil price. Oil field services companies such as Schlumberger, Halliburton and Baker Hughes are laying off workers as the oil majors that they work with continue to cut projects. I expect that the carnage will continue for now.

On a happier note, Cornish copper find raises hopes for once ‘richest square mile’ (The Guardian, Steven Morris) highlights a new discovery of copper near Redruth by Strongbox Exploration. This could be pretty exciting as the average grade of copper in the area is 8% versus the global average of around 0.5% and it was discovered whilst trying to find lithium.

In terms of anti-coronavirus measures around the world, Donald Trump warns Republican governor not to reopen

Georgia (Financial Times, Demetri Sevastopulo and Lauren Fedor) I think is another example of Donny T trying to make sure he stays on both sides of the fence in the “to-lockdown-or-not-to-lockdown, that is the question” debate. He said that he “strongly” disagrees with governor Brian Kemp’s decision to open spas, beauty salons and tattoo parlours from tomorrow and then let residents visit cinemas and restaurants from Monday, but is not really doing anything about it. * SO WHAT? * This would suggest to me that if Georgia gets a second wave, he’ll just blame the governor and if it doesn’t, he’ll probably take the credit indirectly! Georgia has not yet met White House guidelines for reopening, which say that lockdowns should remain in place until coronavirus cases have fallen for 14 days in a row. It was one of the last states to impose a lockdown and is on track to be one of the first to lift restrictions. Let’s hope people don’t have to pay for these decisions with their lives.

Elsewhere, South Korea boosts coronavirus stimulus package to $200bn (Financial Times, Edward White and Song Jung-a) shows that South Korean president Moon Jae-in unveiled a major increase in spending to help industries affected by the crisis. This just serves to highlight concerns for the long-term effects of the outbreak. Talking of which, France’s testing weakness shows challenges lifting lockdowns (Financial Times, Leila Abboud and David Keohane) highlights potential difficulties facing President Macron in his aim to start lifting quarantine conditions in mid-May. Specifically, his scientific adviser says that the country is going to have to be able to triple its current testing capacity. Jean-François Delfraissy says France needs to be able to perform 500,000 tests per week by the current May 11th deadline but current capability is 150,000 per week. Just to put that into context, the UK is currently performing 120,000 tests per week versus Germany with 350,000 and Italy and Spain about 300,000 each.

Meanwhile, Inflation falls to 1.5% as demand evaporates (The Times, Gurpreet Narwan) shows that the combination of weak consumer demand and lower oil prices has dented inflation. The latest data from the Office for National Statistics shows that it fell from 1.7% in February to 1.5% in March. * SO WHAT? * I would say that this was within market expectations, but as the data was collected on March 17th – a week before the UK lockdown began – I imagine it could get worse.

Although M&A isn’t completely dead, there seems to be a steady trickle of acquirers trying to back-out of previous deals…

In Jio becomes Facebook’s biggest investment (Financial Times, Chris Nuttall) we see that Facebook just made its biggest single investment in another company – Indian telecoms company Reliance Jio. The social media giant is paying $5.7bn for about 10% of the company. This sounds like a good strategic move into a market with big potential (in theory). * SO WHAT? * Reliance Jio needs the cash from this deal as it has spent a lot of money on becoming the country’s leading wireless operator but Facebook/Jio: one-sided relationship (Financial Times, Lex) highlights difficulties of foreign companies doing business in India as margins are always tight and can be easily scuppered by fast-changing regulations. Also, the Indian government takes a hefty slice of telecom sector revenues (which has been extended recently to include non-telecom related revenues), so although this deal looks decent enough in theory, it is unlikely to be a money-spinner for quite some time.

As we can see, M&A isn’t completely dead, but there seems to be a stream of companies now who are getting cold feet about deals that were negotiated before the coronavirus

hit. Crew Clothing owner seeks to scrap £22m deal for Moss Bros (Financial Times, Patricia Nelson) shows that Crew Clothing owner Brigadier Acquisition is trying to pull out of the acquisition only one month after agreeing a takeover. As identified by Moss Bros: return of the MAC (Financial Times, Lex), it is trying to use the Material Adverse Change (MAC) clause to void the deal. Victoria’s Secret buyer seeks to cancel takeover after coronavirus (Wall Street Journal, Khadeeja Safdar and Cara Lombardo) shows a similar thing whereby private equity firm Sycamore Partners is trying to pull out of its plans to take on Victoria’s Secret. It is arguing that the decision by Victoria’s Secret owner L Brands to close all of its US stores, furlough most of its staff and stop paying rent were violations of the original transaction. * SO WHAT? * I’m not sure how the US case will go with Victoria’s Secret, but as far as the Moss Bros thing goes, a MAC clause has never successfully been invoked in a deal for a UK private company. If buyers were aware of adverse circumstances OR POTENTIAL for them at the time of signing, a MAC can’t be used. WPP tried to invoke the MAC when trying to buy media company Tempus when 9/11 happened, but it failed and didn’t appeal. However, even if the bid to invoke the MAC in Moss Bros’ case failed, Brigadier COULD try to drag this thing out on appeal in the courts. This would cause Moss Bros a great deal of pain given current circumstances, so it may be forced to get back to the negotiation table and concede improved terms rather than die a drawn-out death.

Both Boohoo and Fever-Tree are currently doing well under current circumstances…

Boohoo eyes struggling fashion brands after boost to profits (The Guardian, Sarah Butler) shows that the online fashion retailer reported stellar numbers yesterday – a 54% rise in pre-tax profits and 44% increase in sales in the year to 29th February. As well as the main boohoo website, it also owns PrettyLittleThing, Nasty Gal, Coast, Karen Millen and MissPap – and it is one of the rumoured potential buyers of troubled Oasis and Warehouse. Although it couldn’t give profit guidance for the rest of the year given uncertainties, it tried to reassure investors by saying that it

has a strong balance sheet and £241m in cash that should help it get through current events. * SO WHAT? * It’s always good to see retailers doing well under current circumstances – especially as others such as TM Lewin and Office are scrabbling around for rescue deals.

I must say that I had been wondering whether we’d already reached “peak gin” in the UK, but Fever-Tree toasts ‘robust’ sales as home drinkers reach for a tonic (Daily Telegraph, Simon Foy) shows that the current outbreak has brought the company some solace as concerned lockdownees continued to reach for a reassuring G&T at home rather than when out-and-about. Still, the company said it couldn’t predict immediate forecasts due to all of the uncertainty but remains confident in its current financial position as it has no debt and held £128m of cash at the end of last year. Worth a toast, perhaps? Its share price rose by 13.29% on the news.

And finally, in other news…

You’ve no doubt heard about this drink already (my eldest son keeps making me this with varying results!), but just in case you haven’t, here’s one person’s experience in I tried making Dalgona whipped coffee – and I was pleasantly surprised with the results (The Mirror, Paige Holland https://tinyurl.com/y93mfgk8). It’s the coronavirus lockdown drink of choice (well, that and alcohol!). I’d recommend it – it’s surprisingly good! And then there’s the fascinating Can dogs detect COVID-19? Canines in training to sniff out virus (AFP, https://tinyurl.com/yavkz8gm). Dogs have been used to detect cancers, Parkinson’s disease and various bacterial infections, so the Medical Detection Dogs charity is trying to find out whether they can be trained to detect the coronavirus.

1. In OIL NEWS, we look at the slump, rising tanker rates, Trump’s lifeline and why petrol prices at the garage ain’t going down!
2. In CONSUMER & RETAIL NEWS, China gives out vouchers to encourage spending, universal basic income pops up again and Admiral does the decent thing while John Lewis, Primark and Kath Kidston hit tough times and Joules benefits from lounging around
3. In INDIVIDUAL COMPANY NEWS, Coke’s sales go down the plug hole while Netflix and Snap benefit from captive audiences
4. AND FINALLY, I bring you some impressive sandwich art…

So oil has a nightmare, Trump holds out a lifeline and petrol prices stay flat-ish…

Over a barrel: how oil prices dropped below zero (The Guardian, Jillian Ambrose) does a really good job of explaining what happened with the oil price, the meaning of “negative prices” and why not all oil prices fell into negative territory, among other things. As I have said before, at one point on Monday, US producers were paying buyers to take their oil off them because they couldn’t store it anywhere. In short, there’s way too much supply, inventories are almost at capacity and demand is nowhere to be seen. Oil tanker rates soar as traders buy cheap and store (Daily Telegraph, Ed Clowes) shows that prices for vessels that can store oil has gone through the roof. For instance, if you wanted to rent a Very Large Crude Carrier (VLCC) which holds around 2m barrels of oil, you would have to pay $150,000 per day – six times more than it would have cost you a year ago! Buyers have bought oil at low prices and stored it on land and at sea in the expectation that they can sell it for a profit later when the price goes higher – to the extent that there are now over 80 huge tankers floating around off the coasts of Scotland, Texas and other places.

Low oil prices are killing the US shale industry at the moment, so Trump pledges lifeline as prices fall below zero (The Guardian, Jillian Ambrose) highlights the seriousness of the situation as the President has told the US Treasury to develop a funding plan for stricken oil producers. * SO WHAT? * Trump tried to downplay Monday’s move into negative territory as a short-term blip but it looks to me like things could be getting worse before they get better as one of America’s largest oil storage facilities – Cushing in Oklahoma – is thought to be only three weeks away from being full while one of the world’s biggest independent oil storage operators, Vopak, said that other big stores outside Rotterdam, Fujairah and Singapore weren’t far off being full either. Trump added that he would buy up to 75m barrels of oil for the government’s national strategic reserves to help out. John Browne, who was chief exec of BP from 1995 to 2007, said something that will chill oil producers to the bone: “This is very reminiscent of a time in the mid-1980s when exactly the same situation happened – too much supply, too little demand, and the prices of oil stayed low for 17 years”. Browne knows his

stuff, so this is not to be taken lightly IMO. Trump will be doing his level best to make sure WTI doesn’t slip back into negative territory.

Given that the oil price has dropped so much, you may be wondering why the price at your local forecourt may not be going down as much as you’d expect! UK petrol prices to stay steady despite global oil price slump (The Guardian, Jillian Ambrose) says that, despite the weak oil price, you may not see petrol prices dip under £1 a litre. Driving mileage has gone right down during the lockdown, so people are buying way less petrol and diesel than they normally do – which means that the garages that sell it won’t want to reduce prices. Lobby group FairFuelUK says that prices were too high anyway before the outbreak but it claims that forecourts are now making profits of 20.5p a litre on petrol and 18.9p on diesel at the moment versus 13.6p and 14.6p at the start of the year. The lion’s part of the price you pay is actually tax – so I guess the government’s not going to be all that helpful on fuel prices because they earn money on it.

BTW, this is a bit tenuous, but I got to thinking about cars with this whole oil price thing. Given the outbreak, people are driving shorter distances. Doing this is bad for diesel cars because they need to go above a certain distance over a certain speed to “clear out” their Diesel Particulate Filters (DPF) otherwise soot builds up and they have to be replaced (and they aren’t cheap, as I have found out in the past). Apparently, modern diesels are fitted with a DPF and catalytic converter to minimise harmful emissions (from what I’ve found on Google – I am not a car expert!) and some of the main materials used in catalytic converters include platinum, palladium and rhodium. Gold prices have obviously sky-rocketed of late because investors buy gold in times of economic strife as it is seen to be a “safe haven” asset. I have noticed that platinum prices at least haven’t done brilliantly recently and wonder whether they will go up into the end of the year as diesel drivers are forced to replace their clogged emissions systems. Like I say, I am not a car expert and would need to check this out, but it might be worth monitoring (if you are into that sort of thing of course!)…if YOU find out, please let me know! It is at times like these when I was a stockbroker that I would be asking the automotive analysts about car parts and then cross-checking with the commodities team to see whether I had a robust story to go to the clients with. Where’s an autos analyst when you need one, eh 🙄?!?

China distributes vouchers, universal income comes up again and Admiral pays customers while the high street continues to be a bit of a mixed bag…

Many consumers the world over are caught like rabbits in the headlights at the moment, either because the amount they can spend has reduced or because they want to hold off on purchases for the time being. China doles out vouchers to encourage shoppers to spend again (The Guardian, Zoe Wood) shows that local authorities are doing their best to think of ways to help consumers to get back into the spending habit once more. Some cities are encouraging two-and-a-half day weekends and Communist party officials are being told to lead by example by spending and shopping. Suning, a major electronics, clothing and food retailer gave out £70m worth of vouchers to shoppers and Tencent has launched “buy now, pay later” functionality on WeChat. We’ll just have to wait and see whether this is successful or not!

Talking of putting money into consumers’ pockets, More than 100 UK opposition politicians call for universal basic income after lockdown (Financial Times, Jim Pickard) shows that there is a growing chorus of voices calling for the government to make regular payments to all adults in the country to head off an even worse economic crisis once the lockdown ends. At the moment, Sunak is saying that he believes that the existing universal credit provision is enough, but things will get more difficult once the current government support measures end. * SO WHAT? * So far, we have seen countries like the US and Japan give their citizens one-off payments of around $1,000 and I know that the concept of a universal basic income has been raised from time to time in various countries, but it has always been voted down. This is a tricky problem, but I wonder whether universal credit payments could give the government a realistic picture from which to gauge the potential future cost of such a system. Whatever they come up with, it is likely to be very expensive.

Then in Admiral to refund £110m of premiums as drivers stay at home (Financial Times, Oliver Ralph) we see an insurer getting some positive press for a change as it has become the first major British insurer to refund premiums to all of its customers to acknowledge that people are driving less during the lockdown. In practical terms that will be about £25 per vehicle, equivalent to 5% of the average annual motor insurance premium as at the end of last year. * SO WHAT? * This has already been happening in the US with companies like Geico, Allstate and State Farm returning billions of dollars to customers and will no doubt put other British insurers under pressure to do the same.

Meanwhile, the UK high street continues to suffer. John Lewis and Primark furlough tens of thousands of staff (The Guardian, Zoe Wood and Sarah Butler) shows that, combined, the two retailers have furloughed over 80,000 staff. 14,000 of those are at John Lewis, which is also making major cuts to its spending plans. Associated British Foods, which owns Primark, announced that it had furloughed 68,000 workers worldwide and written off stock, including Euro 2020 merch that is unlikely to ever sell, worth £284m. Despite its suffering Primark will resist going online despite shutdown (The Times, Ashley Armstrong) shows that the company is going to stick to its guns and not sell online, despite suffering this time around because of its lack of capability in that area. Kath Kidston quits high street and puts 900 staff out of work (The Times, Ashley Armstrong, Louisa Clarence-Smith and Alex Ralph) gives us news of the inevitable as it signed an insolvency deal that has shut down all of its 60 shops across the UK. It was sold back to Baring Private Equity Asia in a pre-pack administration. The company will continue to trade online and in overseas franchise operations. The tough times continue for British retail. Having said that, Clothes for the great indoors give Joules a lift (The Times, Ashley Armstrong) shows that at least one retailer is doing OK during the lockdown as online traffic and sales were all running above expectations despite all their physical shops being closed as part of the lockdown. The company’s share price shot up by 25% as investors took this as a sign that things might turn out OK for them when coronavirus restrictions are eventually lifted.

Coke’s sales underwhelm while Netflix and Snap benefit from captive audiences…

Coke sales volumes down 25% as bars and stadiums close (Financial Times, Alistair Gray) shows how the lockdown is adversely affecting the beverages giant as sales volumes fell by a quarter this month but Netflix adds 16 million new subscribers as homebound consumers stream away (Wall Street Journal, Joe Flint and Micah

Maidenburg) and Snap revenues soars with users stuck at home (Wall Street Journal, Georgia Wells) show that captive audiences are working well for some.* SO WHAT? * Netflix says that production shutdown consequences won’t be too bad over the next three months, but if producers and actors aren’t allowed to do their thing it may start to get problematic. At the moment, it is rushing to finish shows that are in their final edits and buying other content from third-party suppliers (along with everyone else, I suspect!). Snap impressed with a surge in growth and revenues over the first quarter despite everyone expecting ad revenues to be hit. Facebook and Alphabet are yet to report results, so Snap’s upside surprise could be a sign of things to come from the others.

And finally, in other news…

It could be argued that this is a project for people with weird tastes in sandwiches and/or for people with far too much time on their hands but How to make amazing Japanese fruit flower sandwiches (SoraNews24, Oona McGee https://tinyurl.com/ydhprsd2) is still quite impressive. Bizarre fillings, though…

1. In OIL & MACRO NEWS, the US oil price hits historic lows and we see who is lifting the lockdowns
2. In MANUFACTURING NEWS, Russia’s heavy industry,  Europe’s car industry and US food production hit hurdles
3. In INDIVIDUAL COMPANY NEWS, Alibaba earmarks $28bn for cloud computing, Premier Foods benefits from lockdown and Le Pain Quotidien looks shaky
4. AND FINALLY, I bring you IKEA’s meatball recipe and how to clip your dog’s toenails…

So oil falls through the floor while Germany, Taiwan and southern US states are in various stages of lockdown…

US oil price back above zero after historic plunge (Financial Times, Hudson Lockett) moves on from what I identified in yesterday’s note as the price for US oil (the benchmark is WTI – West Texas Intermediate) actually fell below zero for the first time in history, meaning that producers were paying buyers. At one point in trading yesterday, producers were paying over $40 a barrel to get rid of their oil! Brent crude prices, on the other hand, lost about 9% at one point but generally recovered. * SO WHAT? * One of the main differences between WTI and Brent Crude is that Brent is more easily shipped (offshore producers can keep pumping oil for as long as there are ships to offload to whereas American frackers have always had logistical issues with getting their product out), but with global oil storage heading towards capacity, Brent may also go the same way. On the supply side of the equation, Oil storage ‘filling at rate never seen before’ (The Times, Emily Gosden) shows that US storage facilities are being overwhelmed – which will probably mean more price volatility for WTI. The demand side of the equation is also pretty stark at the moment as global demand for oil is thought to have dropped by about 29m barrels a day this month versus the 100m a day before coronavirus. Until demand picks up, that recent agreement between Opec and Opec+ countries to cut production by 10m barrels a day just isn’t going to make much difference at all. In the meantime, we are going to see a lot more stories like Halliburton’s billion-dollar headache (The Times, James Dean) where the oilfield services giant (it’s the world’s second largest after Schlumberger) has decided to cut

costs and capex dramatically. Weak oil prices have resulted in oil majors cancelling and mothballing projects, which means that there’s less work for oilfield services companies to do. As a quick aside, I wonder how this is going to affect Nicola Sturgeon’s plans for Scottish independence. If oil prices remain weak, it’s going to be more difficult for Sturgeon to finance initiatives with lower oil revenues so I wonder whether she’ll wind in the rhetoric given that priorities and practicalities may now be somewhat different…

Elsewhere, Germany throws off the shackles, but pace of recovery will not be quick (Daily Telegraph, Tom Rees) shows that Germany is now allowing small shops (up to 800m²) to open after lockdown. Further relaxation of lockdown measures are expected in the coming weeks, but it is likely to be gradual. Larger shops, bars and restaurants will still be closed and large gatherings are still banned until August at least. US southern states move to reopen economies (Financial Times, Demetri Sevastopulo and Hannah Murphy) shows that some southern states like Georgia, South Carolina and Tennessee are looking to ease lockdown measures over the coming weeks and the anti-lockdown movement seems to be gaining some traction. Meanwhile, Taiwan’s early success against coronavirus cushions economy (Financial Times, Kathrin Hille) shows that one country has actually managed to avoid serious lockdowns altogether during the outbreak as early action (having learned from the SARS outbreak in 2003) has proved to be successful at containment. In the early stages, it screened arrivals from China – and then went on to ban them – while it also adopted strict quarantine measures quickly along with better monitoring and contact tracing. * SO WHAT? * In some ways, it’s heartening to see others emerge from their quarantine. However, I imagine this will make it harder for governments of other countries that are still in lockdown to keep increasingly antsy citizens at bay as everyone yearns for more daily freedom!

Russia’s heavy industry, Europe’s car industry and the US food processing industry are facing challenges…

Russian industry scrambles to cope with coronavirus restrictions (Financial Times, Henry Foy) highlights the current plight of Russia’s metal smelters, hydrogen processors, miners and energy giants as they have been forced to diversify their usual activities in order to build temporary accommodation for shift workers who have tested negative for the coronavirus, manufacture their own respirator masks and manage bus services to transport their staff. The national lockdown was imposed on March 30th and is set continue throughout April. * SO WHAT? * Clearly, Russia’s heavy industry is not cut out for working from home and it has had to adapt hugely in order to keep going. Although the bigger metals, mining and oil companies have been classed as strategic/essential, many of their suppliers and other related small companies have not and supply chains will be hit hard. Russia’s industrial sector faces particular difficulties because much of it can’t just be switched off and on again and many factories are in remote areas which require shift workers to commute, meaning a greater potential for contagion. Sibur, Russia’s biggest petrochemical producer, has made special accommodation for its non-coronavirus sufferers and runs its own bus services; Phosagro, Russia’s biggest phosphate fertiliser company, has used company-owned hotels as worker housing and worker quarantine and also runs its own bus services; Severstal, the steelmaker, is set to make respirators for its own staff and local people in Cherepovets, where the company’s main production site is based. Projects are being re-evaluated and capex will be cut in many cases.

VW urges EU to take co-ordinated action to revive car industry (Financial Times, Joe Miller) shows the German car giant speaking for its entire industry as it presses the EU to take “energetic and co-ordinated action” in the form of a major stimulus package. It is calling for a co-ordinated incentive to boost new car sales and comes as the latest figures show that sales for the EU passenger car market fell by 55% in March due to coronavirus lockdowns. * SO WHAT? * One form this could take is an incentive offered shortly after the 2008 financial crisis – a scrappage bonus – and the minister-president of Bavaria (a region which is home to BMW and Audi, among others) pointed out that such a programme would be a “huge opportunity” to boost sales of electric vehicles. Germany already offers up to €6,000 incentives for the purchase of new electric cars and companies such as VW will be very keen to see this continue. Discussions are ongoing but the pressure will continue to build, especially as carmakers are starting to increase production this week…

Coronavirus spreads to farms, packaged-food plants (Wall Street Journal, Jesse Newman and Annie Gasparro) shows that the American food system is facing increasing challenges as the spread of the virus is forcing plant closures and infecting farm workers. Given such developments as well as the strong demand for groceries, it sounds like problems could be looming ahead if these issues aren’t addressed. Kraft Heinz, Conagra and Flowers Foods are among those to close facilities following other high-profile closures. On the other hand, some that have been closed down have been opening up again with new safeguards – facilities run by Cargill, JBS USA Holdings and Empire Kosher Poultry being among them. * SO WHAT? * Clearly, packaged-food producers and farmers alike are getting increasingly concerned about the ongoing health of their staff. They are having to implement measures as they go and just hope that the outbreak won’t overtake them. 

Alibaba eyes a chunky amount for cloud computing, Premier Foods benefits and Le Pain Quotidien suffers from the lockdown…

In a quick scoot around other stories from today, Alibaba pledges to spend $28bn on cloud computing (Financial Times, Ryan McMorrow) highlights the Chinese e-tailing giant’s plans to build next-generation data centres to cope with increased demand on internet infrastructure and technologies. Although it’s already one of the world’s

biggest cloud providers this represents a big increase on its usual spend. * SO WHAT? * Cloud computing is one of its fastest-growing businesses and it currently has 10 data centres in China and 11 in other countries. No doubt it will be catching up with Amazon and Microsoft’s cloud offerings although it is currently not profitable, unlike Amazon Web Services.

In the UK, Lockdown fattens Premier Foods (The Times, Louisa Clarence-Smith) shows that the food producer has benefited from a huge uplift in sales following the outbreak (although they do seem to be relaxing a bit now from the initial frenzy) but Le Pain Quotidien UK set to appoint administrators unless buyer found (Financial Times, Alice Hancock) shows that the posh Belgium-owned bakery could be the next high street name to disappear.

And finally, in other news…

I thought I’d leave you today with a few projects you might want to try during lockdown. One is the recreation of a real crowd-pleaser in IKEA shares iconic meatball recipe – and they look much easier to make than furniture (The Mirror, Courtney Pochin https://tinyurl.com/ybdtrud2). And then there’s this brilliant idea: Woman goes to extreme measures to cut dog’s nails – involving peanut butter on her head (The Mirror, Paige Holland https://tinyurl.com/yc56busy). How the heck did she come up with that?!?

1. In CORONAVIRUS DEVELOPMENTS, China and Singapore get second outbreaks
2. In NEWS ON IMMINENT PROBLEMS, British household finances will be dented but high-end retailers hope their clientele will go on a spending spree, imports are about to hit ports and lawsuits are starting already
3. In INDIVIDUAL COMPANY NEWS, Walmart keeps going, Uber turns to goods-delivery and Netflix faces a content slowdown
4. AND FINALLY, I bring you some impressive rooftop tennis…

So another wave hits China and Singapore…

Harbin outbreak threatens China’s coronavirus recovery (Financial Times, Christian Shepherd) highlights a new batch of coronavirus cases in the north-eastern city of Harbin which has meant authorities have had to impose new lockdowns. The majority of new cases have been reported in the Heilongjiang province (of which Harbin is the capital), which borders onto Russia. Russia is now China’s biggest source of imported cases. * SO WHAT? * I guess this was bound to happen given that patrolling such vast borders must be difficult (especially at the moment) and that the new lifting of travel restrictions has meant that large numbers of people have gone on the move once more to return to jobs and loved-ones. The world will be watching to see what action China takes next.

Singapore sets new daily record for coronavirus cases (Financial Times, Stefania Palma and Kathrin Hille) shows that the city-state has seen an uptick in cases – with 90% of them being among migrants stuck in cramped living conditions, sometimes with 20 people sleeping on bunk beds in one room. This means that infections have shot up

by 160% in the last week, forcing authorities to put the island under almost total lockdown. * SO WHAT? * Singapore has about 300,000 migrant labourers living in these dormitories and they are thought to be at way more risk than the rest of the population. However, it is not the only country in the region to have large numbers of such workers – Taiwan has almost 720,000 of them, many of whom work in the care and manufacturing sectors, but they have yet to have Singapore’s problem despite them living in similar conditions.

*** JUST A QUICKIE – Have you noticed that the WTI oil price is now almost half the price of Brent Crude (see the table below)? I may be imagining things here, but I don’t remember any time since I started in the markets in 1997 that I’ve seen the prices between the two be this different. Usually, they are just a few dollars different. At the moment, market participants are saying that the price drop is due to futures contracts for WTI delivery in May expiring tomorrow, but it does feel like there might be something more behind this. The best explanation I’ve heard so far is that US storage facilities are at full capacity and so companies are offering bigger discounts to get rid of what they produce (but this is a theory I can’t validate). In the light of what’s been going on recently re storage capacity I think this makes more sense than the contract expiry explanation…***

British household finances will be damaged, unemployment is likely to increase, ports face an influx of goods and the lawsuits have started…

British households face disposable income fall of £515 per month (The Guardian, Joanna Partridge and Graeme Wearden) cites analysis by the Centre for Economics and Business Research (CEBR) which concludes that British households will have a shortfall of £43bn to spend on essentials between April and June. This equates to a 17% hit in disposable income. 11m will be out of work by summer, warns think tank (Daily Telegraph, Matthew Field) piles on the misery as the Resolution Foundation think tank reckons that the new government job retention scheme won’t go far enough to stop businesses for making more job cuts. At the other end of the prosperity scale, Consumer spending: urge to splurge, postponed (Financial Times, Lex) shows that luxury goods companies in particular are hoping that their clientele will indulge in a bit of “revenge spending” after being couped up for so long – as has been the case in China. * SO WHAT? * Although I think it’s worth mentioning the aforementioned forecasts, it is also worth considering that experts (especially those in the business of predicting economic impact) are often wrong. They obviously earn their money trying to predict things, but the fact is that no-one actually knows – this is their best guess based on various assumptions and it is at times such as this that they are MOST wrong. They are definitely worth keeping in mind, but they should NOT be seen as gospel. On the “high end” expenditure front, it is interesting to note that spending on holidays and eating out for richest 20% of UK households equates to about 20% of total household spending, whereas the poorest 20% spend about 12% on the same things. When lockdown restrictions lift, many retailers and purveyors of high-end products will be hoping that consumers spend in a bid to make the most of life. I suspect that spending on essentials will obviously continue and that there will be some relief spending in the immediate aftermath (especially at pubs and restaurants that have managed to stay alive). However, I also believe it

will take a good few years for people to get back onto a decent financial footing once more as they not only try to get back to where they were before – but probably try to save more for if such an event were to happen again in the future. Overall, then, I think that restaurants and pubs that aren’t laden with too much debt will benefit in the short term and luxury goods companies will also see brisk trade. However, I think companies that help people to save money will benefit (possibly Groupon, discount stores, comparison sites etc.) in the longer term as people try to address their finances.

Wave of imports set to hit UK docks (The Times, Callum Jones) highlights a problem that is soon to hit our shores as containers will start to arrive from Asia containing all sorts of goods that are supposed to be sold in retailers that are currently shut due to the lockdown. It is thought that disused airfields may have to be used to park hundreds of containers while warehouses are prioritised for food and essentials. * SO WHAT? * Chief exec of the British Ports Association, Richard Ballantyne, believes that this will be a relatively short-term issue with “peak storage” expected to occur between April 20th and May 13th. I assume that this will just put more pressure on the government to get things moving again on the economic front.

Lawsuits ‘are looming on the horizon’ (The Times, Katherine Griffiths) shows that companies may have to ready themselves for a flood of lawsuits from shareholders and employees who will allege mishandling of the coronavirus outbreak. Insufficient planning and staff mistreatment are likely to feature highly in such actions and Norwegian Cruise Lines has already had a lawsuit filed against it in America, alleging that it told staff to mislead customers about the severity of the outbreak by playing it down. * SO WHAT? * I think this kind of thing has the potential to snowball quickly and could prove terminal to some companies who were obviously caught off-guard and panicked. It will be interesting to see whether these cases work and how much they can claim in damages. If they go unchecked, they could trigger even more problems IMO as those that are sued try to sue others and it all just gets ridiculous. Clearly, there will be a knock-on effect to directors’ and officers’ insurance – no doubt premiums are bound to go up and conditions tighten! 

Walmart soldiers on, Uber adapts and Netflix faces lineup issues…

Walmart’s coronavirus challenge is just staying open (Wall Street Journal, Sarah Nassauer) highlights the difficulties that Walmart is facing as it tries to manage the health of both its workers and its customers as well as keeping local officials onside. The company has debated whether or not to give masks and gloves to workers (it will do so from this week), when and how to clean stores and how to ensure social distancing is adhered to. Along with all this, worker absences have increased and more vigorous health checks have been put in place. In the meantime, Walmart’s 4,700 US stores have seen sales increase by almost 20% in March. * SO WHAT? * Given that supermarkets are pretty much the only places that large numbers of people can gather – and that frustration and paranoia continues to build – you can understand the pressures that supermarket operators are facing. This won’t just be in the US either. With increased sales come increased costs.

Elsewhere, Uber to revive goods-delivery service in hunt for new revenue sources (Financial Times, Tim Bradshaw and Dave Lee) shows that Uber is now trying to revive its

previous attempt to offer goods delivery as it scrabbles around for new sources of revenue. It abandoned the concept two years ago but it is thought that the current attempt will only be temporary unless they can make it profitable. Two initiatives called Uber Direct and Connect will be the portals via which retailers and drivers can interact. * SO WHAT? * This sounds like a decent-enough idea, but you do wonder how profitable something like this can be in such a short space of time. Mind you, at least it is trying to make something out of a bad situation.

On the one hand, Netflix roars ahead thanks to captive audience (Financial Times, Anna Nicolaou and Eric Platt) shows that Netflix is currently benefiting from a captive lockdown audience, but Shortage of new Netflix shows as studios shut down (Daily Telegraph, James Titcomb) highlights the fact that content provision is going to slow down in a big way because no new shows are being made. * SO WHAT? * I don’t think this is just a Netflix thing – it is going to affect ALL the streamers. I would have thought that this makes subscriber switching far more likely as people work their way through content on one platform and then move onto something else when they max out. I think this will make forecasting for the companies more difficult because it will make their “stickiness” harder to judge.

And finally, in other news…

I thought I’d leave you today with a brilliant bit of lockdown sport in Incredible video shows 2 people playing tennis from their apartment rooftops during Italy’s strict coronavirus lockdown (Insider, Kieran Corcoran https://tinyurl.com/y7x22hp8). This is excellent!

1. In MARKETS & MACRO NEWS, markets rise on Gilead’s news and we look at macro developments in the US, Asia and Europe
2. In “WINNERS” & STRUGGLERS NEWS, Verizon buys BlueJeans, Chinese splurge on release, Netflix and warehousing wins while investors pick at Carluccio’s and gyms hunker down
3. In INDIVIDUAL COMPANY NEWS, Libra plans are scaled back, EasyJet ponders future flying and Morgan Stanley beats its peers
4. AND FINALLY, I bring you some uniquely British events and a dog wearing its owners’ false teeth…

So Gilead’s news perks up markets and we look at macro developments around the world…

Gilead drug shows positive signs in early coronavirus testing (Financial Times, Hannah Kuchler) cites a report in the New England Journal of Medicine which said that Gilead Sciences’ remdesivir drug was showing early signs that it could be used to treat the coronavirus. The antiviral drug had originally been developed to stop Ebola, but never got final approval. However, the positive news was embraced by markets as Stock futures surge after coronavirus drug report (Financial Times, Hannah Kuchler). 🤞

Meanwhile, Donald Trump tempers push for quick reopening in new guidelines (Financial Times, Demetri Sevastopulo) shows that Trump had to rein in a previous rant about having “total” authority over post-outbreak planning and conceded that it was in fact up to the governors of individual states to decide when to lift social distancing restrictions. As things stand currently, US states have to show that there has been a downward trend in confirmed coronavirus cases over a 14-day period or downward trajectory in positive tests versus total tests over the same period in order to move to phase one of “reopening”. The White House plan also states that there should be a “robust testing programme” in place for health workers who are at risk, which also includes antibody testing that shows if subjects have previously had the virus. Separately, Coronavirus claims 22m US jobs in just 4 weeks (The Times, James Dean) highlights the current employment situation in the US – it’s not good. Shutdowns, social distancing and stay-at-home orders have all led to the 21.7m jobs created since the low point of the financial crisis in June 2009 being wiped out. * SO WHAT? * Clearly this is problematic for Trump who is seeking re-election later on this year on the back of economic success and job creation. He’s obviously got the best ever excuse now for not being able to meet previous expectations and I think the election is his to lose at this stage. He will have to do something catastrophically bad to muck things up from here as I would have thought that even voters who hate him would rather have the incumbent continue that get someone new in at such a crucial time.

In Asia, China’s first-quarter GDP plunges on coronavirus (Wall Street Journal, Jonathan Cheng) shows that the country’s economy contracted (surprise, surprise!) by 6.8% in the first quarter of 2020 versus the previous year. It’s the first time that China’s economy has shrunk since Beijing began reporting GDP on a quarterly basis since 1992. No doubt everyone will be seeing this as a portent of things to come in their own countries. Japan to give every citizen one-off sum of ¥100,000 (Financial Times, Robin Harding) signals a step-up in response to the coronavirus in Japan, which has been pretty relaxed about things so far. The PM announced a new state of emergency that initially applied

to seven prefectures (which obviously included Tokyo) but is now rolling it out to the whole country. This is not, however, a full lockdown – the state of emergency just gives prefectural governors the right to enforce business shutdowns and requisition medical facilities.

In Europe, Macron warns of EU unravelling unless it embraces financial solidarity (Financial Times, Victor Mallet and Roula Khalaf) highlights ongoing turbulence in Europe as French President Macron has called for more support for struggling economies such as Italy. France is currently urging the creation of a joint fund or EU allocation of about €400bn on top of emergency assistance from the ECB and other EU institutions – which Italy, Spain and other countries are behind. However, Germany, the Netherlands and some other more prosperous European neighbours are very much against a pooling of debt like this saying that they don’t want their taxpayers to be footing the bill. The debate rumbles on…talking of which, UK will refuse any EU offer to extend Brexit transition (Financial Times, Sebastian Payne and Jim Brunsden) highlights a firm stance by the British government not to go for another extension, even if it is offered by the EU. The official line is that going for an extension would just make negotiations drag on even longer, mean even more business uncertainty and delay border controls.

Moving back to coronavirus chat again, Softly, softly…how other countries across the world are loosening the lockdown (Daily Telegraph, Simon Foy) looks at how some countries are making tentative moves toward normality just as the UK announced a three-week extension to the current lockdown. This is an excellent article and you should definitely read it to get more detail! However, as a quick run-through, Austria started to ease lockdown on Tuesday as small stores of under 400m² sales space were allowed to open along with hardware and gardening stores (but there will be distancing measures in place), with the opening of schools restaurants and hotels to follow next month. Italy allowed bookshops, stationary stores and apparel retailers for young kids to open from Tuesday this week, although the nation is still in lockdown until at least May 4th. Germany said it would let shops of up to 800m² area to open next week in addition to car dealers, bicycle shops and bookstores – again, with strict distancing rules in place. Schools would open from May 4th and hairdressers would also being given the green light to operate. Switzerland said it would start to relax current restrictions from April 27th when doctors’ surgeries, hairdressers, massage and cosmetic parlours will be allowed to open. Some schools, shops and markets could follow from May 11th with other rollouts to follow. Spain allowed factory and construction workers back this week but most shops and services are still closed and the US is set to open some regions before the end of the month. * SO WHAT? * These developments are encouraging insofar as they suggest progress. However, until we have unfettered access to accurate testing and a vaccine, life will not return to what it was before. In the meantime, let’s hope these measures work and that the dreaded “second wave” doesn’t occur.

Verizon buys into videoconferencing, Chinese shoppers splash out, Netflix surges, warehousing benefits and Zoom beefs up security while Carluccio’s and gyms try to make headway…

And in the “WINNERS” corner today, Verizon buys video conferencing company BlueJeans (Financial Times, Nic Fildes) shows that Verizon paid an undisclosed amount (surely meaning that it paid through the nose 😉) to buy BlueJeans Network – which has almost 15,000 business customers – to get a slice of the hot action that is videoconferencing. BlueJeans competes with Cisco’s Webex, Microsoft’s Skype and, of course, Zoom. Verizon apparently opened talks about a year ago, but clearly things accelerated somewhat during the current crisis. Some are saying that Verizon paid about $400m, but that’s just speculation. Separately, Zoom hires security heavyweights to fix flaws (Wall Street Journal, Robert McMillan and Aaron Tilley) shows that the company is taking security criticisms very seriously. * SO WHAT? * No doubt Verizon will be kicking themselves for not moving on BlueJeans earlier, but I guess no-one saw coronavirus coming. Still, it is probably a good move for them strategically as I think that the advent of 5G AND everyone becoming much more accustomed to videoconferencing will mean it will become increasingly prevalent – even in a post-coronavirus world. With regard to Zoom’s beefing up of security – I think it’s a great move on the company’s part and they are to be congratulated on moving so quickly. Hopefully, this will mean that they will be able to hang on to more of their “new” customers as a result…

With coronavirus lockdown lifted, Chinese splurge on big luxury brands (Wall Street Journal, Matthew Dalton) will no doubt get luxury goods companies excited as spending on high-end brands following the relaxation of lockdown in China has shot up! LVMH, which owns brands such as Louis Vuitton and Dior among others, said that April sales growth has been strong – and in some places has been up by over 50%. Overall, though, spending by Chinese shoppers has been lower for the quarter because they tend to do most of their shopping on holidays abroad. L’Oreal, which is the world’s biggest cosmetics company in terms of sales, echoed LVMH’s experience. * SO WHAT? * This is

great news for luxury goods companies and it would imply that when travel restrictions are lifted, sales will get even better once its moneyed clientele are free of travel restrictions! 

Content streamers continue to “win” and Netflix now worth more than ExxonMobil as value reaches $187bn (The Guardian, Joanna Partridge) shows that the momentum is carrying on as it now has 160million subscribers globally. Amazon’s Prime Video and Disney+ are also doing well as bored people trapped in their homes seek out entertainment! On perhaps a less glamourous front, Warehouses the big commercial property winners as shopping centres fall silent (Daily Telegraph, Rachel Millard) shows that although the online retailers are getting most of the glory, the warehouses that store their stock are also doing well. Given the way things are going with regard to online shopping, the future also looks pretty bright and companies such as Prologis and Segro, who specialise in this area, are likely to continue to do well.

On the other hand, strugglers include high street restaurant chains as per Carluccio’s administrators receive multiple offers for restaurant sites (Financial Times, Alice Hancock and Daniel Thomas) which shows that it’s a buyers’ market out there as they can cherry-pick the best bits of struggling firms. Tesco, Boparan Holdings (the group behind Giraffe and Ed’s Easy Diner etc.) and Three Hills Capital (which owns Byron) are all interested in different branches but not the whole business. The deadline for bids is Wednesday evening. Then Test of endurance as gyms pushed to their limits to survive the coronavirus crisis (Daily Telegraph, Ben Gartside) shows how many gyms operators are struggling – although it is thought that Gym Group has enough cash to survive for five months. Conversely, Peloton (whose business model I have questioned pre-coronavirus) has seen its share price double over the last month as investors believe that many people will want to avoid working out in close proximity with fellow sweaty gym-goers. * SO WHAT? * It’s no surprise that buyers can cherry-pick what they want now from a struggling high street business. Companies will no doubt want to remain lean in times like this and there is zero incentive now just to grow for the sake of it. As for gyms, many of them have huge initial overheads and depend on new members to pay membership whether they go to the gym or not. Now that everyone is taking a long hard look at their money situation, I would have thought that many of these “zombie” memberships will fall away and it will take some time for gyms to build their memberships up once more.

Facebook scales back Libra, EasyJet mulls new etiquette and Morgan Stanley beats its rivals…

Facebook’s Libra scales back plans for a digital currency (Daily Telegraph, James Titcomb and Matthew Field) highlights a significant pullback from Facebook’s initial ambitions. The Libra Association, said yesterday that it will no longer focus on providing one universal coin pegged to the value of a basket of currencies. Instead, it intends to create an array of different cryptocurrencies tied to the value of specific conventional currencies like the dollar, the pound and the euro. A separate Libra coin will still exist, but will be used mainly for cross-border transactions. * SO WHAT? * This was bound to happen given how much regulators, governments and central bankers hated it. This is not the death of Libra, but its original ambitions have been severely restricted.

There’s been a lot of talk about airlines this week and EasyJet weighs up empty middle seats once coronavirus rules ease (The Guardian, Kalyeena Makortoff and Gwyn Topham) shows that the budget airline is thinking of ways to adapt to the “new normal” of flying in order to comply with social distancing guidelines. Ryanair’s chief exec, Michael O’Leary, thinks this will be unworkable, but they will have to think of something to get things moving again. EasyJet said that winter bookings are well “well ahead” of last year.

This week has seen major US banks reporting results and Profits tumble but Morgan Stanley still beats its rivals (The Times, James Dean) shows that Morgan Stanley has managed to do least badly versus its peers. Like others found, trading revenues over the quarter have shot up. Well done, Morgan Stanley – but I think that the next quarter is going to be even more testing!

And finally, in other news…

We all know how many sporting events are being cancelled on a daily basis at the moment, but what about the lesser-known ones? Those identified in All the wonderfully British things that won’t be happening this May (Metro, Jen Mills https://tinyurl.com/y7yb9mya) definitely need our support when things get back to normal! I thought I’d leave you now with the hilarious video in Dog steals set of false teeth and wears them perfectly leaving owner in stitches (The Mirror, Luke Matthews https://tinyurl.com/yclbclmq). Have an enjoyable weekend whatever you get up to!

1. In MACRO & OIL NEWS, the EU clamps down on bonus and dividend payouts while oil demand continues to be weak
2. In SECTOR-BY-SECTOR NEWS, US banks make big loan loss provisions, US airlines now have the finance but no passengers, UK retail remains hard-hit and insurers are warned to cough up
3. In INDIVIDUAL COMPANY NEWS, ByteDance hires on TikTok boom, Airbnb raises another $1bn and Smithfield Foods closes pork processing factories
4. AND FINALLY, I bring you some egg-citing hacks…

So the EU clamps down on dividends and bonuses while oil prospects continue to look poor…

EU bars bailed-out companies from paying dividends and bonuses (Financial Times, Javier Espinoza) highlights rule changes in the EU that will ban dividends, share buybacks, bonus payouts and buying out rivals or other operators in the same sector whilst still paying back state aid. Similar moves were made in the banking sector during the global financial crisis and are aimed at heading off “undue distortions of competition”. Brussels is also putting in place deadlines by which state aid must be paid back – but they aren’t as stringent as the ones put in place on the banks during the financial crisis. * SO WHAT? * This sounds like a reasonable move in principle – after all, the state is going to need to get the money back at some point and this will, in theory, act as an incentive for companies that are doing well to pay the money back as quickly as possible. Income investors (those who invest in shares to get income from dividends etc.) and senior execs won’t be too pleased but then again there’s no such thing as a free lunch.

Meanwhile, Oil prices slump as market faces lowest demand in 25 years (The Guardian, Jillian Ambrose) shows that the recent production cuts – the biggest ever – are failing to boost oil prices. The International Energy Agency (IEA) said that the market will see the lowest demand for oil for 25 years due to the global lockdown and Global oil storage close to being ‘overwhelmed’ (The Times, Emily Gosden) shows that storage facilities around the world are nearing capacity. Onshore storage tanks are already full and there are now dozens of tankers anchored around Europe doing nothing because they need the onshore storage to empty before they can discharge their cargoes. * SO WHAT? * Cutting oil production isn’t going to work very well if there is no demand on the other side of the equation. The fact that oil reserves are nearing capacity means that it will take some time before production cuts take hold anyway because these reserves have to be run down before there is any semblance of supply/demand balance. The sooner the world economy starts moving again, the sooner this bottleneck will loosen – but at the moment it looks like it will be in place for some time yet. Some countries are starting to edge towards normality but it will be a very gradual and tentative process so I would expect weak oil prices to persist for a while yet.

US banks put aside big provisions, US airlines have money but no passengers, UK retail continues to suffer and UK insurers are warned to pay out…

This week is, as you know, a big week for US bank results announcements. Biggest Wall Street banks set aside $25bn for loan losses (Financial Times, Laura Noonan and Robert Armstrong) highlights the big loan losses announced by Bank of America, Citigroup and Goldman Sachs yesterday ($12.8bn) which followed those announced the previous day by JP Morgan Chase and Wells Fargo ($12.3bn). On the plus side, stellar trading revenues were a bright spot as bank clients traded in volatile markets and it is worth noting that all of them had still announced profits despite huge increases in reserves. Still, it’s too early to get too excited.

In Airlines have the cash. Now they need passengers (Wall Street Journal, Alison Sider) we see that although troubled US airlines now have some much-needed cash to survive, they are going to have to get some passengers pronto otherwise the $25bn in payroll assistance will have been in vain. Delta Airlines and United Airlines have already said that they may have to shrink in order to adapt to a gradual rise in demand – and you would have thought others will be at least thinking the same thing. * SO WHAT? * Until travel restrictions are lifted, demand will be zilch. Even then, I suspect that it will be a slow and cautious recovery as business passengers will probably have become more accustomed to doing videoconferencing and leisure travellers may also be wary of travelling initially. I expect

we will all be in some kind of virtual limbo until a vaccine/cure is found.

Retailers reeling from record sales slump (Daily Telegraph, Laura Onita) just reinforces what we all know already as the latest figures from the British Retail Consortium (BRC) and KPMG showed the worst sales fall on record last month as shops up and down the country shut their doors. Separate data from Barclaycard showed that spending also fell by 6% year-on-year. Online sales, on the other hand, rose by 18.8% (excluding food). * SO WHAT? * This just puts a figure on what we already know, but the situation could get worse as not all shops were closed initially. 

In Pay claims or explain why not, insurers are warned (The Times, Ben Martin) we see that the head of the Financial Conduct Authority (FCA) wrote to insurance company chiefs outlining how to handle business interruption claims and saying that they should explain any disagreements with their approach. This follows recent rumblings about a group of customers discussing legal action against Hiscox because they believe the company is failing to pay out on valid claims. * SO WHAT? * Although it feels like paying out is the right thing to do morally, the fact that most business interruption policies to NOT cover pandemics would suggest that insurance companies are within their rights not to pay. This sounds to me like the regulator is trying to make the insurers look like the bad guy and put more “moral” pressure on them because there’s not really much they can do about it themselves apart from make some noise. It seems increasingly likely to me that the government is going to have to get involved at some point in backing policies somehow if it really wants to cover businesses for coronavirus losses – and this is something that is happening right now in state-owned Chinese insurance companies.

ByteDance hires on TikTok’s booming popularity, Airbnb gets another $1bn and Smithfield Foods closes factories…

ByteDance looks to hire 10,000 thanks to TikTok boom (Financial Times, Ryan McMorrow) shows that TikTok’s popularity has benefited the Beijing-based ByteDance as bored users globally get creative during the lockdown. In China, the company has improved its ecommerce capabilities in order to monetise its Douyin platform (China’s TikTok) which now has 400m users. The company is famed for its generous pay and benefits and its growing success means that it is on track to employ more staff than chief rival Tencent. The company was valued at around $75bn two years ago and is now thought to be worth around $90-100bn. * SO WHAT? * It’s always good to see some companies doing well from these difficult circumstances. However, it will be vital for ByteDance to consolidate its successes quickly to take advantage of its current momentum.

Elsewhere, Airbnb raises another $1bn (Financial Times, Miles Kruppa) shows that the travel company still has pulling power as far as investors are concerned as it has

managed to raise another $1bn only one week after raising the same amount from investment firms Silver Lake and Sixth Street. * SO WHAT? * I think this shows two things – firstly, that investors believe in the company’s business model and secondly, that Airbnb is doing the right thing in shoring up its balance sheet early. At the moment, the company is saying that it can return to 2019 levels of revenue by January 2021, but I guess it all depends on how long travel restrictions go on for. I actually like this company more than some of the other cash-burning start-ups because barriers to entry are quite high, it is cash generative and it doesn’t own loads of expensive assets. If it can weather the current storm, I would expect it to do quite well once normality returns.

Smithfield to close more pork plants over coronavirus pandemic (Wall Street Journal, Jacob Bunge) shows that America’s biggest pork processor is having to close two more pork-processing factories as more employees fall ill to the coronavirus. Other meat processors have also been experiencing the same thing as their production lines necessitate employees working in close quarters. * SO WHAT? * Companies such as Smithfield, Tyson Foods, Cargill and JBS have been paying bonuses to workers and implementing what distancing policies they can, but clearly it’s not enough and if things get worse, this supply chain bottleneck could have consequences to the end customer with shortages likely if things don’t change.

And finally, in other news…

Have you had the misfortune of running out of eggs so far in this lockdown? I have. So when I saw Fresh Out of Eggs? These Replacements Can Go in Almost Any Recipe (Popsugar, Jenny Sugar https://tinyurl.com/y7lmep3y) I thought I’d share this vegan wisdom! None of these will be appearing in a fry-up, but they could help you in baking…

1. In MACRO & COMMODITIES NEWS, the IMF tells us what we already know, talks abound over an exit strategy, South Africa cuts interest rates to record lows, Sunak looks at more measures and we look at what’s going on in oil, lithium and coffee
2. In CARS & PLANES NEWS, Renault pulls out of its China JV, carmakers aim to open European plants, US airlines get bailed out while Wizz Air, Norwegian and Boeing hit serious turbulence
3. In OTHER NEWS, we see software “winners”, downbeat US banks and trouble on the UK high street
4. AND FINALLY, I bring you an idea for a fulfilling DIY project…

So the world faces crisis (we know), Cali talks exit strategies, South Africa cuts interest rates, Sunak ponders more ways to help and we see the latest in oil, lithium and coffee…

Worst slump since 30s (The Times, Philip Aldrick) highlights the IMF stating the bleedin’ obvious (as usual) – which is that the longer this outbreak continues the worse things are going to get. It is now expecting the deepest global recession since the 1930s. Meanwhile, in California outlines plan for life after lockdown (Financial Times, Hannah Murphy, Lauren Fedor and Joshua Chaffin) we see that California has just become the first US state to come up with a roadmap for exiting the current coronavirus lockdown. Governor Newsom said that he would only lift the strict stay-at-home order if certain conditions were in place, such as making sure that there were better protections for the vulnerable, that hospitals were prepared for a surge, that systems were in place to communicate quickly with citizens etc. None of this will come to pass for at least the next few weeks as the state wants to hang on to its relative success in combating the outbreak thus far. Clearly, everyone will be watching what California does very closely as it has seemed to get things right so far.

Elsewhere, South Africa’s central bank slashes rates to post-apartheid low (Financial Times, Joseph Cotterill) highlights the bank’s surprise decision to cut its main interest rate by 1% to 4.25% – less than one month after another cut. This emergency cut shows just how tricky things are getting in the country, although the central bank is still maintaining its inflation target. * SO WHAT? * South Africa’s economy was already looking pretty shaky before the outbreak, but things haven’t got any easier as the country’s debt was downgraded to junk status last month (which makes debt financing more expensive) by ratings agency Moody’s. The Rand has lost over 20% of its value versus the US Dollar so far this year as investors have ditched riskier currencies to buy “safe haven” assets like the Dollar, Yen and gold.

In the UK, Chancellor open to boosting SME bailout scheme (Financial Times, Daniel Thomas, Alice Hancock and George Parker) shows that Rishi Sunak is still working on the much-criticised emergency loan scheme for SMEs and looking to European countries that have implemented more successful schemes for inspiration. Plan to extend Help to Buy to kick-start housebuilding (The Times, Louisa Clarence-Smith) shows that the government is also looking at helping the construction industry and housing market once normality returns. * SO WHAT? * I think this would be a sticking plaster measure for a gaping wound, but may work if it is part of a broader package. Help to Buy is all very well, but people still have to scrape together a deposit – and the lockdown may well have caused any savings to leach away. On the plus side (for buyers), I would have thought that house prices will get weaker but then again this may mean housebuilders are less keen to build. It’s still early days yet, though.

In the world of commodities, Oil tumbles below $30 despite cuts in production (The Times, Emily Gosden) shows that the market is not convinced by the announcement of production cuts following a weekend meeting between Opec and non-Opec oil producing countries as prices weakened further. Shale fields lurch from boom to bankruptcy (The Times, James Dean) shows how the American oil industry has gone from potentially having the highest oil exports since the 1940s this year to its shale industry being on its knees as a result of the continued weak oil price. Shell pulls out of deal to drill for oil in Arctic (Daily Telegraph, Ed Clowes) shows yet another oil major pulling out of a project due to low prices making it uneconomical. It has dropped a deal with Russian energy giant Gazprom to develop oilfields in the Yamal-Nenets region. * SO WHAT? * All of this is bound to continue as the oil price appears to have no upside at the moment. This is why Trump is sticking his oar in and trying to chivvy things along between the oil producers – he WANTS them to come to an agreement to at least put a floor on prices so American oil producers can survive (they need a higher oil price than the others due to higher costs of production). He can see his oil industry going down the toilet (relatively speaking) as Russia and Saudi Arabia’s expensive game of chicken has successfully turned the screws on US competitors. Although they are feeling the pain themselves, it is far worse for the Americans.

In other commodity news, Tianqi looks to sell stake in world’s largest lithium mine (Financial Times, Henry Sanderson and Jamie Smyth) shows that China’s Tianqi Lithium is preparing to sell some of its majority stake in the world’s biggest lithium mine in order to pay down debt incurred in its global expansion drive. It currently holds 51% of Talison Lithium. * SO WHAT? * It seems like Tianqi just expanded too quickly in its journey to become a major player in the material most commonly used in rechargeable batteries. It has made a number of acquisitions over the years, one of which was for a $4.1bn stake in Chile’s biggest lithium company SQM in 2018 which was largely financed from a $3.5bn loan from China’s Citic Bank. This may well be a painful move for Tianqi as every potential buyer will know that the company is essentially a forced seller. After all, would YOU want to sell your interest in lithium as the take-up momentum in such technologies is starting to ramp up in a market where many buyers have a great excuse (coronavirus) to low-ball you on price?

There’s bad news for coffee lovers out there in Coffee climbs as locked-down customers seek caffeine fix (Financial Times, Emiko Terazono) which shows that coffee shipments to Europe and North America have shot up. Although demand fell initially as China’s cafés closed down, prices have perked up again as roasters including Nestlé, JAB and Lavazza have been buying beans like crazy. * SO WHAT? * The price of arabica beans has gone up by 20% since the beginning of February – compare that with oil prices falling by over 40% over the same time period! Oil clearly needs to wake up and smell the coffee. All eyes will be on the harvests in Colombia (which starts this month) and Brazil (which starts next month). Coronavirus has caused logistical challenges thus far, but demand continues to be strong.

Renault pulls out of its China JV and European makers look at how to restart production while US airlines get bailed out and others continue to suffer…

Renault pulls out of China joint venture as sales disappoint (Financial Times, David Keohane, Peter Campbell and Christian Shepherd) shows that Renault has given up on ambitions to sell petrol cars in China and will now concentrate on electric cars and light commercial vehicles there instead. Dongfeng will buy it out of its 50-50 JV. It has been late to the party in China and failed to benefit to the extent that VW and General Motors have – although PSA Group (which owns Peugeot and Opel) and Fiat Chrysler have also lagged. In happier news, Toyota, Renault and Volkswagen to reopen European plants (Financial Times, Peter Campbell) shows that many of the world’s biggest carmakers are starting/planning to open a number of plants after every major maker shut theirs down last month to protect workers and limit the damage caused by vanishing demand and supply chain problems. * SO WHAT? * It’s probably good that Renault made the tough decision re its Chinese JV as it just wasn’t really working – and although it’s good to hear rumblings of a return to some form of normality for production, you do wonder who

is going to be buying cars in the current economic climate. Car sales were already trending down despite world economic momentum picking up, so given that cars are a big ticket item you do wonder where the demand is going to come from in the short to medium term.

US airlines accept bailout (Daily Telegraph, LaToya Harding) heralds an important development for America’s largest airlines including American Airlines, Delta, United Airlines, Southwest, Alaska and JetBlue as they have agreed to accept a $25bn bailout deal from the US Treasury Department. This will mean that airlines will be able to continue to keep staff and pay them until September 30th.

In Europe, Wizz Air cuts fifth of workforce and reduces wages (Financial Times, Peggy Hollinger) shows that the Hungarian low-cost airline is having to announced major cutbacks to conserve cash and Norwegian’s shares take 60pc nosedive as the airline seeks bailout (Daily Telegraph, Simon Foy) shows that the Norwegian low-cost airline is desperately trying to get some kind of bailout in order to survive. Given the current nightmare situation for all carriers, Boeing loses plane orders as coronavirus hits global air traffic (Wall Street Journal, Doug Cameron) is hardly surprising. * SO WHAT? * The whole industry is under enormous pressure at the moment but there’s not much it can really do until travel restrictions are lifted and it gets its hands on state aid which I think is a necessity for any chance of long term survival.

Software companies benefit, US banks are downbeat and problems continue on the UK high street…

Software stocks emerge as downturn winners with work shifting online (Financial Times, Richard Waters) highlights the resilience of software companies who have been weathering the coronavirus crisis and thriving. A shift in selling software licences to selling software subscriptions has helped cloud software-related stocks and working from home has benefited companies such as Zoom, Citrix and Equinix. * SO WHAT? * Whether this uptick will continue once things get back to normal is a moot point. Although subscription revenues have helped companies, it is likely that cash-strapped customers will try to push prices down. Still, I think that overall these companies will continue to benefit as I believe that working from home will become much more prevalent in the future.

This week is a big week for US banks as it is the beginning of the quarterly reporting season. JP Morgan, Wells Fargo

profits tumble as banks brace for a recession (Wall Street Journal, David Benoit and Ben Eisen) shows that the outlook is bleak. Having said that, they have yet to see a rush of bad loans thus far – although they are preparing themselves for the worst. * SO WHAT? * Banks are seen as a bellwether for the health of the economy, so everyone will continue to monitor other banks’ performance carefully as the week goes on…

The nightmare continues for UK high street players in Next shuts website for the day only hours after reopening (The Guardian, Sarah Butler) which shows that the fashion retailer had to close its website as its order limits were reached in only one hour! Continuing with apparel, Warehouse and Oasis left on the brink of collapse (Daily Telegraph, Laura Onita and Simon Foy) shows that the two retailers are on the verge of bringing in the administrators and Lockdown forces pubs chain into bank talks (The Times, Robert Lea) highlights difficulties for Mitchells & Butlers, the owner of All Bar One, Nicholson’s, Harvester and Toby Carvery. Prolonged closures are putting them in danger of not being able to meet their lending agreements so they are now trying to negotiate with their banks. The tough times continue…

And finally, in other news…

I know that some people are using lockdown as a time to catch up on some of the jobs they wouldn’t normally get around to – so how about having a go at this: Man transforms staircase into epic wine cellar that can hold over 150 bottles (The Mirror, Courtney Pochin https://tinyurl.com/smafa27). This is IMPRESSIVE!

1. In MACRO, MARKETS & OIL NEWS, the Eurozone bailout has Italian wobbles, Brexit talks are set to resume, Goldman gets positive and the oil production cut underwhelms while Trump talks things up
2. In INDUSTRY TRENDS, China’s venture capitalists go shopping but diamond production, phone roaming, ad spending and PC sales fall
3. In RETAILER NEWS, Amazon hires even more and UK supermarkets tread a fine line while apparel retailers and small pharmacies face tough times
4. AND FINALLY, I bring you some uplifting news of companies helping in the crisis…

So Europe faces a tough week, Goldman gets more positive and Trump tries to rally support for oil production cuts…

Rift fears as eurozone virus bailout fund is sunk (Daily Telegraph, Ambrose Evans-Pritchard) highlights Italy’s dissatisfaction with the current bailout deal on the table that is supposed to drag Europe out of the coronavirus mire. European finance ministers hailed last week’s deal – after huge amounts of debate – as a historic breakthrough, but the mayor of Stazzema in Tuscany sent a letter to Germany’s Angela Merkel that encapsulated Italy’s anger by saying “The next victim of Covid-19 will be Europe unless there is more solidarity between states”. Will Germany step up, I wonder, as the European north-south divide continues to widen?

While this is all going on, Brexit negotiators try to pick up pieces as talks resume (Financial Times, Jim Brunsden) highlights the resumption of Brexit (remember that?!?) talks tomorrow between Michel Barnier and David Frost. They will decide on new dates for subsequent rounds of virtual negotiations as the three rounds that were supposed to have happened by now have clearly gone by the wayside. Apparently, the call is not expected to cover the possibility of a post-Brexit transition period extension going beyond the end of this year. * SO WHAT? * I do wonder whether negotiations will be more flexible on either side as talks will probably take a back seat as measures to combat the coronavirus outbreak continue to take precedence. This may lead to both sides concentrating less on scoring points off each other and more on getting something done with concessions being won on either side – but maybe this is just a pipe dream! Anyway, given what’s been going on, an extension to the withdrawal agreement (which should have been negotiated and approved by the end of June under the current terms) looks increasingly likely and the two sides will have to negotiate a “financial contribution” payable for the UK if it wants continued access.

Goldman declares US is past worst (The Times, James Dean) shows that equity strategists at the bank believe that stimulatory actions taken by the government and the Federal Reserve have been enough to avoid further equity market weakness – as long as there is no secondary outbreak. Market rout reopens big gaps between winners and losers (Financial Times, Richard Henderson) highlights the difference in share price performance between “winners” and losers across 20 industry groupings of the S&P500 as being the biggest – 42% in March – since records began in 2005. The weakest performers were energy equipment companies (suffering from weak oil price fallout) and banks (suffering from a low interest rate environment and potential exposure to increasing bad loans etc.), while the “best” (or, “least bad”) performers were telecoms and healthcare equipment companies. * SO WHAT? * Given that the quarterly earnings season will be kicking off again with America’s big banks this week, we will see hard figures that will give us a more accurate picture of what’s going on in corporate America. We’ll soon see whether we’re in a bear rally (an unsustainable share price bounce in a falling market) or in the early stages of recovery.

In Historic oil production cuts ‘will not halt slump in demand’ (The Guardian, Jillian Ambrose) we see that the production cuts announced to great fanfare over the Easter weekend (10m barrels a day, which equates to around 10% of the world’s oil supply) have underwhelmed the market. The historic agreement between Opec and non-Opec countries fell short of what many believe is needed to boost the oil price from recent lows against the current economic backdrop but then Trump hints at more curbs to oil output as deal tanks (Daily Telegraph, Tom Rees) shows Trump trying his best to talk the prices up. He tweeted (of course!) that “The number OPEC+ is looking to cut is 20m barrels a day, not the 10m that is generally being reported”. This is, of course, classic Trump – just thowing enough 💩 around to see whether it sticks. It’s actually not a bad idea from his point of view because if oil prices rise as a result, then he can say to oil producers that this is the level they need to cut and if they don’t, he can just say “I told you so” if oil prices either continue to stagnate or fall. At the moment, it looks like the market has taken his outburst with a pinch of salt…

China’s venture capitalists look to be on the verge of a shopping spree but the prospects for diamond production, roaming revenues for telcos, ad spending and PC sales look bleak…

China’s venture capital funding rallies after coronavirus lockdown (Financial Times, Mercedes Ruehl and Ryan McMorrow) cites data from the Asian Venture Capital Journal which shows that Chinese start-ups and tech companies managed to raise over $2.5bn in March – six times the $410m raised in February – as investors sought out coronavirus bargains. Although this is a strong monthly figure, venture capital financing actually fell by over 50% over the first quarter (but then, that’s hardly surprising is it!). One recipient during March was online education start-up Yuanfudao, which got $1bn from a consortium of investors including giant Tencent. * SO WHAT? * This is interesting to see – but I suspect that governments and regulators around the world will be wary of Chinese companies using their cash to buy into strategic overseas assets.

Elsewhere, Diamond sector grinds to halt as India’s lockdown bites (Financial Times, Benjamin Parkin and Henry Sanderson) highlights one of the consequences of Indian PM Modi’s national lockdown as India is responsible for 90% of all diamond cutting and polishing. This is mainly by carried out by artisans in the city of Surat – which is now deserted as migrant workers fled to their rural homes. * SO WHAT? * India’s lockdown means that the demand for rough diamonds has fallen off a cliff and won’t pick up again until it is lifted. India has been carving a niche for itself in the diamond industry over the years by buying rough diamonds from companies like De Beers in southern

Africa and Alrosa (the world’s biggest diamond miner) of Russia and then polishing them up to sell in finished jewellery globally. The industry’s massive reliance on India has exposed problems with the current supply chain and now that things have dried up, many related companies will find themselves in jeopardy. Optimists say that demand will shoot up once lockdown lifts as couples decide to get hitched (?!) but pessimists say that recovery in demand is likely to take time – 18months to two years – given that diamonds are not essential items and that people may well be financially less well off than they were before all this happened. 

In other industry trends, Fall of the roaming empire: telecom groups face revenue loss as travel collapses (Financial Times, Nic Fildes) cites data from Juniper Research which estimates that widespread bans on international travel could punch a $25bn hole in mobile phone company revenues this year. Although they’ve done OK so far because they are protected by their subscription model and the fact that they are an “essential” service, it is thought that this could be the beginning of the end for roaming charges. Ad giant Publicis warns of unprecedented spending pullback (Wall Street Journal, Nick Kostov and Suzanne Vranica) highlights a common phenomenon when economies get weaker – that ad spending tends to fall as a “non-essential” cost and so agencies such as Publicis will suffer as a result for some time and PC sales fell sharply in latest quarter, hit by logistical challenges (Wall Street Journal, Maria Armental) shows that PC shipments fell in the first quarter of the year as supply/logistical challenges meant that rising demand from increased numbers of people working-from-home was not met. Although companies are expected to rein in expenses once this all dies down, they may also have to buy PCs to bring their remote infrastructure up to speed for if this happens again. Lenovo was #1 in shipments, followed by HP and then Dell. The top three vendors have a combined market share of over 50%.

Amazon employs even more and supermarkets face a moral dilemma while apparel retailers and pharmacies face tough times…

Amazon to hire 75,000 more workers to cope with demand (Financial Times, Dave Lee and Alistair Gray) signals the e-tailing giant’s intentions to hire even more staff in order to meet customer demand. This will bring the number of employees worldwide to just under 1m globally! It also announced plans to relax restrictions on “non-essential” products imposed in mid-March. * SO WHAT? * This will be music to the ears of the unemployed as well as third party sellers who account for about 60% of sales via Amazon.com. Many of these third party companies have been locked out as goods other than household staples and medical supplies have been blocked in order to concentrate on banging out essential items.

Stockpiling panic might not save supermarkets from profits slip (Daily Telegraph, Laura Onita) is an interesting article which discusses the moral dilemma that UK supermarkets currently find themselves in. You may recall that Tesco recently decided to pay a dividend to investors despite criticism that it was basically using taxpayer money to fund it (retailers are currently “enjoying” a business rates “holiday” which still applies to big companies, such as supermarkets, that arguably don’t need it). They will say that they still need the “holiday” because they are taking on costs to keep the nation going by not furloughing people (sounds tenuous to me – although they are incurring costs by hiring more people), not claiming any other government handouts (they don’t

need to – they are making more money now than they ever did at Christmases!) and supporting food banks and charities. * SO WHAT? * Supermarkets claim that business is still cutthroat and that margins are still wafer thin so they need all the help they can get. Also, although food sales are strong, clothing and fuel sales remain weak. Still, they are doing pretty well overall at the moment and if they wanted to enhance their standing, they have the option of not taking the handouts – although I suspect that no-one wants to be the first to do so! 

On the other hand, Clothes retailers face £15bn of write-offs as stock lies unsold (The Times, Ashley Armstrong) cites analysis by Retail Economics and Alvarez & Marsal which shows that fashion retailers could be facing massive write-offs as they sit on a mountain of stock that can’t be sold. * SO WHAT? * Trend-focused chains like River Island, Topshop and New Look could be particularly vulnerable as their clothes risk falling out of fashion by the time they can actually sell them, Primark is suffering because it doesn’t sell online and even the normally impressive Inditex, which owns Zara, said last week it would take a €300m write-down on the value of its inventory. For these places, a relaxation in lockdown can’t come fast enough. But even when it does, the discounts will be big and wide-ranging in order to run down inventories. Great for customers, not so great for the retailers.

Elsewhere on the high street, Pharmacies call for emergency cash to stay afloat (The Times, Callum Jones) highlights the plight of pharmacies who are asking for government support despite seeing a huge surge in demand. Some pharmacies are seeing their costs rise – even having to hire security guards – and the Pharmaceutical Services Negotiating Committee, the industry body, is currently in discussions with the government to secure funding.

And finally, in other news…

There’s a lot of sad news about coronavirus at the moment, so I thought I’d highlight something positive in The superhero firms helping out in the coronavirus crisis (The Guardian, Anna Tims https://tinyurl.com/uq5qy6w) which shows you what some companies are doing to help in the fight against the coronavirus. There’s some incredible ingenuity at work! 👍👍👍

1. In MACRO, MARKETS & COMMODITIES NEWS, EU talks fail as lockdowns relax, the UK regulator eases fundraising rules, Wall Street analysts warn against over-exuberance and uranium prices go nuclear
2. In CORONVIRUS “WINNERS” & LOSERS, Disney+ racks up the subscribers, esports tries to fill the gap and food retailers benefit while lawyer, accountant and investment banker jobs are affected, manufacturing jobs at Airbus and Tesla are hit and others call for help
3. In INDIVIDUAL COMPANY NEWS, Zoom gets slapped with a lawsuit for allegedly hiding security flaws
4. AND FINALLY, I bring you toilet roll cakes and a brilliant restaurant…

So EU talks flop, the FCA eases fundraising rules, investors are warned against over-exuberance and uranium prices rise sharply…

EU fails to agree deal on €540bn coronavirus rescue plan (The Guardian, Jennifer Rankin) highlights the ongoing divisions between the more prosperous northern Europe and the more indebted southern Europe as 19 finance ministers emerged from a marathon conference call with nothing to show for it. France and Germany appealed for agreement and Spain warned that the EU’s future was at risk. The main sticking point was the strings attached to credit issued by the eurozone bailout fund. Interestingly, France made a veiled threat that they might go off with a smaller group of Eurozone countries to sort out their own debt issuance (and by that, I would have thought that it means forming a break-off group of stronger countries). * SO WHAT? * It’s anyone’s guess as to whether further talks will reach any deal – but if they don’t, I think that the future of the eurozone will look more uncertain as the north/south divide widens. If Europe ever needed unity, now is the time. While the north feels that it is not getting enough credit for the concessions it has made, you can understand why an already-struggling south won’t want to sign up to punitive, painful and long-lasting conditions.

Europe watches as countries slowly emerge from lockdown (Financial Times, James Shotter and Sam Jones) highlights the fact that all eyes will be on Austria, the Czech Republic and Denmark who are to become the first European countries to relax lockdown restrictions in the next few weeks. Kindergardens and schools in Denmark will reopen from April 15th, some shops selling non-essential goods in the Czech Republic will be allowed to reopen from Thursday and small shops, DIY stores and garden centres will be allowed to open in Austria from April 14th. * SO WHAT? * All three of these countries have benefited from being of relatively small size and the speed with which they reacted initially in terms of lockdown. The decision to relax has not, however, been met with universal praise as parents and teachers are among those to object.

Let’s hope that they are all OK and don’t experience a second wave. The world will be watching.

Meanwhile, there’s good news for companies wanting to raise finance in FCA makes emergency fundraisings easier for UK-listed companies (Financial Times, Matthew Vincent) as the UK’s financial regulator announced a series of measures yesterday to accelerate fundraisings whilst simultaneously protecting investors. Measures include greater used of simplified prospectuses, relaxing disclosure rules within them and allowing investors to participate in share issuance without having to call a shareholder meeting.* SO WHAT? * This will take some of the pressure off the government and the banks and gives companies more options to finance their way through the crisis.

Wall St urges caution as bullish investors rush into recovery bets (Financial Times, Philip Georgiadis and Robin Wigglesworth) highlights strategist concerns that investors are jumping the gun as they pile into so-called “recovery” stocks. Pessimists are saying that the recent bounce shows that the market is pricing in recovery when major risks still remain but optimists are saying that current conditions present huge buying opportunities. Time will tell, but I think you have to have massive 🏀⚽🥎 to invest right now.

In Uranium enters bull market after Covid-19 hits supply (Financial Times, Neil Hume) we see that the price of the radioactive material used in nuclear power stations is now in bull market territory (up 20% from a low in March) as Kazakh miner Kazatomprom announced a major slash in production equivalent to 8% of the world’s supply. This is the latest blow to the world’s uranium supply as 30-35% of global uranium production has now been affected by coronavirus-related shutdowns. * SO WHAT? * Prices have been relatively weak due to stockpiling following the 2011 Fukushima disaster as nuclear power plants were shut down around the world (and plans for new ones were scrapped), but disruptions to supply have turned prices around. It doesn’t look like they will run out of steam any time soon either as more buyers are likely to appear this year because many contracts for nuclear fuel are going to be dropping away from 2021, meaning that buyers will be looking in the market NOW. 

“Winners” and losers continue to emerge…

OK. Deep breath. There’s a lot to get through in this section today 😅! Here goes!

Companies that are entertaining us through the current lockdown are going from strength to strength. Disney+ tops 50 million paid subscribers globally (Wall Street Journal, Maria Armental) highlights impressive subscriber numbers five months after the launch of the new streamer. It had 28.6m subscribers in early February, but that has since been boosted by rollout in India and Europe. The company originally said that it was hoping to have 60-90m subscribers by the end of fiscal 2024! It’s clearly well on the way to that target but the key will be how many new subscribers they will keep when the lockdowns peter out and cash-strapped consumers cut down on non-essentials. Esports filling the gap to keep regular fans interested (Daily Telegraph, Michael Cogley) shows that people are getting their sporting fix digitally with companies like Twitch seeing a massive rise in viewers during April. They are hosting more traditional sporting events in the virtual world in addition to popular games such as League of Legends, Call of Duty: Modern Warfare, Forntite and Grand Theft Auto V. Virtual football and motor racing are attracting more views – and I think that the coronavirus outbreak will accelerate esports’ development as people get used to it.

In retail, Japan convenience stores: lockdown lifeline (Financial Times, Lex) shows that Japan’s 60,000 convenience stores (the biggest players being Seven-Eleven, Lawson and FamilyMart) are benefiting from being classed as “essential” businesses and being very local after years of steady decline. Sales have been rising and footfall has increased for the first time in five months but it is unclear whether these gains will last more than a few quarters. Tesco pays dividend as it takes taxpayer cash (The Times, Ashley Armstrong) highlights controversy courted by Tesco as it has decided to pay investors £900m in dividends despite getting £585m from the taxpayer via business rates holiday due to the coronavirus. * SO WHAT? * This is very controversial and is a bit of a PR disaster as the company has decided to prioritise its shareholders – courting criticism that the government gave rates relief to those (like Tesco) who just don’t need it. If you include the cash injection it is due from selling off its Asian business AND the fact that its sales continue to go bananas, Tesco is doing VERY nicely. Maybe supermarkets should enjoy the rates holiday while they can as this is certainly one loophole that could be closed as funds get scarcer.

In terms of jobs, Lawyers and accountants’ income cut (The Times, Louisa Clarence-Smith) cites cuts in partner

payouts and salary at places like Linklaters, Freshfields Bruckhaus Deringer, KPMG and BDO with staff bonuses and pay increases also on the line, RBS cuts 130 jobs in investment bank (Financial Times, Nicholas Megaw) shows that the state-backed bank is continuing with its restructuring of NatWest Markets and Recruiters feel chill of freeze on hiring (The Times, Louisa Clarence-Smith) shows that big recruiters including Page Group and Robert Walters are shedding staff while Hays and Sthree are also tightening their belts. Lots of remaining staff are taking paycuts and reducing hours at the very least.

In manufacturing, Coronavirus pandemic hits plane makers, complicates 737 MAX return (Wall Street Journal, Doug Cameron) shows that the world’s biggest plane makers are having a nightmare. Airbus is cutting production of planes by a third and Boeing’s plans for returning its troubled 737 MAX to service are “up in the air” (sorry, I couldn’t help myself). * SO WHAT? * Once the dust settles on the coronavirus outbreak, it will be interesting to see how governments manage to help certain industries enough to survive without appearing to others to be giving them an unfair advantage. Trump has already whinged about this in his defence of Boeing through the 737 MAX scandal.

Tesla cuts salaries, furloughs workers under coronavirus shutdown (Wall Street Journal, Tim Higgins) highlights tough times for Tesla following enforced factory shutdowns. Despite all this, Musk is hoping to resume production in his Californian factory on May 4th – the day after the local government-enforced shutdown order is due to be lifted. * SO WHAT? * Tesla is not the only car manufacturer to suffer. EVERYONE else has had to furlough, sack and cut staff wages. I guess the thing with Tesla is that its finances have always looked pretty precarious as they only managed to become profitable relatively recently after YEARS of losses. You do wonder how successful future money-raisings will be (and I guarantee that there will be!) as investors will be pulled in all directions from other (and more profitable) companies wanting their cash.

Meanwhile, UK’s surveyors make plea for stamp duty holiday after lockdown (The Guardian, Patrick Collinson) highlights ongoing panic regarding the near-terms prospects for the housing market and a way to potentially help boost sales (i.e. “cancel” stamp duty for a period of time) and Dairy farmers seek government help as lockdown forces milk dumping (Financial Times, Judith Evans) reflects dairy farmers’ despair as the closure of restaurants, cafes and canteens has caused a collapse in the milk market. The Royal Association of British Dairy Farmers is asking for the government to compensate dairy farmers who are having to sell their milk a much lower rates or just pour it away. They will have to get in line as requests from all sorts of industries for government help will continue to come in from all sides.

Zoom gets slapped…

Following increasing revelations of Zoom’s security shortfalls, Investor sues Zoom after it is accused of hiding security flaws (Daily Telegraph, Hasan Chowdhury) shows that the recently-successful videoconferencing company is now facing a class-action lawsuit alleging that the company hid security flaws that allow hackers access to

video streams. * SO WHAT? * This will be a blow to the company as it has recently seen a massive spike in users (200m daily active users in March, according to the chief exec last week) as many people are forced to work from home. Although they may see a proportion of the gains they’ve made disappear when people go back to work, they should benefit longer term as videoconferencing will surely be seen as being more mainstream. Still, I expect Microsoft to be the main beneficiary as Teams is already part of Microsoft 365, doesn’t cost any extra and hasn’t had any security problems as yet.

And finally, in other news…

It’s always good to see some companies doing given the current circumstances – and Novelty toilet roll cakes keep Finnish baker in business (Reuters, https://tinyurl.com/tesregu) fits right into that category! The great thing is that the deluge of orders has meant the bakery has been able to employ two more staff to keep up with demand! However, perhaps my new favourite video of all time is the one in this story: Parents find brilliant way to take heartbroken kids to a ‘restaurant’ in lockdown (The Mirror, Paige Holland https://tinyurl.com/vc7urxj). That story didn’t make me cry, honest. There must have been something in my eye. Or maybe I’m developing hayfever…what great parents!

1. In MARKETS, MACRO & OIL NEWS, share prices rise again, Wuhan’s lockdown eases and Exxon cuts capex
2. In CORONAVIRUS “WINNERS” & LOSERS NEWS, we take a look at small businesses repurposing but Samsung and Lufthansa suffer
3. In INDIVIDUAL COMPANY NEWS, WeWork sues SoftBank and Asos raises money
4. AND FINALLY, I bring you Pret’s cookie recipe and why hand sanitiser goes out of date…

So markets climb again, Wuhan relaxes and Exxon slashes capex…

From bear to bull? Global markets extend rally into second day (The Times, James Dean and Callum Jones) shows that markets strengthened for the second day in a row as investors displayed cautious optimism. Coronavirus cases in New York may have peaked out earlier than forecast and it looks like Congress and the White House are thinking about unleashing a second economic stimulus of about $1tn. Economic adviser to the President, Larry Kudlow, envisaged a “reopening” of the US economy in the next four to eight weeks. The rate of new infections also appears to be slowing in France, Spain and Italy. Airline stocks took off as a result as investors bet that they would resume flying earlier than expected – EasyJet was up by 15.1% and Ryanair by 5.9%. * SO WHAT? * Markets are still very sensitive at the moment IMO, but there will definitely be a time to get back in properly (I actually think that could be pretty soon, as things stand). Any bit of newsflow seems to have an outsize effect on the market so active investors at the moment will have to be very brave. Huge gains can be easily snuffed out and turned into huge losses in markets like this.

Fear lingers in Wuhan as China eases lockdown (Wall Street Journal, Jeremy Page, Natasha Khan and Warren P Strobel) heralds the end of the city’s 77-day city lockdown as healthy people are now allowed to come and go freely into and out of the city. Some specific areas are still locked down, but there is a worry that authorities are downplaying case and death numbers as an official newspaper said on Monday that there could up 10-20,000 “asymptomatic” cases in Wuhan (these cases are defined as people who don’t yet display symptoms put who have tested positive and might be infectious), but it was quickly deleted online. * SO WHAT? * The accuracy of the data coming out of China

is absolutely critical for the rest of the world as everyone is looking at it as an indicator of how the disease may develop in their own countries. There will be particular scrutiny on what happens in Wuhan in terms of what happens after lockdown restrictions are lifted. Critics say that local and regional officials don’t report bad news further up the chain and that the number of deaths and infections have been underreported because it did not test widely in the early days. On the other hand, China’s Premier Li Keqiang emphasised that he wanted local officials to be honest in case reporting. Just to be clear, it’s not just China who may be underreporting cases and deaths – other countries such as the US and Italy are also facing difficulty in churning out reliable data – Italy’s death toll is thought to be much higher than originally stated, for instance. Widespread and accurate testing will be key to improved data quality, so anything at the moment probably has to be treated with a large pinch of salt wherever you are.

Exxon cuts capital spending by 30% in response to coronavirus (Wall Street Journal, Christopher M Matthews) highlights plans for the oil major to slash its capital expenditure this year as global demand for oil remains weak. Most of the $10bn cuts will be in the Permian Basin, the biggest US oilfield. * SO WHAT? * This is unsurprising given that other oil majors, such as Chevron, are also cutting capex for the same reasons. Opec and non-Opec countries are due to hold a virtual meeting tomorrow to talk about the possibility of production cuts that could boost the oil price, but if you take into account the growing amount of reserves sloshing around at the moment, Rystad Energy estimates that any proposed cuts won’t be enough to stop sustained oil price weakness. Demand is just that weak at the moment as the coronavirus outbreak has just shut pretty much everything down globally. 

Small businesses repurpose, but some big companies continue to lose out…

It’s good to see that there are some examples of phoenixes rising from coronavirus ashes. From guitar accessories to medical gear, a start-up pivots to a new era (Financial Times, Patrick McGee) highlights the travails of guitar accessory manufacturer Thalia that laid off its 12-person production team only to take them all back on a week later as they started to make “intubation boxes” (a box that sits over a patients head so that tubes can be inserted into the mouth without endangering medical staff), which are now referred to as “Thalia boxes”. Because of Thalia’s small size, it was able to turnaround production incredibly rapidly, meaning that their products are now already making their way to hospitals. Small manufacturers pivot to making simple masks (Wall Street Journal, Micah Maidenberg) shows that sewing shops and mattress makers are switching production to make masks that will help to prevent infected people from spreading the virus. * SO WHAT? * I think it’s brilliant that some small companies are able to carry on by retooling and thus keep staff in work – potentially giving themselves another lifeline for the future AND helping the coronavirus effort at the same time. We hear so much about small businesses suffering these days that it’s nice to hear something positive.

On a rather larger scale, Garnier is turning its hand to sanitiser (The Times, Ashley Armstrong) shows that the cosmetics giant is switching production from the popular Micellar Water make-up remover (one bottle of which is bought every five seconds in the UK!) to hydro-alcoholic hand gel and, talking of sanitiser, Air Liquide sells hand sanitiser business to private equity group (Financial Times, Kaye Wiggins and Michael Pooler) shows that M&A isn’t quite dead yet as private equity group EQT Partners is in exclusive talks to buy Air Liquide’s hand sanitiser and disinfectant business, Schülke, for around €900m. Air

Liquide had put this business up for sale last year. * SO WHAT? * Wow! Talk about timing! Air Liquide had touted a $1bn valuation for the business and was seeking a premium. Still, €900m isn’t too shabby and, who knows, Air Liquide may even be able to squeeze more out of it. 

Other companies benefiting from current circumstances include the tiny publishing company in Coronavirus has turned children’s workbooks into bestsellers (Wall Street Journal, Jeffrey A. Trachtenberg) where a husband-and-wife team has seen their business thrust from minnow to mainstream as their children’s workbooks have seen huge orders via Amazon as parents look for ways to educate and entertain their kids while schools are in shutdown mode. Sales at Modern Kid Press have shot up by 500% and recently, it had five of its books in Amazon’s top 100 bestseller list! Also, Plus500 revenue soars nearly 500% as volatility fuels boom in bets (Financial Times, Antonia Cundy) shows that revenues for the online trading platform have benefited handsomely from all the market volatility as punters have tried their best to “buy low, sell high”.

On the other hand, Cineworld’s takeover of Canada’s Cineplex in doubt (Daily Telegraph, Oliver Gill) shows that increasingly precarious-looking financials are making the takeover look vulnerable to collapse, Samsung projects quarterly profit near lowest level in 5 years (Financial Times, Song Jung-a and Edward White) reflects pessimism from the world’s biggest producer of computer chips, smartphones and electronic displays as the company predicts that weaker demand for mobile phones, in-car and consumer electronics will shrink chip demand and Lufthansa decommissions 40 jets and axes Germanwings (Financial Times, Joe Miller, Tanya Powley and Peggy Hollinger) shows the German flag-carrier’s willingness to take drastic measures in a troubled industry following a board meeting yesterday. * SO WHAT? * Given the current circumstances, I think it is prudent for these companies to reconsider acquisitions, cut forecasts and make the difficult decisions. I would have thought that, in any case, things will be much cheaper in the short term anyway, so if the companies’ respective finances prove to be resilient, they may be able to get back on track with their original strategies but pay less money for the privilege. 

WeWork sulks and Asos raises money…

SoftBank faces fight after it pulls $3bn WeWork offer (Daily Telegraph, Matthew Field) follows on from the recent story that SoftBank decided to pull a $3bn tender offer for shares in the embattled office space provider. WeWork alleges breach of contract over the sale. This is going to get interesting. * SO WHAT? * Given that SoftBank has poured so much money into WeWork, you would have thought that its U-turn over the deal AND WeWork’s decision to sue would imply that neither side is seeing a long term future together. If there is a messy divorce I would imagine that WeWork is going to have to offload

properties somehow, meaning that the market is potentially going to see greater supply at much cheaper prices that could drag the whole market down just at a time when demand is not a given.

Investors join party in Asos fundraising (The Times, Ashley Armstrong) highlights another company that has decided to ask investors for more money to get it through current lean times. It has asked institutional investors for £200m which, along with £60-80m from a new banking facility, should help to ease Asos’ situation somewhat. Apparently, the share placing was over four times oversubscribed (very impressive, considering current market conditions). * SO WHAT? * It seems to me that there is still investor appetite out there that will help to keep companies going. WH Smith decided to refinance, now Asos is doing it and I suspect there will be more to come as companies do what they can to survive.

And finally, in other news…

It seems that many fast-food places are sharing some of their recipes so you can get your fix under lockdown and Pret releases its secret ‘quick and easy’ chocolate chip cookie recipe (The Mirror, Paige Holland https://tinyurl.com/tlzausm) is just one such example! I’ve talked a bit about hand sanitiser in today’s edition, so thought it fitting to close on Why does hand sanitizer have an expiration date? (mental_floss, Jake Rosen https://tinyurl.com/s6r5xm6). So now you know!

1. In MARKETS, OIL & CORONAVIRUS GEAR NEWS, markets rally but oil talks are delayed, UK testing hits a setback and the US orders 3M masks
2. In TRANSPORT & LEISURE RELATED NEWS, EasyJet faces potential insolvency, Carnival gets a big Saudi investment, P&O looks vulnerable, car sales hit new lows, Airbnb gets a welcome cash injection and bookies see share prices rise
3. In INDIVIDUAL COMPANY NEWS, Quibi decides to launch despite everything, Facebook moves to quash 5G conspiracy theories, WH Smith aims to raise money and Debenhams goes into administration – again
4. In OTHER NEWS, I bring you some great cooking ideas…

So markets rally, oil talks get delayed, UK testing disappoints and the US orders more masks…

FTSE shrugs off dire UK data as markets sense easing of Covid-19 crisis (The Guardian, Rob Davies) highlights a bit of a respite for markets as investors seem to think that there’s light at the end of the tunnel following reports that some European countries were thinking of relaxing lockdown restrictions. FWIW, I think this rally is ephemeral and we will continue to see volatility on scrappy news for the foreseeable future. Talks delay puts dent in oil price recovery (The Times, Emily Gosden) shows that the shine was taken off the recent oil price rally as talks between OPEC (led by Saudi Arabia) and non-OPEC producers (led by Russia) were delayed until Thursday. One of the Russians said that a deal was close, but let’s be honest – that’s just negotiation 🐮💩 designed to put pressure on the other side to make them look bad if nothing happens. We will just have to wait and see whether they come out with the production cut that many are anticipating. Remember that last time everyone expected a cut, it didn’t happen and oil prices fell through the floor.

UK government admits Covid-19 antibody tests don’t work (Financial Times, Camilla Hodgson and George Parker) is

a real blow as the government admitted that the 17.5m antibody tests it ordered don’t work, meaning that mass-testing will be delayed. It is working with nine companies that have developed coronavirus antibody tests, but the assessors at Oxford University have found that results are unreliable. * SO WHAT? * The government had hoped to send out at-home antibody testing kits, but that won’t be possible now. Professor John Bell, Regius Professor of Medicine at Oxford University, said that the government will continue to work with old and new suppliers to develop something that is robust – which he says will take at least a month. The rollout of a full antibody testing regime has yet to be achieved by any government in the world – so it’s not just us! Meanwhile, demand for kits that detect current Covid-19 infection (aka PCR tests) continue to outstrip supply according to South Korea’s factories stretched to limit churning out virus tests (Financial Times, Song Jung-a, Edward White and June Yoon).

Following recent reports about the US apparently commandeering masks made by 3M that were destined for Germany, Trump administration orders 167 million face masks from 3M for coronavirus pandemic (Wall Street Journal, Alex Leary and Austen Hufford) highlights a big order from the government to cover the next three months. This seemingly draws a line under the spat between Trump and 3M where the former criticised the latter for not providing enough equipment for Americans on the front line.

EasyJet faces insolvency, Carnival welcomes an investor, P&O faces choppy waters, car sales plummet, Airbnb gets a lifeline and gambling firms benefit from lockdown…

In Founders fear involvency despite £600m government loan (The Guardian, Gwyn Topham) we see that EasyJet has managed to wangle a loan from the Treasury and Bank of England’s emergency coronavirus fund. It said it would also borrow a further $500m from commercial creditors. Founder Sir Stelios Haji-Ioannou, who is the company’s biggest shareholder with his family, is pushing for the sacking of two directors and the cancellation of its £4.5bn order for 107 “useless” planes from Airbus. * SO WHAT? * Given the likelihood of prolonged weak passenger numbers, you can understand Haji-Ioannu’s frustration – but you can also understand that Airbus won’t be taking this lightly either. He believes that the company will run out of cash by the end of the year, despite the new-found funds, because he believes that current projections of a return to international travel are “wildly optimistic”.

It’s Carnival time for Saudi Arabia (The Times, Robert Miller) shows that Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), has managed to build up an 8.2% stake in Carnival in a move that reflects some confidence in the cruise industry. Current conditions in the industry are dire as all cruise operators have suspended operations until at least May. Carnival itself says that it is going through $1bn a month currently and last week managed to raise $6.3bn in debt and equity from investors to keep it going for a few months. * SO WHAT? * Well done to Carnival for raising money at such a difficult time. However, I think it will be a VERY slow recovery for the industry because they will surely have to offer MASSIVE discounts to tempt people to hop on board due to the hugely negative press that cruises have received since the pandemic broke out. Given the alternatives to cruising that will also no doubt be offering tempting discounts, I expect the whole industry to be going against the current for quite some time. I would presume that there will be even more consolidation in this sector as it hunkers down for the long haul.

P&O Ferries in trouble as owner seeks rescue deal (Daily Telegraph, Oliver Gill) highlights the fact that almost 4,000 jobs are now hanging in the balance as the ferry company faces a funding crisis. The operator’s Dubai owner, DP World, is trying to organise a £250m rescue deal that will include a chunk of money from the government. Chief exec

Janette Bell emphasised the urgency for a deal, which is still being negotiated. * SO WHAT? * This is a tough one, but given that P&O Ferries accounts for about 15% of goods being imported into the UK, and over half of the goods transported between Dover and Calais, you would have thought it would be within the government’s interest to come to some sort of deal. Whether it can get hold of the funds soon enough or not is another question.

Car sales plummet to worst decline for 20 years (The Times, Callum Jones) reflects an already bad situation getting even worse for the British automotive industry as the latest figures from the Society of Motor Manufacturers and Traders (SMMT) show that March sales had their worst monthly drop in over two decades – 44.4%. The SMMT is now predicting a 25% drop in annual new registrations. * SO WHAT? * This is obviously bad, but not unexpected. It’s also worse elsewhere as sales fell by 85% in Italy, by 72% in France and by 69% in Spain. The SMMT’s chief, Mike Hawes, is talking a good game, implying that this is a temporary thing but I would argue that car sales will be tricky for quite some time as many people will probably be more cautious with their money (especially with big ticket items) and the likelihood of the secondhand car market getting flooded.

Elsewhere, Airbnb raises $1billion from Silver Lake, Sixth Street Partners (Wall Street Journal, Kimberly Chin) shows some relief for the troubled home-sharing start-up as it has managed to raise some extra cash from private equity firms to help support its long term goals. It said that about $5m of the investment will go towards a Superhost relief fund that will provide grants to hosts. * SO WHAT? * Airbnb has continued to rack up big losses and has been considering various options, including an IPO, to raise more finance. If it goes ahead with this, I would have thought that the company will have to give itself a much more conservative valuation than the $31bn it had in February to stand a chance of attracting interest, especially given its “exposure” to coronavirus sentiment.

Bookie sees shares jump after virus losses halved (The Times, Callum Jones) highlights the fact that shares in GVC – which owns Ladbrokes, Coral and Foxy Bingo – shot up by almost 20% after it said that it was cutting its losses estimate and that more savings may be possible. * SO WHAT? * This is great news for a company that has also been hit by the sudden drop-off in sports betting as events continue to be cancelled around the world. However, its chief exec said that it is trying to be responsible with online gambling (interest in which is increasing as people get bored in lockdown) – something that the regulator will be pleased to hear. Having said that, I saw reports recently that said that the UK’s Gambling Commission, the industry regulator, is going to be cutting staff, so maybe there won’t be quite so much oversight as there might have been.

Quibi decides to launch, Facebook quashes 5G conspiracy theories, WH Smith aims to raise money and Debenhams goes into administration yet again…

In other interesting news today, Quibi launches $1.8bn bet on mobile video amid global lockdown (Financial Times, Tim Bradshaw) shows that the start-up which specialises in “quality” 10 minute videos decided to launch yesterday despite the fact that its success may be tempered by people have more time to spare at the moment. It is backed by companies such as Alibaba, Goldman Sachs and JP Morgan and is led by corporate heavyweights Jeffrey Katzenberg (founder of DreamWorks) and Meg Whitman (former CEO of HP). * SO WHAT? * The popularity of short-form content has been shooting up, as evidenced by the likes of YouTube and TikTok, and people are also willing to pay for online video in increasing numbers, as evidenced by the likes of Netflix. Quibi brings together both worlds and brings with it “movie-quality” scripted shows, reality TV and documentaries etc. It’ll be free to view for the first 90 days before starting to charge a subscription of up to £7.99 per month. FWIW, I think this is pretty exciting and although its format may not be quite right for many time-rich people on lockdown right now, it gives people the opportunity to have a proper look and get hooked on all the original shows.

Facebook moves to cut 5G conspiracy theories (Daily Telegraph, James Cook) shows the social media giant fighting back against false news that 5G is responsible for the spread of the coronavirus. The theory is said to have originated in broadcasts from Russian media, in English, aimed at Western audiences and has resulted in people going around and burning down 5G masts. The spread of this theory now means that a “Stop 5G U.K” group now has 56,000 members and 2,400 new posts every day. So far,

Facebook has refused to delete these groups but it has now started to take down posts which link 5G to the spread of the coronavirus. Anyone now sharing such a post will be given a warning. * SO WHAT? * This is clearly a serious problem that comes at a time when communication is absolutely key. Facebook has been characteristically slow at responding and it remains to be seen whether its fact checkers can keep up with all the cr*p that people post. If they can shut down the celebs who spread this stuff, that would be a start!

Meanwhile, on the UK high street, WH Smith looks to raise £150m as pressure rises (The Times, Louisa Clarence-Smith) shows that the high street stalwart is taking pre-emptive action as it is trying to bolster its balance sheet following the closure of most of its stores in March. Shares in the retailer have fallen by a whopping 41% over the last month. * SO WHAT? * WH Smith has been a rare retail success story in recent times as it has benefited hugely from expanding its presence in railway stations and airports. This has helped to support its stodgy high street business but clearly this has all gone pear-shaped since no-one is allowed to travel any more! The financing sounds like a good move and I would expect the company to be one of the first to see business pick up markedly when the effects of coronavirus are brought more under control due to the recommencement of commuting and travel.

And finally, if you haven’t seen it already, Debenhams files for administration (Financial Times, Jonathan Eley) shows that the troubled department store operator has entered into its third insolvency process in under a year! The business is trying to avoid liquidation whilst still trading online. * SO WHAT? * Debenhams has been a complete nightmare for quite some time. It’s good to see that the management has some fight but let’s be honest – are customers going to flock to a store that specialises in nothing and sells product that you can source anywhere else (and probably cheaper)? I think not. If it does fail, it will leave huge holes in high streets up and down the country and a headache for local councils who will be left with the problem of how to replace the heart of their retail centres.

And finally, in other news…

I thought I’d leave you with a few fun lockdown ideas in Man spends 18 months perfecting his own KFC recipe – and reckons he’s nailed it (The Mirror, Paige Holland https://tinyurl.com/qlle4bt) and then maybe you can follow that up with Creative baker shares easy recipe to make giant Jaffa Cake (The Mirror, Luke Matthews https://tinyurl.com/sarksrz). Nice 👍

1. In MACRO & OIL NEWS, Europe moves to ease lockdown, BoJo goes to hospital, various industries appeal for financial help and I give you an update on the oil drama
2. In RETAIL/HIGH STREET NEWS, famous names fall, fashion retailers experience pile-up, Hix calls in the administrators but an independent bookshop sees a huge rise in business
3. In CORONAVIRUS “WINNERS” & LOSERS, households get paid for electricity usage, but superyachts face an uncertain future
4. In OTHER NEWS, I bring you some spooky photos…

So Europe looks like relaxing, BoJo goes to hospital, industries call for handouts and oil uncertainty continues…

Europe prepares to ease coronavirus lockdown (Financial Times, Ben Hall and Guy Chazan) shows that France, Spain, Belgium and Finland are among those looking at easing up home lockdown measures in a way that will avoid a second wave. Interestingly, Spain’s shutdown has been extended until April 26th but the ban on non-essential work – which includes manufacturing and construction – will be lifted after Easter. Italy suggested that it may be easing measures next month, France has hinted at targeted loosening and Denmark – which was one of the first European countries to impose activity and border restrictions – sounds like it might review in a fortnight’s time. * SO WHAT? * I do wonder whether governments are saying this sort of stuff to try to give people hope and something more concrete to aim for. However, on a practical basis, I would have thought that the key to ANY kind of relaxation will be a massive uptick in testing AND contact tracing. Even then, one of the countries that has garnered a lot of praise for testing – Germany – has seen a rise in cases and deaths in recent days, so it is not a given. Still, it is important to have a plan to phase in normality.

Boris Johnson taken to hospital over coronavirus symptoms (Financial Times, Jim Pickard and Sebastian Payne) shows that the British PM was admitted to hospital yesterday for precautionary tests as his coronavirus symptoms had not gone away. He is still in charge of the government but Dominic Raab will be filling in for him at meetings for now.

Meanwhile, Steel sector lobbies for lifeline as it faces collapse (Daily Telegraph, Alan Tovey) highlights problems in a sector that can’t be shut down easily but that is also excluded from government bailouts because its revenues are above the £500m threshold, Biotechs call for funding amid Woodford fallout (Daily Telegraph, Hannah Uttley) shows that our biotech sector is crying out for money now that Neil Woodford is out of the picture (25% of his Equity Income Fund was invested in biotech start-ups) and UK house sales will collapse in 2020 as market goes into deep freeze, says study (The Guardian, Patrick Collinson) cites analysis from Knight Frank which predicts that house sales will collapse this year and not pick up in 2021, although prices will only drop by 3% this year and rise by

5% next year. * SO WHAT? * It’s not surprising that various industries are asking for government help – and time will be of the essence in terms of saving them. As for the housing market – I have said previously that estate agents were talking their own book following BoJo’s victory in the general election at the end of last year and were not taking into account the uncertainty that Brexit would be bringing towards the end of the year. No doubt some will be talking their own book yet again by saying that the housing market will ratchet up again next year, but I just don’t see it. Savings for many will be absolutely decimated and building up deposits will take a lot of time. To my mind, the only way that housing market activity could pick up in a big way again in the near-ish term is if the government waived stamp duty and made concrete incentives to encourage mortgage lending. Will they do that, though? I would have thought they have more pressing concerns.

Meanwhile, US and Canada discuss putting tariffs on Saudi and Russian oil (Financial Times, David Sheppard and Derek Brower) is a story from the weekend which shows that the US and Canada are threatening tariffs if the price war persists and Trouble in the pipeline as Aramco shares take a bath (Daily Telegraph, Ed Clowes) highlights problems for the Saudi side as loads of ordinary citizens who bought into a “sure thing” when the state-controlled oil company floated on the stock market last year are facing financial difficulties because many of them borrowed heavily to buy shares which continue to fall in price – something they thought would not happen. Trump plays oil price poker but Russia control the deck (Daily Telegraph, Garry White) is a really good article that makes the point that although Trump is talking a good game, it is in fact the Russians who actually have more power in this particular game of chicken. * SO WHAT? * Trump tried last week to talk up the price by implying that the Saudis and Russians would have a “virtual” meeting to end the price war, but this is not a done deal. Permanently low oil prices will kill US ambitions of becoming energy independent as its shale producers go out of business, so it is very much in Trump’s interest to talk up the oil price. Theoretically, whoever can produce oil at the cheapest price will win as everyone else goes bust – and the cheapest producer has traditionally been Saudi Arabia. However, some argue that Russia is better equipped to last the course because it is less reliant on oil revenues, has other commodities to sell and the price of production in local currency terms is falling. Having said that, Putin is going to have to finance his recently-announced economic stimulus package somehow and oil revenues will play a major role in this – so holding out will not be pain-free for Russia either.

Famous names get into trouble, fashion retailers face inventory pile-up, the nightmare continues for restaurants but an independent bookshop is doing brisk business…

Big names on high street preparing to close down (The Times, Philip Aldrick) highlights Debenhams and Cath Kidston as two big high street names who will be filing for administration (for Debenhams, this will be the second time in a year!). Arcadia, which owns brands such as Miss Selfridge and Dorothy Perkins, is also believed to be thinking about shutting down a number of stores. UK fashion stores brace for shakeup as clothing piles up in warehouses (The Guardian, Sarah Butler) talks about retailers including Primark, Peacocks, Arcadia and Next who have stopped taking deliveries to their warehouses because there’s no more space – implying that when they do start selling again, there will be tons of product being sold at discount. * SO WHAT? * It just keeps getting worse for apparel retailers. I suspect that the discounts are going to have to be very deep indeed to get people to part with cash to buy non-essentials when many have lost their jobs or a proportion of their income. As I have said elsewhere, I believe that there may be initial euphoria when people start trickling back to work – but reality will settle in soon thereafter and spending will be reined-in.

Restaurants in trouble as Hix calls in administrators (Daily Telegraph, Oliver Fill and Jonathan Jones) heralds more problems for the embattled restaurant sector as chef and restauranteur Mark Hix filed for administration for three of his businesses at the end of last week. * SO WHAT? * OK, so his restaurants are on a different planet in terms of quality, but this latest move comes just after Chiquito and Carluccio’s also fell into administration. In this case, Hix

was exposed to a double-whammy of sky-high London rents and the sudden disappearance of its customer base. The hospitality industry is the third biggest contributor to UK GDP and employs almost 10% of the population but it is taking a massive pasting at the moment in the face of the coronavirus. Restaurants are a tough business to be in at the best of times, but given that we are now in the worst of times, survival will be the name of the game. FWIW, I think that if top end restaurants survive this, they may do well as their clientele may have been proportionately less affected by the outbreak and therefore still able to spend. I also think that fastfood chains will do well as people may crave the familiarity they bring and the prospect of a “cheap treat”. Casual dining, however, will surely find things far more difficult and the shake-out in that area is likely to continue.

On the plus side, Independent online bookseller hails promising chapter in lockdown (Financial Times, Anna Nicolaou) highlights the success of Bookshop.org, which is an e-commerce site that allows customers to buy hard-copy books directly from independent shops. It started only two months ago, selling about $4,000 worth of books a day, but since many stores are now closed and Amazon has de-emphasised the sale of non-essential goods, sales have shot up to over $140,000 a day! Bookshop was created to take on the might of Amazon – founder Andy Hunter said that “We’re using Silicon Valley tactics to try to keep things the way they were” – and he acknowledges that the timing of Bookshop’s launch has been accidentally perfect. Around 420 independent bookshops have now signed up to the platform while Amazon’s book shipments have slowed down. * SO WHAT? * Although you could argue that the longer the lockdown goes on, the more people will get used to Bookshop, I would say that it should enjoy its time while it lasts because once Amazon gets back again it is unlikely to be able to compete on price or expediency. Let’s hope it does last, though, as I think the sentiment is admirable!

Good news for household electricity usage, not so for superyachts…

Households to be paid for daytime green electricity use during lockdown (The Guardian, Jillian Ambrose) heralds good news for some as a combination of successful clean energy generation and a fall in energy demand due to the closure of various businesses and factories means that market prices for electricity are now at their lowest levels

for 10 years. This means that households on some newer tariffs were even paid to use electricity yesterday! How amazing is that?

Finally, Superyachts: depreciating quarantine machines (Financial Times, Lex) highlights the fact that although superyachts have been seeing a huge surge in popularity recently as floating isolation destinations for the super-rich, the good times may be limited for the yachting industry. Historically, after the 1929 and 2008 market crashes, prices fell by over 50% and order cancellations made things even worse. Given that yachts are very expensive depreciating assets with big overheads on maintenance and crewing, the future looks somewhat choppy.

And finally, in other news…

I thought I’d leave you today with the spooky photos in Aerial images show streets, beaches and landmarks empty during coronavirus pandemic (USA Today, https://tinyurl.com/r92apvm) I thought I’d also leave you with one of my favourite telly moments – when Stavros Flatley graced the stage of Britain’s Got Talent. This always makes me smile!

1. In MACRO & OIL NEWS, the US has disastrous jobless figures, UK borrowers offer payment relief, Turkey faces more lockdown pressure and oil rises on deal hopes
2. In CORONAVIRUS “WINNERS” & LOSER NEWS, Chinese apps profit, gaming surges and Amazon hires 80,000 but Land Securities cancels dividend on low rent payments
3. In INDIVIDUAL COMPANY NEWS, SoftBank cancels $3bn WeWork deal and Luckin Coffee has dodgy figures
4. In OTHER NEWS, I bring you some lockdown activity ideas…

So US jobless figures are horrendous, UK borrowers get relief, Turkey faces more lockdown pressure and oil jumps on deal hopes…

US jobless figures worst since the Great Depression (Daily Telegraph, Tom Rees) highlights the tough employment situation in the US right now as the number of Americans applying for unemployment benefits doubled in the week ending March 28th to just under 7 million. Some economists are forecasting that this could rise to 20 million as the lockdowns take hold and that the unemployment rate will reach 16% in the next few months – a level not seen since the Great Depression in the 1930s. 80% of Americans are now in lockdown. * SO WHAT? * This is of course a terrible state of affairs – but forecasts are just that, forecasts. These numbers can vary widely and will be subject to many changes over the days, weeks and months. America has gone for boosting unemployment benefits to help individuals (those who have been laid off can get up to $600 a week for four months) whereas many European countries have taken a different approach by paying a proportion of furloughed workers’ wages to save jobs. It remains to be seen as to which approach will save the most jobs in the long run.

Loan and credit card payments to be frozen for three months in the UK (The Guardian, Kalyeena Makortoff) is good news for those in debt as the Financial Conduct Authority has announced plans to freeze loan and credit card payments for up to three months – and could come into force as soon as April 9th. This action is designed to help people who have not benefited from other measures targeting homeowners (mortgage payment holidays) or business owners. Lenders would also have to waive interest charges on agreed overdrafts of up to £500 over the same period. * SO WHAT? * This sounds good, but the

proof will be in the execution and how easily this can be accessed. As Tesco might say “Every little helps”!

Meanwhile, Erdogan under pressure as Turkey’s coronavirus toll mounts (Financial Times, Laura Pitel) looks at what’s going on re the coronavirus in Turkey. The pressure is currently ratcheting up on President Erdogan to impose a nationwide lockdown, but he seems to be unwilling to change his stance from the one he outlined in a speech to the nation on Monday where he said “Turkey is a country where production must continue and the cogs must keep turning under every circumstance and every condition”. The number of cases has been growing rapidly over the last three weeks and is higher than what China, Italy or Spain had at the same stage. So far, the government has shut down schools and universities, put in place intercity travel restrictions and put people over 65 under lockdown. * SO WHAT? * Clearly, this is far from ideal. However, on the plus side, Turkey has a young population and a healthcare system that has seen big improvements since Erdogan came to power 17 years ago. However, it has a lot of multi-generational households where the virus could spread from kids to grandparents. As things stand, the testing rate is low and lockdown is limited – so you can understand why the pressure to change is increasing.

Oil price rebounds on hopes Saudi Arabia and Russia will reach deal (The Guardian, Jillian Ambrose) shows that global oil prices jumped to over $30 a barrel on hopes that Saudi Arabia and Russia will end the current price war. Trump tweeted (what else?!) that he had spoken to both sides and expected them to cut production by up to 15m barrels a day and that this “will be GREAT for the oil & gas industry”. Unfortunately, Trump’s apparent exuberance was tempered somewhat by Russian president Vladimir Putin who later told journalists that “no one has started talking about any specific or even abstract deals”. Still, maybe this is just a case of Vlad wanting to look like the great statesman and being a bit miffed that Trump got there first. This is not necessarily the end of oil hostilities…

Chinese apps and gaming see a major uptick and Amazon employs 80,000 while Land Securities suffers from a lack of rent…

Chinese apps profit from millions staying at home (Financial Times, Ryan McMorrow and Henny Sender) highlights a few apps in China that have benefited from the coronavirus lockdown. Podcasting app Lizhi, which has 52m listeners, has seen a big increase in revenues as listeners have been buying more virtual gifts for their favourite podcast hosts (this accounts for 99% of the company’s revenues). ByteDance-owned Douyin (the Chinese version of TikTok) is making money from online ads and virtual gifts in addition to e-commerce and gaming. Bilibili, similar to YouTube, is expecting to have its strongest ever first quarter and Taobao Live, owned by Alibaba, saw a massive spike in new merchant livestreamers. Kuaishou, which is backed by Tencent, has been so successful at monetising live streaming that it is now becoming a major competitor to Tencent’s own WeChat. * SO WHAT? * It’s interesting to see how companies have been monetising their huge online audiences. The likes of Facebook, Google and Twitter have been trying to monetise their user bases by increasing advertising but Twitter and Facebook have already warned investors to expect a hit in ad revenues as advertising spend is cut (this is one of the first company expenditures to go in a downturn). Maybe the Americans will see if they can learn anything from their Chinese counterparts…

Gaming firms enjoying surge after workers make the most of more time at home (Daily Telegraph, Chris Johnston) highlights a number of industries that have benefited from

the outbreak and resulting home confinement. MIDiA Research says that the average commuter has about 15% more free time these days and GamesIndustry.biz says that 63% more games were sold in the week to March 22nd versus the previous week, due in part to the release of Nintendo’s Animal Crossing: New Horizons. Video streaming has seen a 20% rise in consumption – and Disney seemed to time their UK launch to perfection as it went live when all the schools started to close! Radio has seen a surge in listeners and music streaming has also benefited, although there is a danger that the number of paying subscribers will fall in the event of a recession as they opt for the free “with ads” service instead. * SO WHAT? * It’s great that some of these areas are seeing a pickup in activity but it will be interesting to see whether the initial frenzy will subside once the coronavirus outbreak gets under control. If people are, say, watching more films than they normally would do, I do wonder whether they will stay on platforms for less time and switch to others when they have had their fill of superhero movies (just as an example!).

Meanwhile, in retail, Amazon has hired 80,000 workers amid soaring demand during coronavirus outbreak (Wall Street Journal, Sebastian Herrera) highlights an incredibly quick recruitment process by the giant e-tailer which is speeding towards its target of adding 100,000 workers to cope with surging demand. It has announced a number of additional worker protections following increasing employee concern.

On the other hand, British retail landlords continue to suffer as per Land Securities cancels dividend as tenants fail to pay a third of rent (The Times, Louisa Clarence-Smith), which follows recent news of others in the retail space. Only 41% of rent due from retailers was paid versus 86% for office tenants and 12% from specialist occupiers. Tough times.

SoftBank goes cold on WeWork and China’s Luckin Coffee gets in trouble…

SoftBank calls off $3bn WeWork deal (The Times, Tom Knowles) shows that WeWork’s biggest investor, Japan’s SoftBank, has decided to abandon an offer to buy $3bn of extra shares. This deal, agreed in October, brought the office space provider back from the brink of insolvency and was to be an additional investment to the $10.5bn that it had already invested in it. The company cited unmet conditions of the deal, criminal and civil inquiries into WeWork and its failure to restructure a joint venture in China. Anti-coronavirus measures leading to more people working from home will have been the final nail in the coffin. * SO WHAT? * I think that this is a nightmare for the company. SoftBank’s reticence when it has already committed so much to the company speaks volumes and this move will shake the confidence of other investors that would have been comforted by having SoftBank as a

bedrock. WeWork has huge debt but it remains to be seen whether others in the space will fare any better given the likely failure of many SMEs etc. Any larger companies who have taken on extra space for expansion could well cancel their contracts, I would have thought, given that they may well be axing staff and need less space.

Luckin Coffee plunges on internal probe into ‘fabricated’ sales (Finanical Times, Alistair Gray, Peter Wells and Neil Hume) shows that things at Starbucks’ fast-growing competitor in China may not be all they seem to be as an internal investigation found that hundreds of millions of dollars of sales last year were “fabricated”. This astounding revelation knocked 75% off the company’s share price yesterday. Luckin Coffee listed on Wall Street less than a year ago. The COO has been suspended. * SO WHAT? * This is lying on an epic scale. Apparently, sales were fabricated while costs and expenses were also “substantially inflated”. This is an absolute shocker as it had been touted as China’s answer to Starbucks, but it seems that all the expansion has been built on lies. Will this play out publicly or will China want to try to sweep it under the carpet? 

And finally, in other news…

I thought I’d finish on a few ideas for you to try during lockdown in 25 things to do while you’re stuck at home during the coronavirus lockdown (The Mirror, Daisy Naylor https://tinyurl.com/sbdfvvt). Enjoy!