Category: Uncategorized

1. In MACRO NEWS, Trump divides on troops, Germany unveils a stimulus, Australia flirts with recession and British banks back China’s security law
2. In NEWS ON PLANES AND CARS, the US threatens a ban on Chinese airlines, Lufthansa takes the bailout, Wizz Air cranks out the flights, China car sales turn up and one major UK car dealer announces strong sales
3. In INDIVIDUAL COMPANY NEWS, Warner Music’s IPO does nicely and we look at Zoom and Quibi’s weak spots while Frankie & Benny’s eyes permanent closures
4. AND FINALLY, I bring you a culinary monstrosity…

So Trump divides opinion on the use of troops, Germany unveils a stimulus, Australia faces recession and British banks in Hong Kong cave…

Pentagon chief breaks with Trump over using troops for protests (Financial Times, Katrina Manson, Demetri Sevastopulo) shows that the US defence secretary, Mark Esper, does not agree with Trump sending the army in to quell the George Floyd protests. He thinks that the National Guard, which is made up of 450,000 part-time citizen-soldiers, is better suited to the role rather than using active duty forces. Ex-chiefs have been lining up to criticise Trump on this and although Esper still has a job, you do wonder whether what he says has been a “CLM” (Career Limiting Move 😂) as Trump doesn’t take kindly to this kind of thing. The whole debacle rolls on…

German coalition agrees €130bn stimulus (Financial Times, Guy Chazan) highlights Germany’s latest fiscal stimulus, announced yesterday by Angela Merkel, that will be powered by a reduction of standard-rate VAT from 19% to 16% and for lower-band VAT from 7% to 5% as well as a €300 one-off “children’s bonus” payment for every child. This move is intended to boost consumer demand as Germany moves out of lockdown. There will also be more financial help for municipalities and incentives for buying electric cars. The car industry will be disappointed that incentives will only be for electric vehicles. * SO WHAT? * This is, as they say, an impressive package when you consider it in conjunction with previous measures. Only time will tell whether its size and timing will be enough to jolt Germany back from its coronavirus-induced coma.

Australia’s boom is finally halted (The Times, Bernard Lagan) heralds the likely end of Australia’s long winning

streak as official figures show GDP contraction of 0.3% in the first quarter as it battled with bushfires. Given that the second quarter is when coronavirus came along, the likelihood is that GDP will contract again, meaning that Australia will officially be in recession (the definition of “recession” is when you get two consecutive quarters of GDP contraction). * SO WHAT? * This is a big deal when you consider that Australia overtook the Netherlands in mid-2017 in having the longest uninterrupted streak of GDP expansion in the developed world. Its record of 29 years is about to come to an end as household consumption dragged heavily while net exports helped to mitigate some of the damage.

Further to China imposing a new national security law in Hong Kong, UK banks back Beijing’s Hong Kong security law (The Times, Patrick Hosking) shows that HSBC and Standard Chartered have decided to officially back China’s imposition of a new national security law on Hong Kong. HSBC said that it “respects and supports all laws that stabilise Hong Kong’s social order” and Standard Chartered said that the new law could help to “maintain the long-term stability of Hong Kong”. * SO WHAT? * Given the banks’ exposure to Hong Kong and Asia, it is hardly surprising that they have decided to just fall in line – if they didn’t I’m pretty sure that China would have done its best to restrict their business (or “encourage” the use of alternative banks somehow). I would imagine that many other businesses with decent exposure to the territory will also fall in line – or just quietly abandon it. Nomura reviews scale of operations in Hong Kong (Financial Times, Leo Lewis) says that the Japanese investment bank is considering its presence there, but who’s to say that it wasn’t going to reduce its exposure there anyway and that this latest development gives it a brilliant excuse?! If businesses there were having a bit of a wobble and/or wanted to cut costs, now would be as good a time as any to do it given the current climate.

The US threatens China, Lufthansa takes the money, Wizz Air makes plans and car sales in China and the UK show positive signs…

US to ban airlines from China flying to its airports (Daily Telegraph, Olivia Rudgard) highlights a fit of retaliation from the US as it has decided to ban passenger planes flying in from China because China has not lifted an order banning US airlines from flying to its airports. The order is expected to come into force on June 16th and will affect seven Chinese airlines but will presumably be lifted if China plays ball.

Lufthansa chief says €9bn bailout larger than needed for survival (Financial Times, Joe Miller and Peggy Hollinger) shows that the company’s supervisory board decided to accept the EU’s conditions for taking on the bailout money. Lufthansa includes Austrian, Brussels, Swiss and Eurowings airlines and the company has sought bailout money from other governments as well as its own. * SO WHAT? * Interestingly, the CEO admitted that the package was more than they needed, but that it was not just about survival but maintaining its position as a leader in the industry. This annoyed Ryanair boss Michael O’Leary, who says that this will give it an unfair advantage and that he will launch a legal challenge.

Elsewhere in the industry, Wizz Air will have ‘most aircraft flying by October (The Times, Robert Lea) shows that the eastern European low-cost carrier is going on the front foot by saying that it expects to be operating 60% of its services over the summer trading season and then 80% from October to March. Wizz’s chief exec believes that flights could be 70% full. Wizz Air is the top operator in nice easter

European countries including Hungary, Romania, Ukraine and Georgia. He said that the company has been able to weather the coronavirus turbulence because it had cash reserves before the outbreak of €1.5bn, it sacked 20% of its workforce very quickly and because 65% of its passengers are expats – and they will want to see their families after lockdown. Also it says it has a young passenger profile – an average of 36 years old – who it argues are the most likely demographic to go on holiday. There’s confidence for you!

Meanwhile, back on terra firma, China cars sales: shock and roll (Financial Times, Lex) shows that car sales are rising in the world’s biggest car market in a meaningful enough way to suggest this isn’t just a short term post-coronavirus surge. Interestingly, Hong Kong listed shares in China’s largest electric car maker, BYD Motors, have shot up by 42% since the lows of March and it seems that there is pent-up demand for new cars after the lockdown as people are still a bit nervous about public transport. The weak oil price has helped to lower petrol prices, meaning that buyers have been opting for larger vehicles which have better margins for makers. * SO WHAT? * China’s automotive sector is highly fragmented so if some of the bigger makers can sell enough cars in this current “boomlet” it is possible that this could finance some much-needed consolidation.

Back home, UK car retailer reports strong sales in reopened showrooms (Financial Times, Chris Tighe) shows that the UK’s fifth-biggest motor retailer by revenues, Vertu, reported strong sales since lockdown lifted – especially in used cars. Vertu’s chief exec, Robert Forrester, said that he thought carmakers would be making some “spectacular offers” when their factories opened to strengthen new car volumes while wariness of public transport was firing up secondhand sales. A blip or a trend? It’s too early to tell, but let’s hope it’s the latter!

Warner Music’s IPO goes well, Zoom and Quibi show weaknesses and Frankie & Benny’s face tough times…

In a quick scoot around other stories doing the rounds today, Warner Music strikes the right note with successful flotation (The Times, James Dean) highlights a cracking market debut for the music company – shares were up by 20.5% from the offer price – and it raised $1.9bn from the sale of 77million shares. Even in times like these, this goes to show successful IPOs can be done!

Then Zoom’s story: how all at once, it just went boom (Daily Telegraph, Michael Cogley) goes into more detail about what I was saying yesterday about Zoom but Zoom: zump bump (Financial Times, Lex) makes the excellent point that, for all of its recent success, to really be considered a major player it needs to stop using dodgy metrics and publish “daily active user” numbers. At the

moment, it publishes numbers that are inflated by people using its platform more than once per day (a daily active user is counted as one user even if they use the service more than once per day). Given that Microsoft’s Teams boasts 75m daily active users and Google Meets has 100m, you can see why they may be a bit coy.

Meanwhile, Quibi asks senior executives to take 10% pay cut (Wall Street Journal, Benjamin Mullin) highlights hard times at the high profile dud that is Quibi, the short-form (and EXPENSIVE!) video specialist. It is now asking senior execs to take a pay cut – and this follows not long after stories that advertisers want to renegotiate deal terms because of their concerns about low viewership.

There’s more gloom in the UK’s restaurant scene as Frankie & Benny’s owner to permanently close 120 restaurants (The Guardian, Sarah Butler) shows that the owner, The Restaurant Group, is going to close up to 120 restaurants which could involve the loss of almost 3,000 jobs. This is the latest round of closures to be made by the parent company as it has already cut branches and jobs in Chiquito’s and Food and Fuel. Just more evidence of retail carnage.

…in other news…

I think that lockdown has provided an impetus for some people to improve skills that can get left by the wayside in the hurly-burly of daily life. Clearly the man in Man’s carbonara ‘monstrosity’ is so bad Italians are left ‘weeping’ (The Mirror, Paige Holland https://tinyurl.com/y7xqz292) needs serious help. I really hope that he published this as a joke for his sake 😱😱😱

1. In MACRO, MARKETS & CONSUMER NEWS, Trump talks tough, the EU races to protect, markets rise on optimism and consumers pay back debt
2. In TRANSPORT-RELATED NEWS, Airlines chart a return, P&O says no cruises until October, Lyft sees an uplift and car companies call for a scrappage scheme
3. In INDIVIDUAL COMPANY NEWS, Warner Music is about to float in the US, Microsoft and Zoom power on and Travelodge aims for a CVA
4. AND FINALLY, I bring you a heart-warming story about some brilliant US teens…

So Trump talks tough, the EU races to protect against outsider takeovers, markets and oil rise on hope and consumers save under lockdown…

Trump hopes tough stance on crime will propel him to election victory (Financial Times, Demetri Sevastopulo) shows that the President is talking about getting tough on the current civil rights unrest by deploying “thousands of heavily armed soldiers” to deal with what he calls angry mobs. He told governors they were being “weak” and called for them to “dominate” the streets. * SO WHAT? * This is just Trump being Trump. Given the devastating effect that the coronavirus has had on the US economy, it seems he’s de-emphasising his economic credentials and moving back to being “law and order” Trump in the run-up to the presidential election. David Gergen, a former adviser to four presidents, observed that he’s using the current unrest to push his handling of the coronavirus further down the front page of the news.

In EU seeks to curb state-backed foreign rivals (Financial Times, Sam Fleming, Javier Espinoza and Michael Peel) we see that Brussels is trying to conjour up new powers to review and block takeovers of European companies by state-supported foreign companies. The proposals are as yet unfinalised but the European Commissions is due to release a white paper on this later this month. This comes only a few weeks after Margrethe Vestager, the EU competition chief, called for European countries to buy stakes in companies to fend off approaches from outsiders. The EU trade commissioner and Phil Hogan (he’s Irish, in case you were wondering!), followed that up by encouraging trade ministers to co-operate in screening bids, warning that a takeover could have repercussions on other countries as well. * SO WHAT? * This comes at a tricky time as there will no doubt be lots of trade negotiations going on between various countries. The problem is that there will be lots of companies who will fail if they don’t get a cash injection from an outsider – so does that mean that Brussels is going to make an effort to bail them out, or would it rather let them die than them falling into Chinese hands?

Global stocks and oil extend gains on economic recovery hopes (Financial Times, Hudson Lockett) shows how markets and oil prices have strengthened on hopes of a global economic recovery. Investors are also hoping for

more economic support from the ECB when it meets up later this week and oil prices were up expectations that OPEC+ nations would extend production cuts for another month. * SO WHAT? * This is all lovely, but it seems to me that markets are detaching from reality at the moment as unemployment is still high, manufacturing is nowhere near full capacity and many in the services sector have been decimated (not to mention the fact that there still is no cure). One of the main differences between the covid-19 crisis and previous crises is the swift, big and co-ordinated nature of central bank response around the world to stimulate economies but it seems to me that a lot of the current market moves are based on hopes rather than reality. I hate to say it but I think that there is going to be a big shock around the corner when businesses go bust because they can’t cope with the practicalities of social distancing and furloughing comes to an end (which it has to). Let’s hope it doesn’t come to that.

Meanwhile, Companies load up on debt as UK households pay off record £7.4bn (Daily Telegraph, Russell Lynch and Lucy Burton) highlights interesting borrowing and spending patterns during lockdown as businesses borrowed money to get themselves through and households paid back debt. On the business side, the Institute of Directors is calling for corporate borrowing to be treated like student loans in that businesses should only have to start to repay when their earnings hit a certain level. On the household side of things, consumers paid back £19.1bn verses people borrowing £11.8bn. Savings deposits trebled versus the average of the previous six months. * SO WHAT? * This is pretty amazing I think and it would suggest that there is a huge amount of spending potential out there if and when people start to feel more confident. Now the Bank of England has recently mooted the possibility of negative interest rates – and if that becomes the case, people may feel that they HAVE to spend because their savings won’t be doing anything. Unfortunately, I think that this will widen the divide between the “haves” (who have hung on to their jobs) and the “have-nots” (who have missed out and lost theirs) who don’t have the money to pay for anything. Having said that, over time, higher spending should eventually result in more jobs. I think there is a delicate balance to be made here and if the government gets the timing right recovery could happen quicker than everyone is expecting. Get it wrong, though, and there could be more disaster to come. At least there is the POSSIBILITY of coming out of this reasonably quickly. For the moment, though, UK shops slash prices as coronavirus causes sales to plummet (The Guardian, Richard Partington) shows what retailers are currently up against as consumers continue to hunker down.

We take a quick look at the latest developments for those involved in travel over air, sea and land…

Airlines shrug off threat of quarantine by adding flights (Daily Telegraph, Simon Foy) shows that airlines are increasing flight schedules in anticipation of the 14-day quarantine thing being abandoned and replaced by “air bridges” (travel agreements between countries that are deemed to be “low risk”). EasyJet said it would be start flying again on 75% of its network by the end of August and Ryanair recently said it would get 40% of its planes flying again in June, ramping up to 60% in August and September. * SO WHAT? * Flying faces a difficult immediate future as I think consumers are going to need a lot of convincing to fly somewhere – even if it is short-haul and heavily discounted. Long-haul and business flying is likely to take even longer to get going – and in the meantime there will be a lot of pain as job losses are likely to continue in anything to do with the airline industry. Having said that, a scrapping of the 14-day quarantining will help a lot in terms of making the prospect more attractive.

P&O Cruises will not set sail again until October owing to coronavirus (The Guardian, Gwyn Topham) shows that the embattled cruise operator will not sail until October 15th, basically cancelling its summer season. P&O is part of the Carnival group, which had previously said it would pause operations until the end of July, but it is now looking at

tightening up its operations so that it can make a confident restart. For now, it said that it would give existing customers a voucher worth 125% of their original booking in order to keep them keen.

Meanwhile, on dry land, Lyft says demand picking up as covid-19 restrictions ease (Wall Street Journal, Micah Maidenberg) heralds some positive signs, although business levels are still way below normal levels. The company said last month that it would cut about 17% of its workforce, furlough employees and cut pay. It’s good to see that there are positive signs in terms of business, but it’s too early to celebrate right now.

Motor sector seeks scrappage deal for diesel and petrol cars (The Guardian, Gwyn Topham) shows that the UK automotive industry is lobbying hard to get a potential £1.5bn scrappage scheme off the ground to stimulate demand for cleaner vehicles. The plans being discussed at the moment involve taking £2,500 off the price of a car, which they estimate will put an additional 600,000 new cars on the road. The industry body, the Society of Motor Manufacturers and Traders (SMMT), argues that doing this would bring a net benefit of about £3 for every £1 it spends via new tax receipts from VAT and excise duty, get more manufacturing employees off furlough and avoiding redundancies. * SO WHAT? * This sounds like a reasonable plan in theory because the last time a scrappage scheme was introduced in the wake of the financial crisis, it lead to hundreds of thousands of extra vehicle sales. The SMMT is pushing for a scrappage scheme to be applied to ALL vehicle types (90% of cars sold last year were purely petrol or diesel) but many others are saying that this is a great opportunity to incentivise the purchase of greener vehicles.

Warner Music’s about to float, Microsoft and Zoom chase similar objectives and Travelodge targets a CVA…

Warner Music to float in US in first big-name launch since pandemic (The Guardian, Mark Sweney) highlights a major flotation due to hit later this week as the world’s third biggest record company will list on the Nasdaq at a valuation of about $13.3bn. Warner Music has benefited from lockdown as streaming revenues have increased by 12% in April alone. ZoomInfo Technologies (no – not THAT Zoom you are thinking of!) is also going to IPO tomorrow, for a valuation of around $7bn, in what will be the biggest new tech listing of the year so far. The Vancouver-based marketing data company mines public data on private companies and sells it on to marketing specialists. * SO WHAT? * This does go to show that there are pockets of confidence around despite the generally desolate landscape.

Talking about coronanvirus “winners”, Zoom lifts full-year sales outlook as coronavirus boosts demand (Wall Street Journal, Aaron Tilley) highlights the company’s strong first quarter numbers as videoconferencing takes over

everyone’s life! Despite some troubles with security issues, Zoom seems to have powered through and now its share price has more than tripled so far this year. Just to give you an idea of perspective, the company said that it saw over 300million daily meeting participants in the latest quarter versus 10million at the end of last year before the pandemic hit. Microsoft takes on Zoom and Slack in a battle for your work computer (Wall Street Journal, Aaron Tilley) looks at how Microsoft has seized opportunities to convert Zoomers to Teams and how it is using aggressive tactics to stop Slack from getting a toehold. * SO WHAT? * Whatever happens, I really think that the way we work has changed for good. FWIW, I believe that Microsoft will reign supreme because of the breadth of its product suite but that there is also still room for the other players like Zoom and Slack to consolidate the gains they’ve made during lockdown.

On the other hand, Travelodge braced for CVA rent row (The Times, Dominic Walsh and Louisa Clarence-Smith) highlights a proposed CVA that would reduce its rent bill by 38% for a fixed period of time and give the troubled budget hotel operator breathing room to continue. Landlords won’t like this and there is a possibility of push-back. It’s by no means certain that Travelodge will pull through this unscathed as CVAs do not guarantee long term survival as we have already seen in the restaurant sector…

…in other news…

Given what’s going on at the moment, I thought it would be good to bring your attention to a positive story in Two local teens grocery shopped for their grandparents. Soon it became a national volunteer effort (The Washington Post, Teddy Amenabar https://tinyurl.com/y7xtt9sq). What a fantastic initiative!

1. In RETAIL NEWS, we look at the current challenges facing US retailing while in the UK Primark opens, Ted Baker has a shake-up, Monsoon gives an ultimatum and car dealers face the future
2. In NEWS ON “WINNERS” AND LOSERS, we take a closer look at six businesses that are thriving and one that isn’t
3. In INDIVIDUAL COMPANY NEWS, insurers are in the dock, Facebook faces revolt and Huawei might suffer from a UK U-turn
4. AND FINALLY, I bring you some kitchen hacks…

So US retail faces challenges and UK retail starts to emerge from hibernation…

Protests derail comeback plans for restaurants and retailers (Wall Street Journal, Heather Haddon and Jaewon Kang) follows on from what I was saying yesterday about US retailers suffering fallout from the George Floyd protests as Macy’s delayed store openings, Apple boarded some of its stores back up and outlets of Kroger, Popeyes Louisiana Kitchen and Burger King cut their hours. Starbucks and McDonald’s are having/planning to have discussions with employees about how they feel about George Floyd’s death and how they can be more inclusive. Talk is cheap – action is what is needed here. * SO WHAT? * It’s bad enough for the big chains desperate to ease themselves back into some kind of activity, but you’ve got to feel for those smaller businesses who, through no fault of their own, have suffered firstly with the coronavirus shutdown – and now looting/fire as tensions flare. Bigger issues at are clearly at stake here, but tell that to someone who’s seen their business literally go up in flames (or employees thereof who see the end of their jobs as a result). The public needs to be heard, but is Trump and corporate America actually going to listen? Whatever Trump’s achievements have been seen to be thus far in his presidency, I think that what he does between now and election day will be absolutely crucial to his re-election chances. There will be no hiding.

Putting that aside for a moment, Shoppers can expect big clearance sales this summer (Wall Street Journal, Aisha Al-Muslim) shows that retailers who have piles of product that they have been unable to shift because of lockdown are going to be trying their hardest to sell it to consumers. Surviving retailers and those who have gone bankrupt are going to be competing for consumer spend side-by-side and it is likely that the real bargains to be had will be in-store rather than online as they try to clear inventory ahead of the autumn season. Bigger discounts may be needed to tempt shoppers to part with their cash as many are feeling the pinch and things are likely to get even tighter as business failures and subsequent clearance sales increase. Mind you, US online grocery shopping jumps as chains rush to add capacity (Financial Times, Dave Lee) shows that online grocery sales shot up by more than 25% over the last month with an average of $90 per order, citing a Brick Meets Click/Mercatus survey. Interestingly, customer satisfaction with online groceries has fallen since the crisis began with fewer than half of the respondents saying that they would be “extremely” or “very” likely to use the same service again in the next 30 days. * SO WHAT? * It’s

certainly going to be a buyers’ market as far as apparel is concerned. Those who decide to brave the shops and cope with social distancing – and who have cash to spare – could bag some serious bargains. As far as online grocery shopping is concerned, I’m sure that stores offering this capability will keep some of their online customers but they will have to think hard about whether they want to invest in their own infrastructure or outsource delivery – both of which will put pressure on their margins.

Meanwhile, back in the UK, Primark plans to reopen all 153 stores in England on 15 June (The Guardian, Jasper Jolly and Sarah Butler) shows that the offline-only retailer will be opening its stores imminently – something it badly needs to do considering that it reckons it loses £650m in sales for every month its stores are closed. All the usual distancing protocols will be in place and if its experience in the European stores that it has already reopened is anything to go by Primark will be welcoming back customers in their (socially-distanced) droves.

Elsewhere, Founder’s stake falls as Ted Baker raises emergency £95m (The Times, Simon Duke) highlights Ted Baker’s £95m emergency fundraising to bolster its finances and now Toscafund has replaced controversial founder Ray Kelvin as the biggest shareholder. The former stock market favourite has lost 95% of its value in the last two years as its credibility has been dented by Kelvin’s alleged “forced hugging” of staff and the unveiling of a massive accounting hole at the end of last year by the new CFO (who is now CEO). It’ll be interesting to see if Toscafund can bring anything to the party.

Monsoon gives landlords stark ultimatum over rent (Daily Telegraph, Laura Onita) shows further evidence of a retailer that is looking over the brink as Monsoon Accessorize has just told landlords that they have a week to come up with rent waivers or it will shut down outlets. At the moment, it is trying to decide which shops it could keep open, if any. 3,500 jobs could be in the balance if the business goes belly-up…

Car dealers reopen but many feat it will be a long road back (Daily Telegraph, Alan Tovey) highlights the reopening of car dealerships yesterday – generally by appointment-only – although it is not yet clear whether consumers will be willing to spend money on big ticket items.

It is clearly very early days regarding who will win or lose on the high street. However, I think it is going to be a buyers’ market for quite some time as retailers vie for consumer wallet in order to survive. Those fortunate enough to have money to spare will be able to get a LOT of bang for their buck.

We take a quick look at some businesses who are benefiting from the outbreak and one losing out…

Six businesses finding an upside in the coronavirus crisis (Financial Times) is an interesting article which highlights businesses that have thrived during the outbreak. MarketAxess, an electronic bond trading venue, now has more users than ever as traders and investors worked from home (its shares have risen by 60% since March lows and it’s now worth $17.3bn!); Discord, an app which allows text, voice and video, has emerged as a popular home-schooling aid in France, Spain and Germany; Japan’s Nissin Foods benefited from ramping up production of noodles before the panic started and people started hoarding; London-based FRP Advisory, the restructuring specialist, has also seen a big uptick in business from businesses desperate to seek out options to avoid collapse; Berlin-based Delivery Hero has seen its share price shoot up by 60% since the

middle of March as food deliveries have picked up and Italy’s Lavazza saw sales rising as people stocked up. B2B wasn’t great, but increased home consumption has helped to mitigate the effects. * SO WHAT? * It’s good to see that some businesses are thriving through this crisis but the key for them will be how to benefit longer-term.

Following on from what I was saying the other day about static caravan makers, Parkdean ‘may run out of cash within weeks’ (Daily Telegraph, Oliver Gill) shows that the UK’s biggest holiday park operator could run out of cash unless the lockdown is lifted. On the one side, Parkdean Resorts has customers demanding refunds for cancelled holidays but on the other it needs people coming in when they hope to open on July 6th in order to keep going. * SO WHAT? * In theory, places like this could benefit from mass-“staycations”. I would have thought it would be much easier to social distance in these places than at hotels and although activities would be more limited compared to normal, I think that people who have been couped up for months will be desperate to see anything other than their very familiar four walls! The key for Parkdean, though, will be the timing. The sooner they can open their doors, the more likely it will be that they can survive.

Insurance companies face a big test, Facebook faces mutiny and Huawei could suffer from a UK 5G U-turn…

Hiscox, RSA and Zurich involved in coronavirus insurance test case (Financial Times, Matthew Vincent) heralds a potentially key development as the Financial Conduct Authority is going to the High Court in order to find out whether wording in business interruption insurance policies is enough to protect them against having to pay out to disgruntled policy owners. * SO WHAT? * With a momentum of anger and frustration building up among businesses who thought they were covered, the FCA took the unprecedented step of launching a test case itself in order to speed up proceedings. A ruling is expected by July. The ramifications of this could be huge.

Zuckerberg hit by staff revolt over Trump posts (The Times, Tom Knowles) shows that some Facebook staff are criticising their leader for turning a blind eye to inflammatory comments made by President Trump, using free speech and accountability as an excuse for leaving them up. This stands in direct contrast to Twitter which slapped his tweet with a warning label. * SO WHAT? * I don’t think that this in itself is going to have a lasting effect on Facebook. The hissy-fit that ensued after Twitter put

fact-check labels on two of Trump’s tweets last week – which resulted in him signing an executive order to review federal advertising sounds and monitor social media companies for bias – sounds worse than it actually is. In reality, an executive order can’t change federal law so there should be zero impact on revenues for any of the social media platforms. However, if social media platforms ARE put under more scrutiny, Facebook may have to monitor content much more closely than it is doing now. At the moment, Twitter employs about 30 employees per million users whereas Facebook employs about 15. This would mean that Facebook would have to employ more people to review content, which would squeeze its operating margins.

Hanging up on Huawei may return PM to US’s good books (Daily Telegraph, Hannah Boland) heralds a potentially key development for Huawei as it is starting to look like Boris Johnson could do a U-turn on Huawei and push it out of developing its 5G network, getting back into Trump’s “good books” in the process (Trump’s team went on a world tour last year telling everyone what a security risk Huawei was and they they should be completely frozen out of 5G!). Ministers are currently looking at putting taxpayer cash towards an international scheme to standardise 5G network equipment. This could make it easier for rival suppliers to enter the market and compete with Huawei. The drama continues…

…in other news…

Following on from yesterday’s “life hacks”, I thought you might like 12 Smart and Simple Kitchen Hacks (mental_floss, Erin McCarthy https://tinyurl.com/ycuk8r7o). There are a couple of quite surprising ones in there…

1. In MACRO, MARKETS & CONSUMER NEWS, Sunak talks about another stimulus package, Chinese companies may leave US markets for London and we look at the state of mind of consumers
2. In RETAIL/HIGH STREET/MAIN STREET NEWS, Pret wants lower rents, restaurants look shaky, Aldo collapses and US shops suffer yet again – this time from the riots
3. In INDIVIDUAL COMPANY NEWS, Plexiglass becomes the hot commodity, we look at the latest in meat/non-meat burgers and see that gaming continues to benefit from lockdown
4. AND FINALLY, I bring you two life hacks…

So Sunak talks stimulus, Chinese companies may list on the LSE and we look into the minds of consumers…

Rishi Sunak set for July stimulus package to stave off recession (Financial Times, Jim Pickard) shows that ministers are making plans to unveil an economic stimulus package in July in order to take the sting out of what is expected to be one of the – if not the – biggest recessions ever. He is expected to put money into training schemes and infrastructure projects and tech. Economists are all predicting all sorts of deficits etc. but, let’s face it, they haven’t got a clue – you may as well use a dart board 😂. The picture will only become clearer as we advance through.

In markets, Chinese firms poised to lose US listing (The Times, James Dean) shows a new bill, called the Holding Foreign Companies Accountable Act – and which cleared the Senate and House of Representatives on May 20th – is highly likely to result in a mass exodus of potentially 200 Chinese companies from the New York Stock Exchange and the NASDAQ. The combined value is around $1.4tn and includes the likes of Alibaba and JD.com. Basically, the new regulations will tighten accounting disclosures and impose much more onerous oversight of target companies. The new law will also affect French and Belgian companies to the extent that lawyers at K&L Gates, an American firm, believe it could be “a game changer” for the London Stock Exchange. * SO WHAT? * This was all sparked off by the accounting scandal at Chinese firm Luckin Coffee, which used dodgy figures in its accounting. The New York-listed Chinese coffee chain has lost 96% of its value since January as a result and complaints of lax oversight of Chinese companies have been growing. London is hungry for work turned down by New York (The Times, James Dean) shows that London and Hong Kong exchanges are likely to want to bend the rules in order to attract lucrative Chinese business – just as the American exchanges did in the aftermath of the financial crisis and it seems that, in recent weeks, as the China-US tensions have increased, Beijing has approved London secondary listings of at least two companies. The legislation is not a done deal yet, but it is widely expected that Trump will want to wave this through as part of his current crackdown on anything to do with China.

Given current circumstances, it’s always a good idea to get a handle on the mood of the consumer to give us a steer

on current and future developments. UK’s richest 20% reduce spending by £23bn during lockdown (The Guardian, Phillip Inman) cites research from the New Policy Institute which shows that 20% of the UK’s most doshed-up will have reduced their spending by about £23bn by the middle of June whereas the bottom 20% will have reduced their spending by £3.5bn. Dan Corry, co-author of the report and chief exec of the New Philanthropy Capital thinktank (sounds a bit w@nky, doesn’t it 😂) points out that the amount richer people have saved equates to 4.5% of GDP and 48% of what the government receives in an entire quarter from all basic, higher and additional rate income tax payers combined! Separately, Household confidence is stabilising at low level (The Times, Gurpreet Narwan) cites a different survey by YouGov and the Centre for Economics and Business Research which shows that households are getting slightly more confident about their finances now that lockdown is slowly lifting – although overall sentiment is still negative. Economists generally think that weak demand will continue and current social distancing measures will make a return to “business-as-normal” much more difficult. Genius 😜. They will no doubt go on to tell us that bears do, in fact, sh!t in the woods.

UK banks warn 40%-50% of ‘bounce back’ borrowers will default (Financial Times, Stephen Morris, George Parker and Daniel Thomas) shows that UK banks are getting twitchy about businesses who took out “bounce back” loans. Three senior bankers think that 40-50% of recipients of the Bounce Back Loan Scheme (BBLS), which loans out up to £50,000 for up to six years, will default on their debt. Although the government backs the scheme, meaning that banks won’t have credit risk, they are not keen on dragging thousands of small businesses through the courts as they are the ones who will have to pursue delinquent borrowers. * SO WHAT? * I would imagine that the bankers are painting as pessimistic a picture as they can to put pressure on the government. The Office for Budget Responsibility believes that only 10% of Covid-19 support loans will go bad – so maybe the truth will be somewhere in between. But as I keep saying, no-one really knows.

BTW, I just re-read this section and you may think I am anti-economist! Actually, I’m not – it’s just that their job is tricky enough under “normal” circumstances but it’s nigh on impossible right now where there are so many moving parts. Still, it’s their job to come up with best guesses and they do what they can with the data available. All I’m saying is that they change their minds and estimates all the time so you shouldn’t take what they say as Gospel. Especially when we’re still in the teeth of a pandemic on an unprecedented scale!

Pret targets rent, restaurants look vulnerable, Aldo collapses and US shops get another kick in the teeth…

Pret plans rent talks with landlords (The Times, Dominic Walsh) shows that the sandwich shop chain Pret a Manger has hired consultants Alvarez & Marsal and CWM to help reduce its rent bill in order to eek out what cash they do have for as long as possible. The chain has continued to operate 100 shops for takeaway and delivery and another 200 are due to open today. Unfortunately, sales are 20% of pre-lockdown levels at best and they Pret is worried that working from home will live on after this coronavirus dies down which would adversely affect their sales longer-term. * SO WHAT? * Pret, like other retailers, is asking landlords whether they can move towards a system of turnover-based rents that will take into account business levels rather than charging a flat rate blindly. On the flipside, Landlords obviously like the certainty of a (high) flat rate because it helps them plan. Surely some kind of compromise will have to be reached in order to stop retailers going down the plughole.

Insolvency to be on menu for many restaurants (Daily Telegraph, Hannah Boland) talks about the potential for a massive wave of restaurants to go bust later on this year as Covid-19-related costs just keep rising. The casual

dining sector had already been in trouble before the virus hit but when you factor in social distancing measures and many customers feeling the financial pinch, the outlook doesn’t look great. It is likely that restaurants will have to cut branches, menus and staff in order to survive. * SO WHAT? * Although I think that people would really be up for going out more and spending in restaurants etc. because they just want to enjoy themselves after enforced imprisonment it remains to be seen whether they will splash out that much if their household finances have been dented. I think that the future of the leisure industry as a whole will be largely dependent on the easing of social distancing measures as I don’t believe that the current ones are sustainable.

Shoe chain Aldo collapses amid retail woe (Daily Telegraph, Laura Onita) highlights yet another retailer in trouble on the UK high street (btw, for shoe fans, apparently you can still buy shoes and accessories on its UK website) but Businesses and restaurants hit in protests, adding to coronavirus damage (Wall Street Journal, Sarah Nassauer and Heather Haddon) shows that some businesses, who were just starting to come to terms with the coronavirus, have been dealt a severe blow with riots and looting in the wake of the George Floyd outcry. Target, Walmart and Nike – as well as many much smaller operators – have had to close their doors or are recovering from the looting that took place in the aftermath of the protests. Adidas has closed all of its US stores and Amazon has altered delivery routes to protect employees. Tough times indeed.

Plexiglass demand shoots up, we see some interesting burger developments and gaming continues to thrive…

Rather unsurprisingly, Plexiglass is the new hot commodity as businesses try to reopen (Wall Street Journal, Sharon Terlep and Austen Hufford) highlights the popularity of plexiglass sheeting as offices, schools and the high street prepare to open their doors by installing dividers. Waiting times for plexiglass sheeting are now stretching from weeks into months as demand has just shot up. * SO WHAT? * This is just a complete nightmare for all concerned as businesses are desperate to get going, but in order to do so they have to adhere to strict social distancing guidelines which cost them time and money to implement. If they can’t get hold of the right stuff now they will be in a terrible state and won’t be able to get ANY of the reduced business that will be around as lockdown eases.

Elsewhere, Meat plants reopen, but burgers stay pricey (Wall Street Journal, Jacob Bunge and Jaewon Kang) shows that although American meatpacking plants are starting to reopen meat production itself is much lower than normal. If you couple this with restaurants reopening as lockdown restrictions lift, supply will continue to be tight. Retail beef prices were up by 21.7%, pork by 17.7% and chicken by 10.5% year-on-year for the week ended May 23rd. On the meatless side of things, Nestlé’s burgers are

Sensational and Awesome, but not Incredible (Financial Times, Emiko Terazono) highlights a victory for Impossible Foods’ over Nestlé as the latter is now not allowed to describe its meatless products as “Incredible”. It has four weeks to remove its products from retail shelves or face €25,000 per day in fines. The fight is intensifying as higher meat prices and relative meat scarcity is resulting in a massive demand spike for the meat alternatives that the likes of Impossible Foods, Beyond Meat, Moving Mountains, Meatless Farm and This provide.

Then in Games industry booms amid lockdown (The Times, Simon Duke) we just get further confirmation that the games industry is really benefiting from lockdown. Smaller developers such as Frontier Developments (Elite Dangerous, Jurassic World Evolution) and Team17 (Worms) have seen their share prices spike by over 50% since the start of the year and the bigger players such as Nintendo and Activision Blizzard have also seen an uptick. The key question is, will this demand continue when lockdown lifts? I, for one, think it will continue for a while yet as people continue to be more cautious about going out than they were before. * SO WHAT? * It seems to me that the console makers have benefited from lockdown because hardware and software sales for ageing consoles tend to tail off in the run-up to newer models being introduced. However, they have got an unexpected boost during lockdown and I suspect that a renewed interest in gaming will not only spark future software sales – it will inspire more hardware sales when we eventually see the new consoles from Microsoft and Sony.

…in other news…

As you know, Watson’s Daily is all about improving your life. Today, I thought I’d leave you with two important life hacks as we head into the summer: Mum’s hack keeps wasps away from your drink in the summer – and it’s free (The Mirror, Luke Matthews https://tinyurl.com/yabhvur2) – simple, yet effective – and Domino’s shares trick to reheat pizza in the microwave without it going soggy (The Mirror, Luke Matthews https://tinyurl.com/yadou4d2). That one’s for those of you out there who are fans of food deliveries!

1. In MACRO NEWS, we look at the latest reactions to the China/HK thing, hurdles to the EU bailout package and the coronavirus latest in France, Spain and the UK
2. In TECH NEWS, Big Tech gets bigger but Trump is about to clip its wings
3. In RETAIL/HIGH STREET-RELATED NEWS, Amazon converts part-time jobs, Boohoo flips the Dark Destroyer the bird, Monsoon is in deep trouble and Cineworld calms nerves
4. In INDIVIDUAL COMPANY NEWS, Nissan choses the UK and EasyJet gets the axe out
5. AND FINALLY, I bring you one family’s lockdown…

So we get the latest on the China/Hong Kong situation, the obstacles for the EU bailout package and a coronavirus update from France, Spain and the UK…

In the midst of all the uproar being caused by China imposing a National Security Law on Hong Kong, UK opens door to citizenship for 300,000 HK residents (Financial Times, Laura Hughes) highlights the UK’s pledge to extend visa rights for British National (Overseas) passport holders and speed up the path to citizenship in response to China’s recent action. About 315,000 Hong Kong residents born before the 1997 UK handover hold BNO passports which have previously given them only a limited amount of extra rights and although they have now been extended, Raab has stopped short of granting them automatic British citizenship. The US, UK, Australia and Canada released a joint statement yesterday condemning China’s move but, on the ground, Businesses swallow ‘bitter medicine’ of Hong Kong security law (Financial Times, Don Weinland, James Kynge and Nicolle Liu) shows that businesses generally seem to want to fall in line in order to avoid further protests and bring calm back. Many companies just want to bring an end to the turbulence of last year when the protests reached fever pitch and others are reconsidering their presence in the territory. Will they all go over to Singapore, I wonder?

Meanwhile, EU recovery fund faces prodigious hurdles to reach consensus (Financial Times, Sam Fleming, Jim Brunsden and Michael Peel) shows that the EU’s proposed coronavirus bailout bill is going to have to get through a tricky few weeks in order to get approval from all its

member states. Potential sticking points include the size of the recovery fund itself, how it’ll be divvied up, what the split of grants and loans will be, what strings will be attached and how the EU is ultimately going to pay it all back. This is going to get difficult – especially with the “frugal four” (Austria, Denmark, the Netherlands and Sweden) being reluctant as things stand currently.

Meanwhile, France further eases coronavirus lockdown (Financial Times, Victor Mallet) highlights the easing of travel restrictions within the country and the reopening next week of schools, cafés and restaurants although French jobless numbers surge as Europe limps out of lockdown (Financial Times, Martin Arnold and Valentina Romei) shows that the number of French unemployed in April hit a record 23%. The path out of the pandemic won’t be a smooth ride for anyone.

Elsewhere, Spain to push through minimum income guarantee to fight poverty (Financial Times, Daniel Dombey and Martin Sandbu) looks at another way of getting money to the people as the Spanish government is set to use emergency powers today to force through a minimum income guarantee that will help the poorest 2.3m in society as soon as next month. This guarantee will top up incomes to a guaranteed level of €461-1,015, depending on individual households, versus the current €310 per month.

Back in the UK, PM Eases lockdown for friends and family (The Times, Steven Swinford) highlights further lockdown easing as now friends and family will be able to meet outdoors in groups of six from Monday – but they must maintain social distancing. I bet that garden centres and grocery stores are going to see a massive uplift in sales of BBQs, BBQ food and garden furniture over the next few days as a result!

Big Tech gets bigger but Trump is about to give it a slap…

In Big Tech goes on pandemic M&A spree despite political backlash (Financial Times, Miles Kruppa and James Fontanella-Khan) we see that big tech companies are snapping up deals at their fastest pace since 2015 – Alphabet, Amazon, Apple, Facebook and Microsoft have already announced 19 deals so far according to data from Refinitiv. This is different to what happened in the 2001 recession and 2008 financial crisis because tech companies now have so much more cash (public filings say they have a combined $560bn in cash and marketable securities), plus they have come out of this current crisis smelling of roses. A combination of cash-rich tech giants and cash-hungry start-ups has resulted in an M&A frenzy in certain areas. * SO WHAT? * I think that this feeding frenzy is likely to continue as Big Tech’s coffers continue to swell and more businesses that previously wouldn’t consider selling may well start showing up on their radar as targets. The problem is that it just means that the barriers to entry are going to be ridiculously high and the big players will just get harder to beat.

Having said that, Trump signs executive order targeting social media (Wall Street Journal, John D.McKinnon and Rebecca Ballhaus) shows that the US president signed an executive order yesterday to limit the legal protection currently enjoyed by social media and other platforms. The effect will be that it will make it easier for federal regulators to hold the likes of Twitter and Facebook liable if they are judged to be unfairly curbing users’ speech. This came just days after Twitter put a fact-checking sticker on Trump’s Tweet regarding voter fraud. * SO WHAT? * It sounds to me like the nutters and conspiracy theorists of the world will be cheering this order. It is likely that this will be challenged in court, with Big Tech arguing that the government is going too far and that it is violating First Amendment protections. Mark Zuckerberg has been taking a hands-off approach so far, saying in a CNBC interview yesterday that “I don’t think Facebook or internet platforms in general should be arbiters of truth” but I suspect that Trump will want to keep the pressure on as we lead into the final straight of the presidential election later this year. He is clearly keen to control the narrative…

Amazon does the decent thing, Boohoo kicks criticism into touch, Monsoon looks troubled and Cineworld gives investors cause for relief…

You will be aware that some retailers have been employing people at a vastly accelerated rate during the coronavirus pandemic, but Amazon gives full-time jobs to part-time workers (The Times, James Dean) shows that 125,000 of the 175,000 part-time employees it took on in America over this period will be offered full-time jobs, according to an announcement made yesterday. The rest of them will stay on seasonal contracts. * SO WHAT? * This move suggests that the e-tailing giant believes it can maintain the market share it has won over the period.

Boohoo sitting pretty after £330m deal for rest of fashion site (The Times, Ashley Armstrong) shows that Boohoo bought the stake in Pretty Little Thing that it didn’t already own for almost £338m. Shares in the online retailer shot up by 15% on the news as the PLT issue had been a cause of concern among investors for a while. The brand accounted for 54% of Boohoo’s profit last year and the company said that talks to make this move had been in the offing for a while but got more serious due to the coronavirus outbreak. It added that it had nothing to do with the disparaging note published a few days ago by short-seller Shadow Fall.

Staying with retailers, Monsoon close to collapsing (Daily Telegraph, Laura Onita) shows that 3,500 jobs hang in the balance as Monsoon Accessorize is about to appoint administrators in the next few days as the pandemic proved to be the final straw for an already-troubled high street retailer. They are not alone in their troubles as Debenhams is about to cut hundreds of head office jobs and Virgin Media will disappear from the high street as it has decided not to reopen its chain of 53 shops after the lockdown ends.

Then there’s some good news for cinema-goers in Cineworld intends to open cinemas worldwide in July (Financial Times, Simon Foy) as the company said it would open all of its cinemas in July. It has also secured $110m in extra cash from its lenders and gave investors cause for relief when it said that it now has enough cash to survive to the end of the year even if cinemas stay shut for the remainder of the year. The share price shot up by 21% on the news – but this is from a low base as the price has absolutely cratered since lockdown. It will bring in social distancing measures, an updated booking system that will allow family groups to sit together and staggered film times to reduce the number of people hanging around in lobbies. * SO WHAT? * So far so great, but the elephant in the room is Cineworld’s planned acquisition of Canada’s Cineplex for $2.1bn. Although consolidation and costs savings will be very welcome now, the price of the original deal may be too great for Cineworld given the increased likelihood of a poor outlook.

Nissan Sunderland breathes a sigh of relief and EasyJet threatens deep cuts…

Nissan’s Sunderland factory safe but plant in Barcelona will close (The Guardian, Jasper Jolly) shows that the Sunderland factory is going to continue while Barcelona’s won’t as part of a massive company-wide cost cutting effort. It did add, however, that it wanted to “improve efficiency” in its Sunderland facility. * SO WHAT? * This latest move means that Nissan will now have no car factories in the EU! Still, it sounds to me like Nissan will be cutting some jobs in Sunderland – although this is purely speculation on my part.

EasyJet to cull 4,500 staff as golden age of air travel ends (Daily Telegraph, Oliver Gill and Simon Foy) shows that EasyJet will be following other airlines in making deep cuts to staff numbers. Chief exec Johan Lundgren said that he believes that demand for air travel will not recover until 2023, which stands in contrast to rivals Ryanair and Wizz Air who believe that the recovery will be in 2021. EasyJet will also cut its fleet. * SO WHAT? * This is just the latest airline to hit massive turbulence. IMO, any return to normality will depend on a vaccine/cure and the reduction of social distancing measures. These are the main things that will boost confidence (and financial position) of potential passengers.

…in other news…

We’re all doing things in lockdown to chase away the boredom/increase the fun factor – and this family is no different: A dad turned his entire house into a giant ball pit for his kids who haven’t been able to visit their favorite playground (Insider, Samantha Grindell https://tinyurl.com/y8lt2h7c). Looks like fun!

1. In MACRO NEWS, the EU puts forward a coronavirus response package and things get more tense in/for Hong Kong
2. In CORONAVIRUS “WINNERS” AND LOSERS, we take a look at how airlines, retail-related companies and other industries are coping
3. In INDIVIDUAL COMPANY NEWS, Ghosn’s masterplan continues to unravel and Boohoo rejects criticism
4. AND FINALLY, I bring you what must be the world’s coolest McDonald’s…

So the EU comes out with a plan and the US reacts further to the HK/China tensions..

European Union plans $2trillion coronavirus response effort (Wall Street Journal, Laurence Noonan) highlights the European Union’s response plan which comprises of a €750bn recovery plan and €1.1tn budget over the next seven years. The idea is to give a massive financial boost to some of the bloc’s most affected countries without adding to their already heavy debt burdens. This would give room for the governments in Italy, Spain and Greece (and others) to spend more now in order to recover more quickly. * SO WHAT? * Sounds great in theory, but for this to go through, the plan HAS to be approved by ALL 27 member states and already the ‘zone’s “frugal four” – the Netherlands, Denmark, Austria and Sweden – have called it into question. IMO this could be make or break for the Eurozone – and it sounds like it has its work cut out in convincing everyone to quite literally buy in to this.

US says Hong Kong is no longer autonomous from China (Financial Times, Katrina Manson and Demetri Sevastopulo) heralds the latest development in the China vs Hong Kong vs The Rest of the World debate as Washington says that China’s latest moves to impose a national security law on Hong Kong means it has effectively lost its autonomy. * SO WHAT? * The US has previously classified Hong Kong as being independent enough from China to receive special treatment but that has now been revoked. Subsequent moves have yet to be made but things could get pretty serious from here depending on what the Americans decide to do. If you want to find out more detail about what this is all about, What is China’s proposed national security law for Hong Kong (Financial Times, Sue-Lin Wong and Nicolle Liu) does a really good job. Basically, though, China’s new law will just take precedence over Hong Kong’s existing laws and legal system and will prohibit “splittism, subversion, terrorism, any behaviour that gravely threatens national security and foreign interference”. It could basically give Beijing licence to do whatever it wants. Some of the more controversial consequences of an implementation include making it a criminal offence to insult the Chinese national anthem and officially endorsing the presence of Chinese secret police.

There are winners, but on the other hand job cuts rack up in the airline industry, retail woes continue to cause fallout and other industries see suffering ahead…

In the “winners” corner today, we have The US publishers hiring staff despite news media storm (Financial Times, Anna Nicolaou and Alex Barker) which shows that the New York Times Company and Dow Jones (which owns the Wall Street Journal) are seeing a major uplift in subscribers – very useful given that many newspapers are suffering a severe drop-off in ad sales. Web grocery sales double in ‘permanent’ shift online (The Times, Ashley Armstrong) highlights a doubling of the online grocery market, according to the latest statistics from Nielsen. Retail bosses expect the consumer shift to online to continue after the lockdown as people trend back to big weekly shops and older people get used to shopping over the internet. This probably explains Tesco and Sainsbury’s sales outpace Aldi for first time in a decade (Financial Times, Jonathan Eley). Interestingly, sales growth at the biggest supermarkets was still bettered by Lidl. Maybe Lidl’s bakery is the difference?!?

I must say that it feels to me like I am constantly bringing you bad news about anything to do with aeroplanes and any related industry. Unfortunately, today isn’t going to be any different as Boeing to axe 12,000 US workers even as Max assembly resumes (Financial Times, Claire Bushey) signals job losses both domestically and internationally as part of the company’s plan, announced last month, to cut 10% of its workforce. American Airlines to cut 30% of management and administrative staff (Wall Street Journal, Alison Sider) shows that although there are early signs that things are picking up, they are not picking up enough to save jobs and Job cuts ready for takeoff at Ryanair (The Times, Robert Lea) highlights up to 3,000 potential redundancies – a sixth of its workforce – in the airline’s bid to stay alive. Given that air travellers are likely to be far fewer in number in the coming months at least, none of this is particularly surprising.

Misery in retailing continues to have knock-on effects as Shopping centre owner British Land slashes value of retail portfolio (The Guardian, Mark Sweney) shows that the retail landlord has written down the value of its property portfolio by over 25% following the impact of the coronavirus on its retail tenants. This follows not long after rival Landsec went through the same exercise (although its

valuation didn’t take quite such a drubbing). Hammerson boss quits as his retail strategy unravels (The Times, Louisa Clarence-Smith) shows another casualty of retail doom as the the chief exec of one of the country’s biggest shopping centre owners, David Atkins, has decided to step down although he will stay in place until next spring by which time they should have found a successor. What a job that is going to be!

Other industries face an uncertain future. Brokers could pay the price if insurers dodge Covid bullet (Daily Telegraph, Michael O’Dwyer) highlights potential problems for insurance brokers if insurance companies manage to swerve paying out on business interruption policies. Companies like Hiscox and Aviva are the target of a test case being brought against insurers by the Financial Conduct Authority (FCA) at the moment, but if they are not found liable, hotels, pubs, dentists and others will probably focus their attention on insurance brokers who they will say gave them duff advice. Nasty.

I’ve mentioned this before but The £75bn car finance sector has finally met its match – coronavirus (Daily Telegraph, Tim Kiek) says that the car finance sector might be teetering over a precipice as its business, which has been powered by super low interest rates for a number of years now, could be highly vulnerable as consumers have been getting hooked on PCP (Personal Contract Purchase, not the recreational drug “angel dust” 😂) and the warm feeling of “owning” a new car on a relatively regular basis. At the moment, the industry has won a stay of execution as the FCA instituted a three-month payment holiday on finance deals but this isn’t going to last forever and the danger is that consumers forego buying a new car due to cashflow issues.

Another potential loser of the current situation is identified in UK holiday home manufacturers warn of risk of collapse (Financial Times, Alice Hancock) as the UK’s £9bn static caravan market is looking decidedly shaky due to their clients, holiday parks, being shut down over the lockdown and look vulnerable to collapse. Three manufacturers have 75% of the market share in this sector – including Willerby and ABI – with small operators making up the rest and because holiday parks have been closed, orders for new homes have evaporated. * SO WHAT? * I think that survival will depend greatly on how soon holiday parks are allowed to open. I would have thought that many of them are actually OK in terms of social distancing and would actually provide attractive options for those emerging from lockdown to escape to. Still, their futures are hanging in the balance in the meantime…

Nissan backpedals on Ghosn’s ambition and Boohoo rejects criticism…

Renault and Nissan scrap Ghosn strategy in move to slash costs (Financial Times, Peter Campbell, David Keohane and Kana Inagaki) shows that former chief Carlos Ghosn’s strategy of bringing Renault, Nissan and Mitsubishi closer together is being thrown in the bin as the three makers are to divide responsibilities across the partnership and not go ahead with a full merger. They believe that divvying up responsibilities will save billions in costs – more detail of which is to be announced tomorrow. Interestingly, they have split things up as follows: Renault will be lead in

Europe and Russia and focus on smaller cars and diesels, Nissan will concentrate on the US and Japan focusing on larger vehicles and Mitsubishi will lead in south-east Asia on hybrid development for SUVs. Hmmm. What could possibly go wrong…

I mentioned doubt being poured on Boohoo’s figures yesterday, so Boohoo pooh-poohs attack by hedge fund (The Times, Ashley Armstrong) appears to be the online apparel retailer’s response saying that it “strongly refutes the allegations made in the research note” published by Shadow Fall. The report claims that sub-brand Pretty Little Thing was boosting its profits by underpaying for things like office space but the company disputes this. * SO WHAT? * I suspect this will run – and could become a real thorn in Boohoo’s side. We’ll just have to see how this develops, but it’s not great timing for Boohoo as it attempts to pull away from the coronavirus outbreak intact…

…in other news…

It may surprise you to know that I am not a massive fan of McDonald’s – but I would definitely go to this one if I could: A McDonald’s in New Zealand lets diners eat inside a decommissioned airplane (Insider, Sophie-Claire Hoeller https://tinyurl.com/y8n4fxgu). How brilliant is this??

1. In RETAIL NEWS, Amazon is in talks to buy Zoox, Macy’s puts up properties for collateral, Boohoo gets a thorn in its side and we see mixed views on what’ll happen once UK shops reopen
2. In CAR NEWS, President Macron boosts the French car industry, UK drivers save money but McLaren cuts staff and Aston Martin ditches its chief
3. In AIRLINE NEWS, Lufthansa’s bailout is likely to come with strings, Latam Airways files for bankruptcy and Ryanair plots a return
4. In INDIVIDUAL COMPANY NEWS, we look at some pharma developments, Stripe’s expansion, Quibi’s ad renegotiations and Warner Music’s flotation
5. AND FINALLY, I show you how to fix stuff…

So Amazon goes shopping, Macy’s puts up collateral, Boohoo has a naysayer and UK shop reopenings divide opinion…

Amazon in talks to buy driverless car start-up Zoox (Financial Times, Patrick McGee) highlights an interesting direction for Amazon as it is in advanced talks to buy self-driving start-up Zoox. Zoox is unusual in the space in that, since it was founded in 2014, it has tried to create a driverless system, a network and an autonomous vehicle at scale, all at the same time! Given that it doesn’t have a major auto manufacturer backer – and that the coronavirus has dented its prospects – it is perhaps unsurprising that it is considering a sale to keep the money flowing. Amazon was also a lead investor in a $530m funding round for rival Aurora, but what might be piquing Amazon’s interest here is the potential for it to slot into its logistics offering. Neither party commented on the story – but it is interesting! Zoox was last valued at $3.2bn two years ago, but you would have thought that any negotiations going on now would be for a significant discount.

Macy’s pledges stores as collateral in $1.1bn bond deal (Financial Times, Alistair Gray) shows how the US department stores chain is putting up some of its properties as collateral in order to get better terms on a bond offering to raise money. It estimates its property portfolio to be worth $2.2bn, which is more than its market capitalisation. * SO WHAT? * Many retailers have suffered hammer blows from the coronavirus outbreak – Neiman Marcus and J.Crew will readily attest to that as they both

recently file for bankruptcy – but Macy’s is in a better position balance sheet-wise. Its chief exec, Jeff Gennette, thinks that any recovery is likely to be gradual.

In the UK, ‘Dark Destroyer’ leaves Boohoo investors with reasons to be tearful (The Times, Miles Costello) shows that there’s danger lurking for Boohoo as a short-seller, dubbed the “Dark Destroyer” on account of the effect he can have on companies, alleges that Boohoo overstated the profitability of Pretty Little Thing. Shadow Fall is the one doing the shorting on the back of research by Matthew Earl which says that the company has also been misrepresenting its free cashflow to investors for the last six years. This could turn out to be a nasty fly in the ointment if Boohoo is not careful…

Then there are different views on imminent UK shop openings in Reopening of shops will not end England’s woes (Financial Times, Jonathan Eley and Peter Campbell) which points out that the sector was already struggling before the coronavirus hit and that the retailers’ industry body, the British Retail Consortium (BRC), is continuing to call for more government help whereas Need for retail therapy ‘will boost footfall’ (Daily Telegraph, Hannah Uttley) cites findings from data company Springboard which showed that there was a rush to go the shops over the bank holiday weekend, which implies that when they actually return, the consumer will be there (albeit not all at the same time as they will be social distancing). * SO WHAT? * Although there may not be so many customers coming through the doors it will be interesting to see whether the ones that do go are more likely to buy things – and possibly more of them per shopper. After all, if you have to queue outside for a while before going in I would have thought that there is much more of a chance that you’d buy something, no?

President Macron tries to save the French car industry while in the UK, drivers save money on petrol, McLaren cuts staff and Aston Martin boots its chief…

In Macron’s €8bn incentive to push electric car sales (Daily Telegraph, LaToya Harding) we see that the French President has announced an €8bn bailout plan for the French car industry in return for PSA and Renault promising to focus on production in France. The plan includes things like grants of up to €7,000 to encourage people to buy electric vehicles and, from June 1st there will be an additional offer of €3,000 for converting from a petrol-fuelled car to a cleaner one and up to €5,000 to trade up to an electric vehicle. Around three quarters of the French population would be able to access these incentives. * SO WHAT? * This sounds like a great idea in theory, but the success will all be in the execution. It will no doubt be the sort of thing that other governments could consider as well in order to revive an ailing car industry.

Meanwhile, back home, Drivers save £4bn on petrol as cars gather dust (Daily Telegraph, Jonathan Jones) cites the latest figures from GoCompare – which show that drivers have saved a lot of money by driving much shorter

distances under lockdown. They have saved money on fuel by driving less and the fuel that they actually put in has become cheaper due to the weakened state of the oil price (Tesco, Asda and Morrisons are now charging under £1 per litre at their forecourts, for instance). In addition to this, insurance premiums have come down and some firms are offering refunds for customers whose cars have been idle in the lockdown.

Elsewhere, Formula One carmaker McLaren cuts 1,200 jobs amid Covid-19 crisis (The Guardian, Mark Sweney) highlights big job cuts being made in order to survive – this is significant given that it employs 4,000 workers. It blamed the cancellation of motorsport events (F1 accounts for 12% of the group’s revenues), the shutdown of manufacturing and car sales and a forthcoming Formula One cost restrictions from next season. Aston Martin shares jump as it presses eject button (The Times, Ben Martin) highlights the inevitable demise of Andy Palmer, the chief executive who is being replaced by Tobias Moers, an exec who ran the high performance division of Mercedes since 2013. Palmer did well to revive Aston’s fortunes initially, but someone had to take the fall for the disastrous share price performance of the company since its stock market flotation. * SO WHAT? * None of this is particularly surprising – it’s just more evidence that shows the hurt that is being experienced across the entire car industry at the moment.

Lufthansa’s bailout is likely to be conditional, Latam Airways files for bankruptcy and Ryanair makes plans for a return…

In a quick look at the latest developments in the airline industry, the state bailout of Lufthansa I talked about yesterday looks likely to come at a cost as per Lufthansa’s coveted airline slots under threat after bailout (Financial Times, Joe Miller, Javier Espinoza and Tanya Powley) which says that the airline may have to give up valuable slots at Frankfurt and Munich airports as EU officials are concerned that Germany’s bailout of the flag carrier could give it an unfair advantage over rivals.

Latam Airlines files for bankruptcy after ‘collapse’ in demand (Financial Times, Adam Samson and Michael Stott) shows another airline biting the dust as Latin

America’s biggest carrier filed for bankruptcy protection, following fellow regional player Avianca’s bankruptcy filing on May 10th.

On a positive note, Summer holidays ‘back on’ as Ryanair resumes flights (The Times, Graeme Paton) shows that Ryanair will be introducing a thousand flights per day from July 1st. This is despite recently announced restrictions that means incoming passengers will have to undergo a 14-day quarantine. It will focus on holiday destinations in Spain, Italy, Portugal, Greece and Cyprus. * SO WHAT? * This all sounds lovely, but I do worry that people will just be too nervous to go abroad on holidays because of the quarantine on the way back, the restrictions on what you might do when you get to the destination and the prospect of further coronavirus waves putting any future holiday in doubt. I really think that staycations are going to be the thing this year (if anything) and that Airbnb is well-placed to benefit from people wanting to escape lockdown without having all the hassle of going to a hotel.

We look at pharma developments, Stripe’s expansion plans, Quibi’s ad renegotiations and Warner Music’s flotation…

In other news today, Merck chief casts doubt on coronavirus vaccine timeframe (Financial Times, David Crow) highlights Merck chief exec Ken Frazier’s doubts over the 12-18month timeframe to develop an effective coronavirus vaccine just as the company announced it was buying Austrian biotech company Themis Bioscience that has itself been developing a coronavirus vaccine. Elsewhere, Remdesivir approved for limited use as Covid-19 drug in UK (Financial Times, Donato Paolo Mancini) shows that Gilead Sciences’ experimental coronavirus drug has received the thumbs-up in limited cases in the UK.

Other interesting developments in the papers today include Lockdown supercharges Stripe expansion (Daily Telegraph, Michael Cogley) which shows that payments giant Stripe will be expanding into the Czech Republic, Romania, Bulgaria, Cyprus and Malta next week as part of a European rollout, giving it presence in 39 countries. Advertisers seek to revise terms with streamer Quibi (Wall Street Journal, Benjamin Mullin and Suzanne Vranica) shows that the “premium” streamer Quibi is having to eat some humble pie as its lukewarm launch last month has meant that many advertisers are looking to defer payments while the company itself is looking to cut costs and Beat goes on for Warner flotation in New York (Daily Telegraph, Chris Johnston) shows that one of the world’s big three recorded music companies (the other two being Universal Music and Sony Music) is continuing with plans to float on the NYSE after originally announcing plans to list in early February. The company continues to benefit from more people streaming under lockdown and so sentiment is actually pretty good.

…in other news…

I thought I’d highlight this rather useful article today: From wonky tables to broken printers: how to solve the most irritating household problems (The Guardian, Emine Saner https://tinyurl.com/ycual43g). If you have a bit of time and the wherewithal, you could save yourself quite a lot of money here!

1. In MACRO NEWS, Beijing gets serious with Hong Kong, German confidence improves and Sunak talks “last resort” bailout plans
2. In CAR-RELATED NEWS, Europe puts big money into EVs, VW loses in court, Nissan mulls more cuts, Hertz goes under and Uber makes cuts in its self-driving division
3. In INDIVIDUAL COMPANY NEWS, Lufthansa gets a state bailout, Shopify continues to benefit and Novacyt eyes a windfall
4. AND FINALLY, I bring you the correct way of folding crisp packets and an amazing raffle…

So Beijing gets tough, German confidence improves and Sunak talks bailouts..

Beijing’s message to HK: ‘We waited for you guys long enough’ (Financial Times, Tom Mitchell) highlights China’s impatience with Hong Kong and the effect that last week’s announcement – that it would impose a new national security law – had on the territory. The move was condemned by the international community and set off Hong Kong’s largest street protests since the coronavirus lockdown on Sunday. * SO WHAT? * You will recall that last year, Hong Kong chief exec Carrie Lam’s clumsy handling of a proposed extradition agreement between Hong Kong and China led to six months of mass protests and Lam backing down. The new security law is even more controversial and so it seems that Beijing has decided to bypass her and impose it themselves. There will no doubt be more criticism – but I suspect it will be all noise and no back-up as I doubt anyone will be minded to implement sanctions on China at this moment in time. Having said that, Trump might use this as an excuse to tear up the phase one trade agreement with China that was probably doomed anyway and make him look a bit macho to the American electorate into the bargain. 

Global flickers of hope after German data hints at revival (Daily Telegraph, Tim Wallace) highlights pockets of hope around the world that suggest that there is a gradual movement towards normality. Japan’s state of emergency has been downgraded and the country is now allowing some flights. Spain has been lifting restrictions and now cafés and restaurants have opened in Greece. The influential German Ifo survey now points to businesses being increasingly confident about the future across services, manufacturing and exports. This will be a source of some comfort in Europe, given that Germany is its main economic driver.

Unions and business support Sunak’s ‘last resort’ bail out plans (The Guardian, Jasper Jolly) highlights the Chancellor’s plans to help strategically important companies with taxpayers’ money. The plan is called Project Birch and the idea of it is to limit the tsunami of job losses in sectors that have felt the most damage during lockdown. Virgin Atlantic, Loganair, Rolls-Royce, Jaguar Land Rover, Aston Martin and Tata Steel are all appealing for government aid at the moment. Details are still being hammered out, but at least there is movement in the right direction because, after all, it’s not just the companies themselves that will be affected – it’s the whole supply chain.

Europe ups its EV investment, VW takes a legal blow, Nissan considers cuts, Hertz goes under and Uber reduces employee numbers in self-driving…

Europe eclipses China in electric vehicle investment (Financial Times, Joe Miller) cites figures from the Brussels-based Transport and Environment campaign group which says that investment in electric vehicles and battery development has shot up over the last year, mainly due to VW’s push into emission-free vehicles. According to the report, the US currently lags Europe and China on electric vehicle investment. * SO WHAT? * European car manufacturers have had to invest in zero-emission technologies to comply with rules that kicked in at the beginning of this year which state that they have to cut their fleet-wide carbon emissions to an average of 95g per kilometre by 2021. Non-compliance will result in massive fines – so the sense of urgency is palpable! This is all very well and you will see loads of stats showing a huge percentage increase in the sale of electric vehicles – but the problem is that they are still a miniscule percentage of overall sales under more “normal” circumstances and although people may WANT to buy them, there is still the problem of poor charging infrastructure. This is not something that can be addressed overnight. It would also help if governments increased incentives to buy EVs – but that will be yet another expense for the government that could, arguably, slide down the list of priorities given what’s going on at the moment.

Talking about VW, German court rules against Volkswagen in ‘dieselgate’ scandal (The Guardian, Jasper Jolly) highlights VW’s loss in a landmark legal battle in the highest civil court in Germany over compensation for the purchaser of a secondhand minivan that had the emissions-cheating software. VW now has to pay the plaintiff €28,257.74 in compensation. * SO WHAT? * This will pave the way for the payment of compensation to 60,000 German VW owners and is the latest blow to the carmaker. VW has thus far paid out over €30bn in fines and compensation around the world since the scandal first came to light in 2015. It currently faces 91,000 consumer claims under a group litigation order in the UK and is disputing allegations that it installed an emissions-cheating device. It seems that many owners are set to receive a very useful windfall during current lean economic circumstances.

There’s more gloom in the automotive industry in Nissan, Renault prepare billions of dollars in cuts (Wall Street Journal, Sean McLain and Nick Kostov) which gives us the heads-up that Renault and Nissan are to announce huge cost cuts this week on Wednesday, Thursday and Friday. Nissan is aiming to cut vehicle capacity by a million vehicles and Renault is thought to want to cut costs by 20% over the next three years. * SO WHAT? * This is basically unpicking all the growth that previous boss Carlos Ghosn was so keen on. Rightly or wrongly, he is being blamed for a lot of the company’s ailments but the fact is that all car manufacturers are suffering from poor sales around the globe. It’ll take a few years to see whether this “right-sizing” is enough to help them survive.

In car-related news, Hertz was already in terrible shape. The pandemic finished it off (Wall Street Journal, Nora Naughton, Matt Wirz and Cara Lombardo) is a post mortem on Hertz, which filed for bankruptcy protection on Friday. All the major car rental companies are having a nightmare because they are hugely exposed to the airline industry, which is itself fighting to survive. Hertz was already in trouble with huge debts – but the coronavirus delivered the coup de grâce. * SO WHAT? * The company suffered more than rivals because it made a series of strategic errors, had ongoing issues digesting Dollar Thrify in 2012 and borrowed $19bn while traditional rivals Avis and Enterprise moved faster and new rivals, Uber and Lyft, started breathing down their necks. Anyway, if you are interested in an analysis in the downfall, definitely have a look at this article – it’s really interesting!

In Uber cuts employees from self-driving division (Daily Telegraph, Olivia Rudgard) we see that the company is making more cuts – this time at its previously sacrosanct self-driving division. Until now, this division has remained untouched because it is seen to be the future of the company, but this has changed and now 10% of its staff are to leave. It has also cancelled almost all internships and graduate positions. * SO WHAT? * Given what a mess Uber is in, it’s not surprising that it is getting a bit dramatic with the knife. The question is will it be enough?? I have not been a fan of Uber for a long time because I think it just burns cash at a silly rate and doesn’t seem to care at all about its employees contractors at all. The irony of it planning for a driverless future based on the money it has generated from human drivers is morally questionable IMO, but also I don’t like the fact that it is trying to be all things to all people all around the world and that it seems to flit from one “hot area” to another. At least rivals like Lyft try to concentrate on their knitting and aim for a geographical focus.

Lufthansa gets a leg up, Shopify continues to storm ahead and Novacyt stands to benefit…

I mentioned above that the airline industry is in dire straits at the moment and German government agrees €9bn bailout for Lufthansa (Financial Times, Joe Miller) reiterates that fact as the government will be taking a stake of at least 20% in exchange. The government said that it won’t exercise its voting rights and will sell its stake by the end of 2023. * SO WHAT? * This move is unsurprising and it’ll be interesting to see how/whether other countries follow suit. Under normal circumstances, the state taking an interest is a general no-no and is seen to engender unfair competition. It’ll be interesting to see how government bailouts benefit their respective flag carriers over the coming years. I would have thought that such subsidies will enrich the national airlines of rich countries whereas those of poorer countries will just go to the wall because their governments won’t be able to afford the luxury.

I must admit I was banging on about this company last week but Pizzas in the post: Shopify challenges Amazon for slice of lockdown trade (The Guardian, Zoe Wood) shows just how useful the Canadian e-commerce platform has been for retailers and restaurateurs during the coronavirus in helping them “pivot” to online sales. It has Amazon firmly in its sights! * SO WHAT? * This company appears to be an anti-Amazon in its working practices – and it’s good to see that Amazon will have decent competition. The announcement of Facebook Shops last week with Shopify as one of its partners is a real stamp of approval IMO. Let’s hope that its proposed warehouse and logistic network expansion goes to plan!

Then in Virus test makers in line for windfall (The Times, Alex Ralph) we see that the company making Covid-19 antivirus tests, Novacyt, could be paying out its top management some big bonuses after its shares have risen from 13p at the end of last year to a peak of 491p last month! They fell to 320p on Friday as investors have taken profits, but it seems that bosses in the company will benefit from supplying its Covid-19 test to over 100 countries, having received over £90m-worth of order by late April. It expects demand for its test to continue through to the end of this year at least.

…in other news…

You all know that I’m all for improving your lives, right? Well I think that Woman claims simple folding technique is the ‘right’ way to seal crisp packets (The Mirror, Paige Holland https://tinyurl.com/y8ccvsu7) could be life-changing for some while Couple spend two years renovating cottage to raffle it off for £5 (The Mirror, Paige Holland https://tinyurl.com/y9dnvytm) sounds like it could be life-changing in a different way! What a prize!

1. In MACRO NEWS, China scraps its GDP target, China moves to impose new security law on Hong Kong and the UK’s economic downturn shows signs of relenting
2. In TECH NEWS, Big Tech gets more powerful, Zuckerberg points to a WFH future, Sony increases its VR efforts, Samsung carries on with chip expansion plans, Nvidia sees higher earnings and Baidu threatens to go off in a huff
3. In BANKS NEWS, lenders warn of the impact of negative interest rates, RBS tells its staff to stay home and Monzo’s co-founder quits as CEO
4. In INDIVIDUAL COMPANY NEWS, AstraZeneca prepares to increase production for its potential vaccine
5. AND FINALLY, I bring you the official answer to chocolate in the fridge/cupboard debate…

So China ditches its GDP target and moves to impose a new security law on Hong Kong while the UK’s downturn appears to be slowing…

Beijing scraps GDP target, a bad sign for world reliant on China growth (Wall Street Journal, Jonathan Cheng) shows that China has, for the first time since 1994, decided not to announce a GDP growth target for the year due to uncertainties surrounding the impact of the coronavirus outbreak. * SO WHAT? * Pessimists are interpreting this as being a sign that Beijing isn’t going to unveil a massive stimulus following its biggest economic contraction for forty years. GDP grew by 6.1% last year, which was lower than expected but still within the officially forecast range of 6-6.5%. It looked like China was losing momentum before the coronavirus hit anyway, so it’s hardly surprising that growth is going to take a real beating – it’s just that this official move took many by surprise.

China plans new national security laws for Hong Kong (Wall Street Journal, Chun Han Wong and Natasha Khan) highlights China’s plans to put a big dent in Hong Kong’s autonomy by imposing new laws that will stamp out pro-democracy protests. Details are yet to emerge, but this new move will take precedence over the territory’s system of self-governance. * SO WHAT? * We don’t know everything yet, but there is likely to be a backlash against this from the

West. However, to be honest, if you were China and wanted to crush resistance you might as well do it when everyone else is still suffering from the fallout of the coronavirus as they will be less well-equipped to impose sanctions etc. China is not Iran and so I would have thought any threats from world democracies will be fairly toothless. Hong Kong has, until now, been living under a “one country, two systems” credo since the UK handed it back to China in 1997, but national security legislation has been a tricky topic ever since and it now looks like Beijing has lost its patience. Asian markets aren’t going to like this but I don’t expect China to back down.

Meanwhile, UK economic downturn shows signs of slowing down (Financial Times, Delphine Strauss) cites the latest IHSMarkit/Cips purchasing managers’ index for the UK which shows that sentiment in manufacturing and services has improved since last month although it is way below normal May levels. IHSMarkit’s chief business economist, Chris Williamson, interpreted this as showing that the UK should be expecting “a frustratingly slow recovery”. * SO WHAT? * I would take this – and ANY other macro announcements these days – with a MASSIVE pinch of salt. This survey only measures sentiment and I would want to see hard output figures and order book statuses before getting too excited. Reliable information is hard to gather at the moment in these unprecedented times and so “best guesses” are likely to be wonkier than they usually are.

Big Tech gets bigger, Zuckerberg expects a WFH future, Sony ups its VR efforts, Samsung ploughs on with chip expansion, Nvidia announces higher earnings and Baidu thinks about its US listing…

Big Tech is emerging from the crisis stronger than ever (Financial Times, Richard Waters) highlights how tech giants are pulling further away from the pack in terms of performance. Microsoft, Apple, Amazon, Alphabet and Facebook combined have added $1.7tn to their market cap since the lows of March – a rise of 43% when the wider US stock market has rebounded by 33% from the lows and are still 12% weaker than they were before the outbreak. Big Tech now makes up 24% of the total value of the S&P500 index – 3% more than before the crisis hit. The demand for improvement in online capability has boosted a number of different stocks. Website builder Wix has seen its share price shoot up by 32%, Shopify (which provides digital platforms to retailers) is up by 46% and PayPal is up by 20% as online payments increase. PayPal was worth about the same as Goldman Sachs a couple of years ago – now it is worth three times as much! * SO WHAT? * Big Tech has been a target for politicians and regulators who have wanted to limit its sheer power going into the beginning of this year. The coronavirus outbreak put all that on hold, but there are signs that efforts to do so will start again soon as the Department of Justice and a number of states are hoping to launch an antitrust case against Google and, in Europe, work has restarted on the Digital Services Act that could herald the beginning of new regulation for the sector. It’ll be interesting to see how all this pans out.

Zuckerberg unveils work from home revolution (Daily Telegraph, James Titcomb and Lucy Burton) is a really interesting article that looks at what work may look like in the future. Facebook’s Mark Zuckerberg said that 50% of his 45,000 employees will work from home within the next ten years and other companies such as Twitter, Shopify and Coinbase have gone further by saying that working from home will be the default forever, with only a minority coming to work. Zuckerberg said that he thought such policies would broaden economic opportunities whilst also improving diversity and economic impact. * SO WHAT? * I am a massive fan of giving employees the opportunity to work from home and believe that it means that employees will be much more able to live the lives they want to. OK, so not everyone can do this, but I think that more people working from home would mean that house prices would get less overheated in certain areas, commuting costs would reduce dramatically and the environment would also benefit as a result. At the very least, more people should be given the option to do this in future IMO. Now that employers have seen how it can work on a semi-permanent basis in practice, they will be able to make better-informed decisions.

On the tech hardware side of things, Sony ramps up VR efforts as demand for virtual events surges (Financial Times, Kana Inagaki and Leo Lewis) shows that the Japanese consumer electronics company is trying to improve its VR headset so that it can cope with future demand for online-only concerts, crowd-free sporting events and games. * SO WHAT? * This initiative comes six months before the planned launch of Sony’s PlayStation 5 and Microsoft’s Series X consoles but its existing VR capability is thought to be one of the characteristics that will put it ahead of its rivals. Coronavirus has led to all sorts of online-only events and concerts and I would have thought that having more VR capability to enhance these events will go quite a way to bringing it into the mainstream.

In Samsung defies pandemic and trade threats with chip expansion (Financial Times, Edward White) we see that Samsung Electronics plans to plough ahead with building a new $8bn computer chip production facility near Seoul in addition to continuing with an  $8bn expansion of its memory chip factory in the Chinese city of Xi’an. The confirmation of these developments comes amid doubts over demand for tech products while the world economy is taking a pasting from Covid-19.

Elsewhere, Coronavirus lifts Nvidia as people stuck at home turn to games, remote work (Wall Street Journal, Asa Fitch) shows that chipmaker Nvidia saw first quarter revenues rise by 39% versus the previous year as it benefited from more people playing console games (Nvidia chips are used in the Switch console, for instance) and the shift towards cloud computing as people worked from home (many of its chips are sold to data centres). Games revenues rose by 27% while data-centre sales shot up by 80% to record levels. * SO WHAT? * This goes to show that there are some areas of tech that are doing better than others in the face of the global pandemic. With new games consoles potentially stirring demand and the new trend of WFH becoming more mainstream, I would have thought that Nvidia would be well-placed to benefit.

Chinese search giant Baidu reconsiders US listing (Financial Times, Ryan McMorrow) highlights that the company may abandon its Nasdaq listing as US lawmakers move to impose stricter rules on Chinese companies trading in New York in the wake of the recent Luckin Coffee accounting scandal where the Chinese competitor to Starbucks announced sales that didn’t exist. * SO WHAT? * Baidu floated on the Nasdaq in 2005 and US listings have been used by Chinese companies over the years to raise capital given restrictions in their home markets. Growing numbers of Chinese tech companies have been embarking on secondary listings in Hong Kong to broaden their investor base, especially in the wake of the US-China trade war where sentiment towards Chinese companies has cooled considerably. Alibaba has already done this and JD.com is going down the same road. I would be surprised if Baidu wasn’t considering doing this anyway – so the new regulations are probably just giving these plans a shove.

Lenders warn against negative interest rates, RBS tells its staff to work from home and Monzo’s founder takes a back seat…

In a quick look around some banking stories today, British banks warn BoE of pain of negative rates (Financial Times, Stephen Morris and Attracta Mooney) shows the banks’ reaction to what the Bank of England said earlier this week about taking interest rates below zero – that it would hurt their earnings and ability to react to the likely impending tsunami of coronavirus-related loan losses. This would narrow the banks’ net interest margin (aka “NIM”) – which is the difference between what they charge borrowers and what they pay out on deposits – and make profitability even harder to come by. The banks argue that the double-whammy of loan losses AND a narrowing of the NIM will be too painful. What would negative interest rates mean for mortgages and savings (The Guardian, Hilary

Osborne) does a good job of telling us the impact of negative interest rates on the individual regarding mortgages (none on a fixed-rate, a bit of a reduction if you’re on a standard variable rate), savings (unlikely that banks will charge customers to hold their savings – otherwise everyone would just withdraw their money and stuff it in their mattresses) and loans/credit cards (not much).

Meanwhile, Bank tells 50,000 staff to stay at home until October (The Guardian, Rupert Jones) highlights the lender’s decision to keep over 75% of its staff at home and Monzo co-founder steps down as chief executive (Financial Times, Siddarth Venkataramakrishnan) shows potentially worrying signs for the digital bank as Tom Blomfield takes a different role in the bank to be replaced by its US chief exec TS Anil in the face of significant challenges posed by the coronavirus. This also comes in the same week that the company’s chief credit officer, Tim Trailor, left the company and shortly after Monzo raised money, but at an equivalent valuation of 40% below its most recent fund raising round. Tough times ahead.

AstraZeneca ramps up production facilities…

AstraZeneca books orders for 400m doses of Oxford vaccine (Financial Times, Naomi Rovnick, Clive Cookson and Donato Paolo Mancini) signals some hope as it has secured orders for at least 400m doses of its unproven

coronavirus vaccine being developed with Oxford University. It could begin delivering them in September. This prototype has been just one of the potential solutions, but if it is successful, 300m of the 400m doses will go to the US. AstraZeneca said it was building a supply chain capable of making up to 1bn doses of the vaccine – but its effectiveness is still not a definite. Fingers crossed, eh 🤞

…in other news…

I thought I’d leave you today with the official answer to an important long-running debate: Cadbury confirms whether their chocolate bars should be kept in cupboard or fridge (The Mirror, Courtney Pochin https://tinyurl.com/ybvahuja). My view is that I like the snap of it being in the fridge, but think you get better flavour from keeping it in the cupboard…

1. In MACRO NEWS, the Bank of England moots negative interest rates, Sunak looks to extend the mortgage holiday and economic indicators show some positives
2. In CONSUMER AND RETAIL NEWS, gamblers turn to stock markets, Americans buy TVs and bikes with their cheque, Target strengthens, Shopify accelerates and M&S has issues
3. In INDIVIDUAL COMPANY NEWS, US and China cloud companies vie for Asian business, Rolls-Royce cuts 9,000 jobs and two UK battery start-ups look to join forces
4. AND FINALLY, I bring you a hilarious gift-gone-wrong and a “Pac-Man” facemask…

So the Bank of England considers new territory, Sunak aims to extend the mortgage holiday and economic indicators show signs of life…

BoE says negative interest rates are ‘under review’ for first time (Financial Times, Chris Giles) shows that our central bank is entertaining the possibility of negative interest rates for the first time in its 324 years of existence in order to stimulate an economic revival. * SO WHAT? * If this happened, it would pretty much force companies (and households!) to spend rather than save – and this comes only one week after the “new” governor said the Bank was not “planning or contemplating” such a move. It sounds like there’s still debate going on about taking this road but the fact that it is even being considered is interesting. As things stand, it sounds like negative rates are more likely to be introduced in the autumn when the economy might need an additional boost rather than at the next MPC meeting in June.

Following on from Chancellor Rishi Sunak’s gloomy prediction earlier this week that the economy was unlikely to bounce back quickly from this recession, it sounds like he’s looking at ways to help homeowners in UK mortgage payment holiday set to be extended (Financial Times, Jim Pickard, Daniel Thomas and Matthew Vincent). He is currently working with the Financial Conduct Authority

(FCA) on extending the existing scheme that was due to end in June – and this comes shortly after he announced an extension to the government’s job retention scheme, which has now been extended until October. It sounds like this won’t be a universal extension and the criteria for claimants will get tighter.

Glimmers of hope in economy as indicators show signs of life (Daily Telegraph, Tom Rees) highlights thoughts of some city forecasters who believe that there are signs that there could be light at the end of the coronavirus tunnel. Jefferies economist David Owen pointed to stats that showed traffic congestion is edging up, as is energy consumption – and Barclays data is showing slight improvements in spending according to its chief economist Fabrice Montagné. Still, it’s early days yet and no-one really knows what’s going to happen. * SO WHAT? * Economists like looking at direct and indirect signals regarding the state of the economy – along with a whole myriad of other stats and surveys – but even they are made more difficult to interpret because of the unique circumstances we are currently in. For instance, an increase in traffic could just mean that people are avoiding public transport. Also, spending at the moment is heavily skewed to online because most shops aren’t open. Unfortunately, it would be quite dangerous to read too much into this sort of thing, but then again it is their job to make the best predictions they can with the data available.

Gamblers set their sights on the financial markets, Americans spend on TVs and bikes, Target strengthens, Shopify broadens its appeal and M&S continues to suffer…

It’s interesting to see changes in consumer behaviour in these coronavirus days. Frustrated sports punters turn to US stock market (Financial Times, Richard Henderson) shows that online brokerages are benefiting from seeing an uptick in account openings as people attempt to get their gambling fix by betting on the US stock market! With world sporting events cancelled around the world, the likes of Charles Schwab, ETrade and Interactive Brokers have seen record new account sign-ups in either March or April. This is a welcome influx at a time where competition in this area is increasing and trading fees are being slashed. * SO WHAT? * I would be very wary of replacing sports betting with financial markets betting because I would argue it could be more addictive given the constant newsflow and the prospect of “beating the suits” at their own game. As you know by now, I’ve worked at four different investment banks over 13 years myself and I can assure you that trading markets is not “easy”, as many YouTubers would have you believe! This needs to be policed IMO, but I really am not sure of how you could do it effectively. In the meantime, the online brokers can benefit from trading commissions generated by their new clientele betting their government money in order to get rich quick.

Then Americans splash out on bikes and televisions (Financial Times, Alistair Gray) shows that Americans have been spending their $1,200 government handouts on exercise equipment, TVs and video games after panic-buying essentials. Target gains strength during coronavirus (Wall Street Journal, Sarah Nassauer) highlights strong sales for the US retailer in the most recent quarter powered by sales in discretionary items such as clothing and kitchenware. * SO WHAT? * It’s interesting to see these trends emerging from the ashes of the coronavirus. For many, these may be lean times, but for

those who have managed to keep their jobs, they may well be feeling a bit richer and emboldened to buy more expensive items – after all, they are probably less likely to be able to spend it on a holiday this side of Christmas! 

In Shopify accelerates online shopping services to take advantage of crisis (Financial Times, Tim Bradshaw) we see that the e-commerce company is unveiling more new services for retailers and an unexpected expansion into groceries. Restaurants are also using Shopify to sell takeaways and meal kits, among other things, and although Shopify doesn’t do deliveries itself, it is building a warehouse and logistics network to compete with Amazon. * SO WHAT? * It seems that Shopify is getting more widely recognised as it transitions from being more of a “back-end” service to something that consumers themselves can engage with. Its recently launched app, Shop, helps consumers track their orders from Shopify’s retailers and locate new stores in their area. As things stand, it looks like Shopify will be more generous than Amazon to the retailers that sign up as Harley Finkelstein, the company’s COO, said that it sees itself as being the distributor of “the economies of scale directly to small businesses, as opposed to keeping it for ourselves”. That and maybe not, like Amazon, allegedly using their data and becoming their biggest source of competition 😂.

M&S takes £145m hit on unsold stock as clothing sales fall 75% (The Guardian, Zoe Wood) shows that the high street stalwart has taken a massive hit on the mountains of unsold stock left idle by selling restrictions due to the coronavirus. It launched a “rainbow sale” last week to clear its spring and summer fashion, but this is unlikely to clear the decks completely for the troubled retailer. Although clothing and home sales fell by a whopping 75% in the six weeks to May 9th, sales in its food halls – excluding its restaurants – only fell by 4.6%. * SO WHAT? * M&S’ food business has not benefited as much as some supermarkets from the surge in grocery buying because many of its outlets are near offices or in transport hubs – and that has taken the edge off. However, help is at hand as its food will be delivered by Ocado from September – but unfortunately its clothing business still needs major surgery IMO. If it doesn’t sort out this turkey, I think M&S will be vulnerable to takeover. A target for Amazon, perhaps??

US and Chinese cloud companies fight over Asia, Rolls-Royce announces job cuts and two UK battery start-ups talk about joining forces…

US and Chinese cloud companies vie for dominance in south-east Asia (Financial Times, Mercedes Ruehl) looks at how increased demand for online services during lockdown has spurred demand for data centres in the region with the likes of Amazon, Google and Microsoft competing with “local” rivals Alibaba, Tencent and relative newbie Huawei cloud. Investment and competition is likely to get fiercer as the coronavirus has increased the need for online capability considerably.

Anger as Rolls-Royce cuts 9,000 jobs (The Times, Alex Ralph and Martin Strydom) heralds bad news for

employees at Rolls-Royce as engineering company announces the biggest ever redundancy round since the company went private in 1987. Most of the cuts will be suffered by the civil aerospace division and could mean that some sites are closed down. * SO WHAT? * This is obviously bad news but is hardly surprising given that Airbus and Boeing’s plane orders are being decimated at the moment.

I thought I’d try to end on a positive note today in Deal between battery start-ups brings UK’s first gigafactory closer (Financial Times, Peter Campbell) where AMTE Power and Britishvolt are talking about joining up to produce battery cells for carmakers and energy storage groups. They are looking at a £4bn project to build manufacturing facilities in the UK and are considering an IPO to fund the venture. * SO WHAT? * This could make a huge difference to supply chains in the UK because, as we have seen, battery manufacturing facilities have thus far been very Asia-centric. At the end of the day, though, the success of this venture will depend largely on how cheaply they can produce. Still, this sounds good, no?

…in other news…

I thought I’d leave you today with the hilarious Man’s awkward error on personalised glass for fiancee’s 30th birthday (The Mirror, Paige Holland https://tinyurl.com/yd3q5fmc) and the, quite frankly, bizarre Mask in a restaurant? This one can gobble like Pac-Man (Reuters, Eli Berzlon https://tinyurl.com/ycfayj52). Nice idea in theory, but surely you would feel like a right kn0b wearing one of these?? Better to avoid the restaurant IMO…

1. In RETAIL NEWS, Walmart and Home Depot are on a run, US retailers phase out hazard pay and French Connection is in trouble
2. In SOCIAL MEDIA NEWS, Facebook takes on Amazon in online shopping, TikTok gets a Disney chief and Spotify signs up Joe Rogan
3. In FINANCIAL NEWS, Sony buys the remainder of Sony Financial and investment banking fees suffer
4. In INDIVIDUAL NEWS, AstraZeneca’s investment in Moderna rises, Johnson & Johnson stops selling baby talc and Compass raises big money
5. AND FINALLY, I bring you lemon and paintbrush life hacks…

So Walmart and Home Depot see brisk business, US retailers phase out hazard pay and French Connection looks vulnerable…

Over in the US, Walmart sales surge as coronavirus drives Americans to stockpile (Wall Street Journal, Sarah Nassauer) shows that America’s biggest retailer reported a big upswing in quarterly sales as shoppers flocked through their doors to stock up on food and other essentials. Sales were up – and although footfall was lower, spending per transaction was 16.5% higher over the quarter. There was a spending boost in April when customers spent government stimulus money and e-commerce sales shot up by 74% (the number of new customers trying its online grocery pick-up and delivery services quadrupled since mid-March!). Despite significant additional costs related to raising wages for warehouse workers and hiring new staff to cope with the increased demand, Walmart still managed to report a higher operating profit over the period. Although it did well overall, execs said they would not publish financial forecasts for the rest of the year given current economic uncertainties. Home Depot reports higher revenue despite coronavirus impact (Wall Street Journal, Matt Grossman) shows that the DIY retailer saw higher sales in the first quarter, but reported an 11% fall in earnings over the period because of higher staff costs in terms of pay and benefits. Revenues rose by 7.1% over the period, which was better than expected, and sales from its digital platforms grew by around 80%. Like Walmart, Home Depot also announced that it would withdraw full year guidance for the same reasons. Fun fact: Home Depot is the second best performer on the Dow Jones this year – only Microsoft is ahead of it!

Both of the retailers I’ve just mentioned experienced higher wage costs. Well Retailers phase out coronavirus hazard

pay for essential workers (Wall Street Journal, Jaewon Kang and Sharon Terlep) shows that some of the biggest US retailers are starting to phase out the extra “hazard pay” they gave their frontline workers as the coronavirus ramped up. Amazon, Kroger and Rite Aid are some of the companies who have started to phase out the payments although workers and unions argue that they are still facing the same risks. To be clear, the rises were always temporary anyway and the original period they had agreed for these higher payments has already been extended.* SO WHAT? * Retailers are finding it hard because minimum wages were already rising before the coronavirus hit and so offering higher hourly rates and one-off bonuses will be even more difficult going forward. The other thing is that unemployment has risen exponentially since the outbreak started, so employers will be able to have their pick of employees. I suspect we shall see similar things happening at retailers around the world.

Back in the UK, French Connection warns it is running out of cash (The Guardian, Sarah Butler) highlights the ongoing travails of already-troubled apparel retailer French Connection as it has announced that it will run out of cash within the next few months if it doesn’t get a cash injection and/or an uptick in sales. Like other fashion retailers, it had to close all of its stores and concessions both at home and abroad. Although online sales have jumped by 44%, the company has said that this is not enough to sustain the business. It is, like other non-essential retailers, preparing to reopen UK stores on 1st June under the government’s current coronavirus plan. * SO WHAT? * French Connection was already struggling before the outbreak and so I would say it is unlikely that it will be able to come out of all this unscathed. 40% of the company is owed by founder Stephen Marks and Mike Ashley’s Fraser Group (formerly known as Sports Direct) owns a 26% stake. It just seems to me that this company is destined to fail after losing its way – let’s hope someone comes along to breathe some life into what was once a very popular brand!

Facebook takes on Amazon, TikTok gets an American chief and Spotify signs up Joe Rogan…

In Facebook takes on Amazon with online shopping venture (Financial Times, Hannah Murphy) we see that Facebook has unveiled “Facebook Shops” which will enable sellers to create digital storefronts on Facebook or Instagram and let them gather data on what shoppers want. Users will be able to browse, message businesses re purchases and buy directly (in most cases) via a new checkout. Chief exec Mark Zuckerberg said he’s accelerated the launch of Shops in order to take part in the current boom in online shopping. He added that he would be able to use the data to improve its advertising service, enabling him to charge more. * SO WHAT? * This could potentially be huge given Facebook’s 2.6bn user base and it comes at a time where third party sellers have been complaining about dodgy practices from Amazon in hogging all the data and using it to compete against them (that’s the allegation anyway!). This could also be interesting from a food delivery angle as it could become a competitor to the likes of Grubhub because, longer term, Shops could host restaurant and food ordering services. Facebook will work with existing ecommerce services such as Shopify and integrate everything with shipping and logistics. This sounds like a VERY interesting development and brings them closer in functionality to other “super apps” such as China’s WeChat where you can message, buy products and send money all on one platform. This could be an excellent way for Facebook to promote Libra as well, I would imagine!

To infinity and beyond for TikTok under Disney’s ‘Buzz’ (Daily Telegraph, James Cook) highlights the appointment a new chief exec with clout, former Disney dealmaker Kevin Mayer – the man who led the launch of Disney+.

ByteDance-owned TikTok has seen downloads push through the 2bn mark last month and data from Sensor Tower says that TikTok has grown faster that its rivals in terms of downloads since the beginning of this year. * SO WHAT? * This is a key appointment that may go some way in calming American suspicions that China might be able to access user data in that there will be someone for US officials to bring to account. Since the concerns were voiced, ByteDance has moved to separate TikTok from its Chinese operations – and this appointment should help to satisfy the sceptics in some way. The other thing is that this new appointment could signal a wave of acquisitions, given that Mayer had form in this area at Disney with acquisitions of Pixar, Marvel, LucasFilm and 21st Century Fox. TikTok has generally stayed away from acquisitions thus far but given its popularity and Mayer’s history, it would be reasonable to assume that this will change! In addition to becoming TikTok’s chief exec, he will also become parent company ByteDance’s COO. I think that this sounds like an inspired appointment and will turbo boost the company’s fortunes both in terms of potential content AND advertising revenues.

Spotify strikes podcast deal with Joe Rogan worth more than $100m (Wall Street Journal, Anne Steele) highlights a new exclusive deal for Joe Rogan to take his famous podcast to Spotify. This is one of the biggest ever licencing agreements in the podcasting arena. His “vod-cast” – video podcast – format has become incredibly popular over the years and he has witheld it from Spotify, saying that it did not pay enough and that he was getting decent money from the likes of YouTube. His full library of podcasts goes back 11 years and will be available from September 1st, becoming exclusive to Spotify thereafter. * SO WHAT? * This is really interesting and signifies Spotify’s commitment to podcasting and improving the array of its content outside music. According to data from the Interactive Advertising Bureau, US ad revenue from podcasts shot up by an estimated 42% last year.

Sony buys out Sony Financial and investment banks suffer fee losses…

Sony offers $3.7bn for rump of financial services division (Financial Times, Kana Inagaki) highlights Sony’s bid to buy out the remaining shareholders in its financial services arm to get full control of a unit that it already holds 65% of. This division actually generates a lot of the company’s profits and will be a slap in the face for US activist investor Third Point who has been pushing for Sony to break it off and focus on entertainment. * SO WHAT? * This looks like a particularly opportune purchase as Sony Financial’s share price has fallen by more than 20% since early February – mind you, the offer has not been made at a premium to the market price before this was announced, which goes against normal practice. Shares in both Sony and Sony

Financial rose after the announcement and it seems that, strategically, Sony could do with exposure to Sony Financials’ life insurance, reinsurance, online-only banking and credit card settlement businesses – especially considering the upside potential of digital banking in Japan.

Banks suffer £143m decline in fees as deals dry up (Daily Telegraph, Vinjeru Mkandawire) shows that fees for investment banks’ advice plummeted by £143m (63%) last month as corporate M&A just dried up. The total number of deals done in April fell by a whopping 87% versus last year and it was the quietest month for over thirty years! * SO WHAT? * These numbers just reflect what’s going on around the world at the moment as global deal making has fallen to its lowest level for seven years. I would expect this to pick up in the coming months as surviving companies look to consolidate for protection or to grow by buying assets that had previously been too expensive to pick up.

AstraZeneca has its fingers in the Moderna pie, J&J stops sales of baby talcum powder and Compass tries to raise a lot of money…

In a quick look around some other big stories today, AstraZeneca investment in Moderna hits $2bn as vaccine hopes soar (The Times, Alex Ralph) highlights the value of AstraZeneca’s stake in American biotech-of-the-moment Moderna, whose share price has quadrupled this year and shot up by 20% on Monday after reporting positive early trial results for a Covid-19 vaccine. It has a stake of around 7.7% of the company and this little burst has helped to make AstraZeneca the most valuable company on the FTSE100!

Johnson & Johnson to stop selling talcum baby powder in US, Canada (Wall Street Journal, Peter Loftus) highlights

the impact of all those lawsuits that have accused its most famous product of causing cancer in women and sowed the seed of doubt in many a would-be customer. As of March this year, roughly 19,400 plaintiffs have filed lawsuits against the company. J&J continues to argue the safety of its product, but the lawsuits will continue to drag on and sales of other products continue to be tarnished by the allegations.

Then in Compass seeks £2bn as canteens lie idle (The Times, Dominic Walsh) we see that the world’s biggest catering company is taking precautionary measures to shore up its finances in these uncertain times by launching a fundraising to attract money from retail and institutional investors. The pandemic has hit the caterer extremely hard as canteens, schools and educational establishments around the world shut down – so although this is fairly chunky in terms of size, it is probably a wise thing to do given the uncertainty of lockdown lifting.

…in other news…

I thought I’d leave you today with a couple of life hacks: Woman praised for sharing paintbrush hack that will save you so much time (The Mirror, Paige Holland https://tinyurl.com/y9n2dnz8) and Trick to squeeze lemons without a mess shows we’ve been doing it wrong for years (The Mirror, Luke Matthews https://tinyurl.com/yad6ffod). Well I never!

1. In MARKETS & MACRO NEWS, markets rise on vaccine hopes, Germany and France propose a €500m rescue fund and the Bundesbank sees signs of recovery in Germany
2. In RETAIL/HIGH STREET NEWS, JC Penney announces store closures, Apple opens some of its US stores, shopping centre owner Intu faces more problems, Café Rouge’s owner talks with creditors and Aldi teams up with Deliveroo
3. In INDIVIDUAL COMPANY NEWS, the nightmare continues in airlines for Thai Airways and Ryanair while Uber cuts staff and offices and JAB goes for a coffee listing
4. AND FINALLY, I bring you a coronavirus-friendly door-opener and a brilliant high school graduation ceremony…

So markets rise, Germany/France propose a rescue fund and there are signs of a German recovery…

Vaccine hopes and easing of lockdown fuel mini-revival (The Guardian, Larry Elliott) highlights a boost to markets following rising hopes of a vaccine (Moderna’s vaccine showed positive results in tests), the ongoing easing of lockdown restrictions and the announcement of a European rescue package as per Merkel and Macron propose €500bn EU rescue fund (The Guardian, Daniel Boffey), which states that the two European heavyweights are looking at doling out grants to European economies via a centralised fund. As things stand, the member states receiving the cash would not need to repay it – and it will be added to the EU budget where everyone contributes depending on the size and prosperity of their respective

economies. The proposal still needs to be approved by the other 25 member states, but could signal a significant step forward in addressing recent criticisms that Europe has been paralysed by Covid-19. This is not yet done and dusted, though.

Bundesbank sees early signs of recovery in German economy (Financial Times, Martin Arnold) shows that Germany’s central bank believes that a “recovery is on the way” following a big contraction in April. It says that weakness in manufacturing and services is being offset by the reasonably robust performance of its construction industry. The Bundesbank added that the €1.8tn package of fiscal measures to help individuals and businesses through the pandemic will also start to kick in and sounded positively chipper when it said “There is currently much to suggest that overall economic developments will move up again in the course of the second quarter as a result of the easing measures and a recovery is under way”. Let’s hope it’s right! If it talks things up enough, maybe the optimism will be self-perpetuating.

JC Penney announces cuts, Apple opens some US stores, Intu is up against it while Café Rouge’s owner considers its future and Aldi teams up with Deliveroo…

JC Penney to close nearly 30% of its stores (Wall Street Journal, Suzanne Kapner) heralds the ongoing nightmare for troubled US department store JC Penney that announced the closure of over 240 stores. The 118-year old company filed for chapter 11 bankruptcy last Friday and follows Neiman Marcus, J.Crew and Sage Stores, who have all gone down the same road this month. It also announced that it would close two distribution centres, cut corporate overheads by 25% and $1bn in expenses. * SO WHAT? * The company has been in trouble for quite some time, so it wasn’t really a surprise that it had to file for chapter 11. It suffered from confusing pricing, sub-par marketing and poor online shopping capability. Apparently it has learned from this and will make changes accordingly. Exact job loss numbers and locations of stores affected have not yet been disclosed. There will no doubt be more to come…

On a more positive note, America’s Apple stores open again (The Times, James Dean) highlights a reopening of an additional 25 shops as the country starts cranking up activity. It had already reopened five US stores after closing all of its 510 stores worldwide after the coronavirus hit. Everyone has to wear face coverings and temperatures will be taken at the door, with shopper numbers restricted at any one time and loads of cleaning. This brings its total number of opened stores worldwide to about 100 and it expects to open 12 sites in Canada and 10 in Italy this week. It has 271 stores in the US.

Back in the UK, Shopping centre firm seeks debt standstill as lockdown takes toll (The Guardian, Julia Kollewe and Joanna Partridge) shows that the nightmare being experienced by Britain’s retailers is continuing to have a knock-on effect as Intu, one of the country’s biggest shopping centre operators, is appealing for “standstill

agreements” from its lenders to help it survive a sharp drop in rent payments from its retailer tenants. Under a standstill agreement, the company would not have to pay back what it had borrowed until the end of 2021. Intu said it was likely to breach debt commitments at the end of June and is unlikely to be able to raise money via other means given the current economic backdrop. Most of its shopping centres will be closed until at least 1st June and the company has furloughed 60% of its mall staff and 20% at its head office. * SO WHAT? * Intu is not the only landlord that is suffering because its tenants aren’t paying rent at the moment – but there is limited recourse at the moment for them to pursue some of the better-capitalised ones in the courts as such actions have been temporarily banned by the government. This just gives us more evidence, as if any was needed, that pretty much anything to do with retail is having major problems at the moment.

Speaking of problems, Cafe Rouge owner stokes job fears with creditor talks (Daily Telegraph, Oliver Gill) shows that Casual Dining Group (aka CDG), which owns brands including Bella Italia, Café Rouge and Las Iguanas, has filed a notice of intention to appoint administrators. Various options, including a CVA, are being considered with restructuring specialists Alix Partners. On a separate, and altogether more positive note, rival restaurant chain owner Boparan Restaurants is on the verge of buying Carluccio’s which could save about 900 jobs. * SO WHAT? * It’s a shame that things have come to this for CDG  given that Café Rouge in particular seemed to be on the path to recovery after a rough patch, but given likely ongoing difficulties in the casual dining sector even if it does open up (social distancing is going to make profits VERY difficult to come by) it seems only prudent to at least consider the options. Sadly, about 6,000 jobs hang in the balance.

Then in Aldi trials online market with Deliveroo tie-up amid battle with rivals (Daily Telegraph) we see that Aldi has started to offer its customers rapid delivery of bread, milk and fresh products (among 150 items) via Deliveroo from its store in Nottingham. It could look to roll this service out to other stores later in the year. Given it’s lagged the UK’s “Big Four” in delivery capability, this sounds like a step forward.

Airlines nightmares continue, Uber makes cuts and there’s a coffee IPO in the offing…

Another day, another load of depressing stories about airlines. Thai Airways headed for bankruptcy protection (Financial Times, John Reed) highlights what is likely to be the world’s first failure of a national flag carrier as the Thai government is to consider a restructuring plan after a bankruptcy filing in court. The airline has been lossmaking for years as it failed to keep up with rivals’ service offerings, continued to fly unprofitable routes and suffered from a strong baht. Elsewhere in the industry, Ryanair warns coronavirus will push it to €200m quarterly loss (Financial Times, Arthur Beesley) shows that the short-haul specialist is expecting tough financials although investors were heartened by it saying that it planned to resume 40% of flights by July.

Uber cuts 3,000 more jobs, shuts 45 offices in coronavirus crunch (Wall Street Journal, Preetika Rana) heralds more drastic action by the ride-hailer two weeks after it announced 3,700 job losses and targeted $1bn in cost savings. The additional cuts mean that, in total, the company will be cutting about a quarter of its workforce within the next month. Job losses exclude drivers, as they are not classed as employees (which is whole other problem!). * SO WHAT? * It sounds like Uber will be continuing to reverse out of non-core and cash-burning businesses but ultimately, the key will be whether or not customers return to its ride-hailing business as the economy starts to open up once more.

Then in JAB seeks €2bn shot for coffee business with listing (Financial Times, Arash Massoudi and Judith Evans) we see that JAB Holdings is looking to raise up to €2bn from listing its JDE Peet’s coffee business in Amsterdam in what will be Europe’s biggest IPO so far this year. JDE Peet is the world’s largest pure coffee company (it merged Jacobs Douwe Egberts Group with US retail coffee brand Peet’s in preparation for the IPO) and is Nestlé’s biggest rival. JAB Holdings, which manages the wealth of Germany’s Reimann Family, hopes to raise €1.5-2bn from the IPO which will be used to pay down debt. * SO WHAT? * IPOs are rather thin on the ground at the moment given market volatility and the opacity of corporate earnings, but it seems that this will be going ahead due to the belief that the coffee market will continue to be robust (or should I say, “robusta” – sorry, I couldn’t help myself).

…in other news…

I thought I’d leave you today with an interesting coronavirus gadget in Japan has a Reassuring Door Opener to soothe coronavirus fears, so let’s try it out (SoraNews24, Casey Baseel https://tinyurl.com/y93aet7o) and the brilliant idea in High school to hold graduation ceremony on a ski lift (CBS News, Caitlin O’Kane https://tinyurl.com/y7cu7rev). Whoever came out with that idea was a genius!

1. In MACRO NEWS, Jay Powell warns of a slow recovery, Japan’s economy falls into recession and the Saudi sovereign wealth fund has a shopping spree
2. In SECTOR-BY-SECTOR NEWS, carmakers call for subsidies, travel opens up but the prospects are dim and meat-substitutes continue to gain popularity
3. In INDIVIDUAL COMPANY NEWS, Uber drops robotic scooters and gets rebuffed by Grubhub, Jio attracts another investor and we look at the latest in coronavirus vaccines
4. AND FINALLY, I bring you a gift idea for someone that really likes toast…

So Jay gets gloomy, Japan slumps and the PIF makes hay…

Jay Powell warns US recovery could take until end of 2021 (Financial Times, Lauren Fedor and James Politi) shows that the chair of the Federal Reserve does what most central bankers do – and states the bleedin’ obvious! He said that, for the economy to recover fully, there will have to be a vaccine. What. A. Genius. He did go on to say, however, that he expects the economy to start on the path to recovery over the second half of this year and that there would probably be a “couple more months” of net job losses with unemployment climbing to 20-25% (it is 14.7% at the moment). Donald Trump reckons that a vaccine will be ready by the end of 2020 (I bet he’s hoping that comes about a week before the election and then he can claim all the credit 😂), but many of the scientists are more cautious. He has also called for potentially negative interest rates, but Jay Powell is currently against going down that road. Not listening to Trump has actually worked quite well for Powell so far – remember, Trump was going on and on at him to cut interest rates – and he didn’t – which eventually meant that when he needed to cut them he actually had the bandwidth to do so. However, that doesn’t mean he’s always going to be right!

Japan’s economy fell into recession in first quarter of 2020 (Wall Street Journal, Megumi Fujikawa) is one of a

couple of stories that were actually out over the weekend but that I thought were worth mentioning in today’s Watson’s Daily. Anyway, Japan’s economy fell into recession during the first quarter of 2020 (i.e. it has had two consecutive quarters of GDP contraction) and it looks like the current quarter isn’t going to be great either. Economy Minister Yasutoshi Nishimura said that the government was due to put together a spending package by May 27th, which would include additional support for corporate financing and aid for students.

The other weekend story is Saudi wealth fund snaps up $7.7bn of blue-chip stocks (Financial Times, Andrew England, Anjli Raval and Arash Massoudi) which highlights that the Public Investment Fund, chaired by Crown Prince Mohammed bin Salman, has taken some chunky stakes in the likes of BP, Boeing, Carnival and Live Nation in addition to Facebook, Bank of America, Citigroup, Walt Disney, Marriott, Pfizer and Starbucks. * SO WHAT? * This is quite interesting when you think that, at the end of last year, its only disclosable holdings were Uber and the remainder of its stake in Tesla (which it sold in the first quarter). The Fund is still on the hunt for strategic opportunities “that have a strong potential to generate significant long-term returns while further benefiting the people of Saudi Arabia”. Other Gulf state sovereign wealth funds are on the look-out for investment opportunities, but Saudi Arabia’s has been the most active thus far. No doubt the others will follow – but I suspect that assets will continue to be cheap for a while yet.

Carmakers call for help, travel opening is double-edged and meat substitutes gain popularity…

Carmakers press for EU and UK subsidies after slump in demand (The Guardian, Jasper Jolly) shows that the leaders of BMW, Daimler, Fiat Chrysler and Jaguar Land Rover (among others) met last week with Frans Timmermans of the European commission, calling for subsidies that would help to spark demand as orders for new cars continue to fall. Carmakers want all new cars to get subsidies, but environmental campaign groups believe this is a unique opportunity to push carmakers into producing more all-electric cars with zero emissions by only applying subsidies to electric, small and light vehicles. * SO WHAT? * I would doubt that governments will just give subsidies to electric cars because most countries continue to have poor charging networks. Improving them quickly in order to cope with more EVs on the road is going to cost even more money, so I would have thought that subsidies on new EFFICIENT cars would be a reasonable compromise. Mind you, even with subsidies, it is debatable as to how many people will feel comfortable splashing out on a car right now. Still, they will make things easier – and if they come in the form of scrappage allowances, this would certainly be a step in the right direction.

Europe reopens but travel operators fear tourists will stay away (Financial Times, Alice Hancock) shows that although travel is preparing to open up again, social distancing restrictions and traveller reticence is likely kill the buzz for some time to come. The European Commission is talking about time slots at the pool, Covid-19 warning signs and no self-service buffets. Tui is the world’s largest tour operator and plans to restart

holidays in July but it expects to run to cover costs and not make any profit. Interestingly, Tui and On The Beach have said that they have witnessed a bottoming out of summer bookings and Trivago has reported a 24% rise in the number of browsers on its website in April versus March. In terms of actually getting to the destinations themselves, Wizz Air restarted some routes from Luton Airport at the start of this month, while IAG and Ryanair are talking about resuming operations from July. * SO WHAT? * Social distancing for flights will make things extremely difficult for travellers and if you also factor in 14-day quarantines in some countries, it is likely to be enough to put people off leaving their country in the first place. I would argue that, if anything, companies such as Airbnb will benefit as lockdowns lift because you will have fewer movement and activity restrictions when you get to your destination. Why go to a hotel where you have to book your 20 minutes at the pool when you could hire a villa with its own swimming pool?

Then Fake steaks are real thing during virus (The Times, James Hurley) cites the latest data from Kantar which shows that companies who make plant-based meat substitutes saw sales shoot up by 25% in the first quarter of this year versus the same time period last year. A separate survey from the Vegan Society shows that 20% of people had cut down on dairy and eggs during lockdown and the same proportion of people said they would continue to buy meat alternatives once the lockdown ends. We hear a lot about the likes of Beyond Meat and Impossible Foods, but the UK’s Meatless Farm is also doing well at the moment, with sales up by 210% over the last year. * SO WHAT? * I believe that the more people try the meat alternatives, the more they will be willing to buy them again in future because they really are quite good (and this is coming from a meat-eater!). If these companies can bring prices down to similar levels or lower than meat, then I think growth could be even more rapid.

Uber abandons robotic scooters and gets rebuffed by Grubhub, Jio gets more interest and we see the latest situation in coronavirus vaccines…

Uber drops robotic scooters (Daily Telegraph, Olivia Rudgard) sounds like a faintly ridiculous headline, but the company has abandoned its robotic bike and scooter project following the recent meshing together of its Jump scooter division into Lime. The idea of this division had been to make autonomous versions of these modes of transport. Then in Grubhub refuses Uber’s latest offer as merger talks continue (Wall Street Journal, Cara Lombardo) we see that Uber’s advances have been rebuffed thus far as talks turn to price. There is no guarantee that the two will reach an agreement, but talks are ongoing. Obviously, Grubhub is holding out for a higher offer.

Reliance Jio bags fourth big investor with General Atlantic stake (Financial Times, Benjamin Parkin, Arash Massoudi and Anjli Raval) highlights more interest in the Indian digital company as New York-based private equity firm General Atlantic has purchased a 1.3% stake for $870m, following investments from fellow private equity firms

Vista Equity Partners ($1.5bn) and Silverlake ($750m) in addition to Facebook ($5.8bn). Reliance, owned by India’s richest man Mukesh Ambani, has oil refining and petrochemicals as its core business but the telecoms arm, Jio, was launched in 2016 and has grown exponentially. It has plans to list within five years and now appears to be giving foreign investors a chance to invest in India’s growth. * SO WHAT? * It has cost Reliance a lot of money to bankroll Jio’s growth over the years, and if you combine the debt it has accumulated as a result and current low oil prices, you can see why it has welcomed an injection of foreign capital.

Although most of this kind of stuff is noise at the moment, I thought it was worth mentioning Coronavirus vaccine front-runners emerge, rollouts weighed (Wall Street Journal, Peter Loftus) to give you a quick update on what the current situation is. Out of over 100 vaccines in development around the world at the moment, at least eight have made it to the human testing stage. Moderna and Pfizer have two of those and others, such as Johnson & Johnson, AstraZeneca and Sanofi are now boosting capacity in order to make hundreds of millions of doses of their own or partners’ vaccines. Anyway, it’s still very early days and any positive news on efficacy and production capacity at this stage is largely academic. Still, at least it sounds like we are going in the right direction!

…in other news…

I thought I’d leave you today with an interesting, yet rather pricey, gift idea in Would you pay £348 for ‘ultimate’ slice of toast – pricey device divides opinion (The Mirror, Courtney Pochin https://tinyurl.com/y9339pkr). Apparently, this thing does nice toast 😂

1. In NEWS ON WINNERS, Nissan Sunderland gets a lift, Norwegian Zoom rival goes moonbound on flotation, e-scooters come into their own, a covid-test supplier predicts ongoing sales and Apple buys into VR
2. In AIRLINES NEWS, a number of US airlines announce job cuts – as do Qatar and British Airways – while Virgin Atlantic appeals for finance
3. In RETAIL NEWS, Boohoo wants to go shopping, Garden centres look forward to opening, M&S has a massive sale and WH Smith faces a rocky road
4. AND FINALLY, I bring you suggestions for things to do under lockdown and a story that will surely melt your heart…

So Nissan Sunderland gets some potentially good news, Pexip skyrockets, e-scooters get a boost, a biotech selling covid tests does a roaring trade and Apple makes a VR acquisition…

Nissan in talks to build Renault models at Sunderland plant (Financial Times, Peter Campbell, David Keohane and Kana Inagaki) heralds some potentially good news for workers in Sunderland (but bad news for those in Spain) as the company is in talks to swap production of the Kadjar and Captur models from Spain to the UK. This would be part of Nissan’s global overhaul of its operations as it prepares to cut 20% of its global production capacity. Sunderland would be suited for this move because they use the same manufacturing system as the Qashqai and Juke, which are currently made in the UK. Talks are still ongoing, so it’s not in the bag yet. * SO WHAT? * Nissan is supposed to be making a major strategy announcement on May 28th, where it is expected to give more details on a European restructuring.

In Shares in Norwegian Zoom rival Pexip soar on stock market debut (Financial Times, Anna Gross) we see that the videoconferencing company which touts itself as a more secure alternative to Zoom – and is used by the likes of Amnesty International, PayPal and the US Airforce, no less! – saw its share price shoot up by over 40% on its stock market debut in Oslo yesterday. It raised Nkr2.4bn in the biggest Scandinavian software listing in history – made all the more impressive given the lack of listings elsewhere in Europe. Pexip’s revenue is almost entirely subscription-based and rose by 72% in 2019 while recurring revenues doubled in the first quarter of this year versus Q1 last year. * SO WHAT? * Sceptics worry that the gains such companies made under lockdown will disappear as people will go back to meeting face-to-face in the slow return to normality. However, as Pexip’s chief pointed out, people will be much more used to using video now and so will be more likely to use it in future. I can understand the sceptics’ point of view if people were in lockdown for a few weeks and videoconferencing was just used on the odd occasion, but the fact is that even the office technophobes have been forced to embrace this technology on a regular basis. When you couple that with (probably) fewer flights being available due to airlines going bust etc. and companies all wanting to cut costs, video is the obvious way to go and EVERYBODY will have used it in some shape or form so I think any previous resistance to using it will continue to fall.

Transport revolution: wheels in motion for e-scooter trials (Daily Telegraph, James Cook) highlights the new boost

that could propel the success of e-scooters as Grant Shapps, the Transport Secretary, announced that they will be tested on Britain’s roads next month. The idea is that their use could take the pressure off public transport that will find it difficult to incorporate social distancing as more people return to work. If all goes OK, a number of transport laws forbidding the use of electric scooters on public highways will have to be revised. Scooter company Bird is all a-flutter about the prospects as it is now resuming talks with local authorities who had previously expressed an interest and another start-up called Ginger, is also gearing up for launch. * SO WHAT? * Although e-scooters sound like a great solution to commuting at the moment, they are not without issues. Paris was an early adopter of the tech and it welcomed the likes of Bird and Lime (the latter of which recently got a hefty investment from Uber) in 2018 only to find that its pavements then became littered with them. There also needs to be some education on how to use them safely and how drivers need to behave so they can co-exist on the tarmac. There’s also the issue of hygiene for hire scooters and the spread of germs. You may then think – why don’t I buy my own? Not so fast – according to this article in TechRadar, they are not yet road legal. At the moment, the government is looking at hire scooters and doesn’t want to let any old scooter on the road for safety reasons (which sounds fair enough). For the record, I had a quick scan on Amazon and they look like they would cost £300-500 from a make you have never heard of.

Elsewhere, Bumper year ahead for firm selling Covid tests to the NHS (The Times, Alex Ralph) shows that dual-listed French/UK-listed biotech company Novacyt, is forecasting continued strong demand for its Covid-19 diagnostic test well into 2021. Most of the company’s operations are in Britain and it now supplies tests to over 100 countries, as well as to the NHS in Britain. Novacyt became the second company after Roche of Switzerland to have its test listed by the World Health Organisation for use in emergencies and it has also been approved for use in over 16 countries including the US and India. Wow!

Then in Apple buys virtual-reality streaming upstart Next VR (Wall Street Journal, Kimberly Chin) we see that Apple has used some of its massive cash pile to buy virtual reality streaming company NextVR for an undisclosed sum. The company broadcasts a mixture of live and recorded events like music concerts and sporting events for VR headsets. * SO WHAT? * This sounds exciting, don’t you think? Apple has been looking into VR and AR tech for many years and is rumoured to have built headset prototypes. It has made a few other acquisitions in the last two months including weather app Dark Sky and Ireland-based AI voice start-up Voysis. They do this sort of thing from time to time, so you shouldn’t read too much into it. Still, it does sound interesting!

Airlines announce more job cuts and Virgin Atlantic continues to seek out cash…

There just doesn’t seem to be any good news among airlines at the moment. US airlines eye job cuts once bailout strings expire (Financial Times, Sujeet Indap and Claire Bushey) takes a look at what’s in store for US airlines following the government bailout – more pain but also the

prospect of being able to access a second $25bn bailout fund should they need it. Elsewhere, though, jobs are continuing to get slashed in Qatar Airways to cut 9,000 staff (Daily Telegraph) and Walsh condemns quarantine plan as he confirms job cuts (The Times, Ben Martin), which shows that BA’s ultimate boss is going ahead with announcing 12,000 job cuts.

Virgin Atlantic in talks to raise £750m rescue cash (Daily Telegraph, Oliver Gill) highlights the troubled airline’s current efforts in raising money in order to survive. The company has approached a number of investors to get backing in addition to offering a stake in Virgin Galactic recently. The fight continues.

Boohoo wants to go shopping, Garden centres look forward to opening, M&S has a big sale and WH Smith faces tough times…

There seems to be an air of positivity surrounding some parts of UK retail at the moment. Boohoo plans to raise up to £200m as it eyes acquisitions (Financial Times, Jonathan Eley) shows that the online fashion retailer Boohoo wants to raise up to £200m to fund potential acquisitions. Rivals such as Asos and Joules have raised money this year from investors, but this is the first time that a high street retailer is expressly saying that the money raised would be for acquisitions. It said that it wants to make the best out of current circumstances and is reviewing a number of M&A deals. Punchy! Then Garden centres upbeat on reopening (Financial Times, Jonathan Eley) shows that some in the business of garden centres are also hoping to make the best of a disastrous year so far. The logic goes that not many people will be able to go on holiday and so those who have managed to hang on to their income through the outbreak will have more money to spend at places like gardening centres. Although business levels have generally been weak, some have seen success already from a sharp increase in online orders.

Elsewhere on the high street, Marks & Spencer holds huge sale after clothing piles up amid lockdown (The Guardian, Zoe Wood) shows the high street stalwart trying to shift its mountain of untouched spring and summer fashion by announcing a big sale. As part of this “rainbow sale”, 10% of takings will go to NHS charities. M&S is due to report its annual results next week. * SO WHAT? * Well M&S has to try and get rid of its stock somehow – and it’s great that it is using this opportunity to give money to the NHS. Still, there will no doubt be many other retailers getting rid of their apparel stocks – so there will be many bargains to be had!

WH Smith hits the buffers after collapse in rail travel (The Times, Ashley Armstrong) highlights yesterday’s announcement by the company that sales fell by a whopping 85% in April as its railways and airport business took a hammering due to lockdown. It has furloughed two thirds of its staff and is losing between £25m and £30m a month at the moment. Although it’s managed to keep 203 of its 600 high street shops open by being classed as an “essential retailer”, footfall has been poor as people have stayed at home. * SO WHAT? * It’s ironic that the boring high street part of the business has proved to be the saviour of the company just as its railway station and airports business was really taking off. It really needs the restrictions to be lifted on people moving about before it can get back to growing ways.

And finally, in other news…

I thought I’d leave you this week with a few things to possibly inspire you during lockdown in 50 Fun Things to Do When You’re Bored (mental-floss, https://tinyurl.com/ybrpcbqg). Then there’s the rather lovely story of Mum comes up with heartwarming idea so kids can hug grandparents in lockdown (The Mirror, Paige Holland https://tinyurl.com/y8n3xdpo). I got quite emotional reading that!

1. In MACRO NEWS, THAT German judge digs his heels in
2. In SECTOR-BY-SECTOR NEWS, we take a look at the latest developments in banking, shipping, UK real estate, retail and meat/less
3. In INDIVIDUAL COMPANY NEWS, VW shuts down production again, Tui faces challenges and Travelodge eyes a CVA
4. AND FINALLY, I bring you news of a ridiculously hard puzzle…

So that pesky German judge isn’t going away…

German judge warns EU over ‘very difficult to resolve’ legal crisis (Financial Times, Guy Chazan, Sam Fleming and Martin Arnold) shows that Peter M Huber, the judge at the centre of the EU kerfuffle I’ve been talking about recently, said in  Frankfurter Allgemeine Zeitung (aka “FAZ”, a German centre-right newspaper) that the EU’s infringement proceedings over his controversial ruling on the ECB “would trigger a significant escalation, potentially tipping Germany and other member states into a constitutional conflict that would be very difficult to resolve”. Although chancellor Angela Merkel said she would respect the decision of the court’s judges, she also implied support for the ECB. * SO WHAT? * Just in case this has escaped you, the fuss is all about Germany’s constitutional court ordering the government and parliament to give it a proper

assessment of its bond-buying – which it’s currently doing as part of the ECB stimulus programme – and whether it fits in with other policy objectives. It said that if it does not get a satisfactory answer within three months, it will stop the Bundesbank (Germany’s central bank) buying bonds. The judge said that most national courts had been unhappy with the ECJ’s primacy over national law over the last 50 years and that this latest development is just bringing things to a head. Europe has so far tried to brush this under carpet, but if this issue continues to grow it really could split the eurozone apart at a very crucial time. FWIW, I think if Europe can survive in its current form through coronavirus it will be able to withstand pretty much anything – but nationalist governments in Europe will no doubt use current weakness either as an excuse to leave the union or to hammer out better agreements (good luck with that, though!). If things get that bad, I do wonder whether Brexit negotiations will take a turn as Europe’s bargaining position gets weaker (although Britain’s negotiation position doesn’t exactly look brilliant either at the moment!).

We take a look at what’s going on in banking, shipping, UK real estate, retail and meat/less…

In the world of banking, Deutsche restarts job cuts after six-week pandemic hiatus (Financial Times, Stephen Morris and Olaf Storbeck) shows that the Germans are sharpening their axes once more after suspending redundancies for six weeks. 18,000 cuts are expected, with 50% of them in Germany – but they are not alone as Commerzbank yesterday announced 2,300 job cuts of their own at their first quarter results presentation. When you consider things like European banks’ share of trading revenues sink to lowest in five years (Financial Times, Laura Noona), which shows that the banks’ share of global trading revenues has fallen to five year lows, you can see that bosses have a great excuse to whack employees with. BNP Paribas, Barclays, HSBC, Société Générale, Deutsche Bank, UBS and Credit Suisse combined took just 34% of global banks’ trading revenues, according to research from industry monitor Coalition. * SO WHAT? * OK so the jobs cuts were expected but I do wonder whether this sort of thing, combined with the fallout from coronavirus and sliding trading revenues, will hasten cross-border consolidation within the European banking industry.

Meanwhile, Maersk warns of 25% drop in shipping as virus snarls trade (Financial Times, Richard Milne and Naomi Rovnick) highlights the depressing prospects for global trade as the chief exec of the world’s biggest container shipping line warned of rough seas ahead. He also suggested that protectionism could potentially be on the rise following the coronavirus outbreak as countries try to defend key companies and industries, meaning potentially less container traffic. * SO WHAT? * Given its size, Maersk is often seen to be a decent bellwether for the health of global trade as it transports almost 20% of the world’s containers, so a negative outlook will  not inspire confidence.

In the UK, following recent lockdown lifting, Homebuyers rush to estate agents as the market opens (The Times, Louisa Clarence-Smith) highlights an upswing in inquiries following the housing secretary, Robert Jenrick, saying on Tuesday night that estate agents’ offices and show homes could open once more and that viewings were now allowed (with social distancing measures in place). The housing market has been suspended for the last seven weeks so inquiries came flooding in yesterday. However, Properties ‘may lose 13% of their value’ (The Guardian, Patrick Collinson) cites research from the Centre for Economics and Business Research which forecasts that 2020 prices will fall by 13% due to fewer transactions, economic uncertainty and falling incomes. Funnily enough, estate agent Savills (so no vested interest here then 😂) points to its own research which says that the market would fall by

around 5% and a third of all valuation surveyors think it could be more like 4%.* SO WHAT? * The number of properties on the market may be boosted by more people wanting to downsize or move if they’ve lost jobs or if you’re being optimistic, they might be moving to bigger properties in suburban areas as working from home becomes more normalised. The only thing is, I do wonder whether selling prices will go down over time as homeowners try to hang on to their properties for as long as possible and then are forced into taking much lower prices when they sell because they HAVE to move. Early days. Mind you, if you DO have a job and some money set aside, you will be in a VERY strong negotiating position.

Stores’ PPE safety measures will be multibillion burden (Daily Telegraph) highlights a very real problem now facing retailers who decide to open to the public once more as making them compliant with new safety measures is going to cost a great deal of money that many don’t have. * SO WHAT? * Measures like the installation of screens at checkouts, supplying staff with masks and gloves, widening spaces between desks etc. will not come cheap and will be a massive cost burden on the companies who have no choice but to comply with safety guidelines. And it all comes at a time when money is VERY tight. The BRC observe that this will be a particular problem for businesses that have high footfall but low margins. The thing is, there is no alternative. They will have to take the hit and/or pass it on as higher prices to customers – which will be difficult if the customers are feeling the pinch themselves.

In food, Tyson reduces some beef prices as coronavirus pushes grocery store costs higher (Wall Street Journal, Jacob Bunge) shows that the US meat processing giant has started to cut prices that it charges supermarkets and restaurants for beef after factory closures have increased meat costs. Tyson processes about 20% of America’s beef and is looking to cut prices by a chunky 20-30% to its customers to keep its product affordable. Meat difficulties are music to the ears of meat-substitute rivals as Coronavirus meat shortages have plant-based food makers’ mouths watering (Wall Street Journal, Jacob Bunge and Heather Haddon) show that the likes of Beyond Meat, Impossible Foods and Tofurky are stepping in to satisfy customers’ meat cravings. * SO WHAT? * This is amazing for the plant-based protein companies as they have a captive customer, meat rivals having problems and people potentially willing to try their wares for the first time. Tyson must be desperate if it is willing to cut its prices so deeply. I have said before that there’s a lot of scope for plant-based foods companies to cut their prices both now and in the longer term as economies of scale start to kick in. If people like what they eat now (and I think they will – it really is very good these days) I think they are likely to buy again in the future – probably not every day, but they will certainly see it as more of an option than they may have done otherwise.

VW shuts production again, Tui has issues and Travelodge considers an IVA…

In a quick look at other big news stories today, VW to pause production of key models as hopes of quick recovery dashed (Financial Times, Joe Miller and Richard Milne) shows that VW is going to suspend production of four key models only weeks after restarting production in Germany because demand for new cars in Europe has been decimated. It will temporarily halt production of the Golf 7 and 8, the Tiguan and the Seat Tarraco as they can’t carry on cranking out vehicles that no-one’s going to buy. This will be taken as an ominous sign for rivals.

Then Tui warns of 8,000 job losses as travel firm faces ‘greatest crisis’ (The Guardian, Jasper Jolly) shows us the

drastic measures that Europe’s biggest travel group will have to take as it faces crisis in the tourism industry. Tui: when travel unravels (Financial Times, Lex) does give some reason for hope, though – bookings are starting to come in as customers in lockdown dream of freedom, inquiries are increasing, deposits are being taken and there’s always the prospect that it could bring in some cash from the sale of assets such as hotels and cruise vessels (albeit for cheaper prices than they could have attracted pre-coronavirus). Still, it’s not going to be plain-sailing.

Talking of hotels, Travelodge eyes CVA in battle with landlords over rents (Financial Times, Alice Hancock and George Hammond) shows that the budget hotel operator is ratcheting up its battle with landlords by threatening to launch bankruptcy proceedings if they don’t cut their rent demands. Landlords have been holding out, but this latest development could make them acquiesce. Tough times ahead…

And finally, in other news…

I thought I’d leave you today with news of a ridiculously difficult puzzle in Heinz creates ‘slowest puzzle on earth’ with all 570 pieces the same red colour (The Mirror, Paige Holland https://tinyurl.com/y7c3avkd). What a nightmare!

1. In MARKETS, MACRO & OIL NEWS, Asian markets weaken again, PM Modi unveils a stimulus package for India, Sunak extends furlough and Saudi Aramco suffers
2. In CONSUMER & RETAIL NEWS, UK consumer spending takes a hit, Landsec makes a painful portfolio revaluation, TM Lewin gets snapped up, Morrisons sees sales rise and AO.com is doing brisk trade
3. In INDIVIDUAL COMPANY NEWS PLUS COOL STUFF, Uber eyes a takeover of Grubhub, Toyota is downbeat on the future and then we see a coronavirus-zapping robot as well as good news for cinema fans
4. AND FINALLY, I bring you some virtual escape rooms and the most incredible skateboard trick…

So Asian markets weaken again, Modi unveils a stimulus, Sunak prolongs furlough and Saudi Aramco suffers from the weak oil price…

Asia stocks dented by pandemic fears and US-China tension (Financial Times, Hudson Lockett) shows general market weakness in Asia as confidence has been dented by rising US-China tension, fears of a second wave of infections in China and South Korea as well as Anthony Fauci, senior member of Donald Trump’s coronavirus task force, warning that lifting lockdown too early could result in “suffering and death”. Fortunately, Modi unveils $266bn stimulus package to revive Indian economy (Financial Times, Amy Kazmin) was something to cheer in the region as India’s Prime Minister announced the package – which is equivalent to about 10% of India’s GDP – in a TV address yesterday. Details are to be announced by his finance minister Nirmala Sitharaman over the next few days starting from today.

Meanwhile, Furlough extended to October at £100bn cost (Daily Telegraph, Tim Wallace, Simon Foy and Lizzy Burden) shows the UK chancellor providing some relief to employers and employees alike, but it will come at a cost. Let’s hope that this will be enough to get people back to work and earning while minimising risk.

Then in Saudi Aramco reports 25% dip in profits after oil market collapse (The Guardian, Jillian Ambrose) we see that even the world’s most profitable company isn’t immune to buffeting as it announced a big fall in profits due to weak oil price (which, TBF, it was responsible for!). Many analysts are saying that oil demand will take ages to recover to 2019 levels and, in the meantime, there is just tons of oil sloshing around in storage facilities and tankers parked in various parts of the world to soak up what demand there is at the moment. * SO WHAT? * Saudi Arabia said on Monday it would make additional cuts of 1m barrels of oil per day, but TBH this sounds to me like a token effort. IMO, China needs to start to recover properly before anyone can really get even mildly excited about oil because China obviously has scale and a proper pick-up in domestic production will help supply chains around the world get back to some form of normality.

UK spending takes a dive, Landsec revalues, TM Lewin gets snapped up, Morrisons has strong sales and AO.com does a roaring trade…

Spending collapses in April despite online sale rise (The Guardian, Richard Partington) cites the latest data from the British Retail Consortium (BRC) which says that sales fell by almost a fifth last month versus April last year – the sharpest drop since records began in 1995. * SO WHAT? * Clearly this is hardly surprising considering that options for consumers have been severely restricted of late, but online retailing obviously saw a massive rise and could potentially change consumer behaviour permanently (I would have thought this will be particularly true for older people who have been slower to embrace online shopping). In addition to the BRC’s figures, Barclaycard (which is the UK’s biggest credit card provider and handles almost 50% of all credit card and debit transactions) published data which showed that sales had fallen by 36.5% in April versus the previous year. I think it would be fair to say that no-one will be surprised by this, but the speed of any improvement will correlate closely with how quickly business are opened up. Confidence over job security is pretty fragile at the moment and so I don’t expect to see much in the way of frivolous spending.

Shopping centres owner Landsec cuts value of portfolio by £1.2bn (The Guardian, Julia Kollewe) shows that the property company has cut the value of its portfolio by almost £1.2bn (or 9%) to take into account current market conditions. The company added that it expects more

business failures and higher vacancy rates, especially in leisure and retail. It does not expect the economy to recover to pre-coronavirus levels until 2022 at the earliest.

On a slightly more positive note, Shirtmaker TM Lewin collared by private equity (Financial Times, Jonathan Eley) shows that SCP Private Equity has just bought the UK menswear chain from Bain Capital as a going concern for an undisclosed sum. It will fold it into Torque Brands, a collection of niche brands with global appeal. Bain acquired TM Lewin in a management buyout in 2015. * SO WHAT? * Clearly there is some interest in brands and private equity firms can pick up good assets for decent prices at the moment.

Morrisons sales up as it doubles online delivery slots during lockdown (The Guardian, Sarah Butler) shows that the grocer is on track to achieve £1bn in annual sales by next spring as the momentum for online shopping continues. However, the company said that the immediate outlook for sales was uncertain and that a near-40% drop in fuel sales and closure of in-store cafés has hit profits.

Talking about online, AO thrives in new world of shopping online (The Times, Ashley Armstrong) highlights AO World’s success in the coronavirus environment. Chief exec John Roberts said that sales have actually been so strong that it is like “Black Friday every day” with frenzied demand for office equipment, laptops and chest freezers. * SO WHAT? * It’s good to see some companies do well in these difficult times. Interestingly, rival Dixons Carphone said recently that it had actually been able to claw back two thirds of shop sales online, so you would have thought that this would give management ample excuse to cut the number of stores. 

Uber is hungry for Grubhub and Toyota gets pessimistic but then there are coronavirus-zapping robots and some interesting potential developments for cinemas…

Uber places Grubhub deal on the table (The Times, James Dean) highlights talks between the two regarding a $6bn all-share deal. * SO WHAT? * Grubhub is one of the biggest food delivery services in the world and a combination with Uber Eats could be interesting. Many think that there are too many players in the food delivery sector and that consolidation was likely. You may recall that Uber tried to buy Deliveroo in 2018 but it all collapsed because neither side could agree a price. I imagine that the price for Grubhub will now be quite reasonable given current circumstances!

Profits will fall by 80% Toyota warns (The Times) shows that the Japanese carmaker is painting a gloomy picture of the impact of the coronavirus and has cut its forecasts accordingly. Toyota’s president, Akio Toyoda, said he thought the effect from the coronavirus on sales would be more severe than that felt following the 2008 financial crisis. * SO WHAT? * Clearly things are tricky. However, I

really do wonder whether things will be that bad. Certainly the prospects for the next year or so are likely to be poor, but I really think that the key is a vaccine/cure. IF we get one soon-ish, I believe that economies will pick up at a rapid pace because businesses can get back to full capacity. Unfortunately, until then, things are likely to go sideways at best.

I really wanted to include UV light robot destroys coronavirus in 2 minutes (Financial Times, Junishi Oshita – great surname 😁) because the prospect of a coronavirus-zapping robot sounds brilliant, no? The machine, made by Texas-based Xenex Disinfection Services, announced a successful test of its LightStrike robot which emits light that renders pathogens too damaged to function. It has been proven to work on multi-drug resistant bacteria and the Ebola virus – and has now been shown to deactivate the coronavirus in just two minutes! Wow!

Then there’s good news for all you cinema fans out there in Vue aiming to screen films again by July (Daily Telegraph, Hannah Uttley), with social distancing measures in place – but it could be even better in the US in Coming Soon: theaters go back to the future with $2 retro blockbusters (Wall Street Journal, R.T. Watson) where cinemagoers may be tempted back by the prospect of watching classics on the big screen! This is one way to get punters back in as many “modern” releases have been shelved. Will the UK get this I wonder?? What movie would you like to see on the big screen again? For me, it would be Top Gun 👍

And finally, in other news…

I thought I’d bring you a few ideas for if you want something fun to do “virtually” if you have had enough of pub quizzes in You can now play virtual escape rooms online with your friends during lockdown (The Mirror, Paige Holland https://tinyurl.com/yacfnyfk). However, I think the star of the show today is the kid in Skateboarder, 11, makes history by landing 1080-degree spin (SkyNews, https://tinyurl.com/yd7qucua). Wow!

1. In MARKETS, MACRO & OIL NEWS, Asia markets wobble, Russia has leadership issues, German employers slash jobs and cheap oil has consequences
2. In CONSUMER & SPENDING NEWS, Americans face challenges, UK household spending is actually worse than originally thought and we see that consumers aren’t spending on fun things
3. In INDIVIDUAL COMPANY NEWS, Branson tries to use Virgin Galactic to save its earthbound counterpart, British Airways comes under criticism and Russia’s Yandex pivots
4. AND FINALLY, I introduce you to an inspirational Malaysian school girl and, separately, the worst song I have EVER heard…

So Asia markets have a moment, Russia has leadership problems, German employers cut jobs and cheap oil has downsides and upsides…

Asia stocks fall on fears over new coronavirus infections (Financial Times, Hudson Lockett) highlights a market fall over fresh concerns over the ongoing impact of the coronavirus in the region. In China, producer prices fell at their fastest rate for four years and there were reports of new infections in Wuhan, coronavirus cases in South Korea increased due to lockdown euphoria going wild in Seoul’s nightlife district and Australia took a hit as China suspended red meat imports from four abbatoirs in the country. As I keep saying – I expect market volatility on increased sensitivity to coronavirus newsflow, however “big” it is.

Coronavirus leaves Russian government rudderless (Financial Times, Henry Foy and Max Seddon) shows that Russia’s having a few leadership issues at the moment as Vlad’s “new” PM, Mikhail Mishustin, is laid low with the virus and so stand-in Andrei Belousov has now taken on a job that surely no-one would want. * SO WHAT? * He is tasked with slowing down the rate of infections AND lifting the six-week national lockdown which is causing huge damage to the economy and will probably end up being Putin’s fall guy if it all goes wrong. He’s doing this with his hands tied behind his back because oil revenues that were supposed to finance a national infrastructure spending programme have been thin on the ground because of the ongoing oil price weakness. Russia needs oil prices to be at around $42bn to balance the budget. This is a tough ask.

There’s bad news in Europe as German employers slash jobs as coronavirus lay-offs mount (Financial Times, Martin Arnold) shows us what the future could be in the UK as even Europe’s strongest labour market is being hit by the outbreak as restaurants, hotels and recruitment companies are seeing huge lay-offs – over 50% of them, according to the closely-watched Ifo survey. Everywhere is being hit – carmaking, travel, sports and entertainment companies etc. Unemployment is now at a three-year high of 5.8%. When you consider that Germany entered the crisis with almost full employment, you can appreciate how dire the situation has become.

The cheap oil price continues to have consequences in Shale-drilling pioneer Chesapeake Energy warns its future is in peril (Wall Street Journal, Rebecca Elliott) as it said that it has hired advisers to look into options that include bankruptcy. * SO WHAT? * Another shale producer looks like it’s close to biting the dust, following in the footsteps of Whiting Petroleum, which filed for chapter 11 last month. Research firm Rystad Energy reckons that 140 US oil and gas companies will file for bankruptcy protection this year as they just can’t cope with an environment with prolonged weak oil prices.

But then on the flipside, Morrisons, Asda and Tesco cut petrol prices to less than £1 a litre (The Guardian, Rebecca Smithers and Jillian Ambrose) shows that normal punters in the UK will be able to at last take advantage of the weak oil price. * SO WHAT? * This will certainly help consumers who are actually using their cars at the moment – but there are not so many of them these days! Great news for key workers, though, as they have had to bear the brunt of garages keeping their prices high. Garages aren’t going to be able to do that for much longer now…

American and British household budgets are dented and there’s a lot less spending on fun things these days…

Millions of Americans to lose health insurance as jobless rate soars (Financial Times, Hannah Kuchler and Kiran Stacey) highlights a very concerning state of affairs as people losing their jobs will be losing out on health insurance in increasing numbers, putting more pressure on the White House to cover the costs. The government launched a scheme this week that will cover 28m uninsured Americans for the cost of coronavirus tests and treatment but insurers and healthcare providers say that it won’t be enough to cover laid-off workers who are going to lose their insurance. * SO WHAT? * Given that almost 50% of all Americans get insurance through their jobs (the average family pays over $20k a year for insurance!) you can see why this is a nightmare waiting to happen. Think about THAT when you clap for NHS workers this Thursday – we are SO lucky to have the NHS.

Back in the UK, Coronavirus hit household spending much harder than BoE assumed (Financial Times, Chris Giles)

shows that household spending fell by over 40% in April according to a survey of anonymised bank accounts conducted by the London Business School. The findings make it look like the Bank of England’s forecast of the worst recession in 300 years was too optimistic! This assumption was made on the premise that household consumption was down by “only” 30%.

Under Armour says revenue could fall 60% this quarter (Wall Street Journal, Micah Maidenburg) shows that the company is going to cut more costs as store closures bite while first quarter revenues fell by 23% versus the previous year. Execs think revenues could drop by up to 60% in the second quarter. Then Caesars, Eldorado revenues fall on coronavirus casino shutdowns (Wall Street Journal, Micah Maidenburg) highlights weak revenues for the first quarter, confirming a trend that we saw last week with MGM Resorts and Wynn Resorts.

Interestingly, Disneyland Shanghai reopens in test case for recovery (Financial Times, Christian Shepherd) shows that the theme park opened yesterday to a limited number of visitors who had to adhere to strict social distancing rules. This will be closely watched by everyone but could be a model that will be rolled out to its other theme parks around the world. Baby steps, I guess…

The airline dramas continue and Yandex pivots…

Branson sells $500m space stake to bolster Virgin Atlantic survivial (Daily Telegraph, James Titcomb) shows that Branson is resorting to desperate measures to save Virgin Atlantic as calls for government help seem to be falling on deaf ears. * SO WHAT? * This is interesting because it would mean that he will give up majority control of Virgin Galactic, but then it would raise cash to support the leisure, holiday and travel divisions of the business. I wonder whether the government is looking at billionaire Branson, thinking that he has a lot of assets he could sell off to keep Virgin Atlantic going and that any potential handout will only come when he has endured some pain as well.

Meanwhile, Walsh ‘using virus as cover for sacking thousands of BA staff’ (The Times, Robert Lea) shows Branson’s arch-rival in a bit of a PR pickle as MPs are slinging the mud with abandon at BA parent IAG’s chief Willie Walsh. * SO WHAT? * TBH, what do they expect? With the best will in the world, air travel is absolutely decimated everywhere you look and it is unlikely that travellers are

going to return in their droves until a vaccine/cure is found for the coronavirus. Although it is clearly an absolute nightmare for all affected, airlines just have to hunker down, cut as many costs as they can and survive this horrendous coronavirus “winter” and hope that it all goes away. Part of that will be cutting staff costs, painful though that will be. 

In lockdown, Yandex evolves from Russia’s Google to its Amazon (Financial Times, Max Seddon) shows how even a massive company can pivot in response to the coronavirus as tech giant Yandex has managed to benefit from a 75% growth in use of its delivery apps and drive more people to use its other platforms for search, blogging and streaming. Its two core businesses of advertising and taxis have been badly hit by the outbreak, but it is hoping that these other businesses can mitigate some of that damage. Its chief operating officer Greg Abovsky said in an interview that “This obviously will sound super ballsy/arrogant, but we potentially have an opportunity to build a FedEx in the space of a few months”. Wow! * SO WHAT? * We often hear about smaller companies being able to switch focus under the coronavirus outbreak, but it is interesting to see how a giant like Yandex adapts.

And finally, in other news…

I actually got quite emotional when I read this story: For Malaysian schoolgirl, homework is sewing PPE gowns to help beat coronavirus (Reuters, Ebrahim Harris https://tinyurl.com/yag5ev2z). What a great little girl! And then at the other end of the scale I thought I’d bring you what I think must be the worst song ever written in Get your lazy body movin’ with PPAP singer’s new fitness challenge song, “Hoppin’ Flappin’ (SoraNews24, Casey Baseel https://tinyurl.com/ydbwy8zd). O.M.G. 😱😱😱

1. In MARKETS & MACRO NEWS, financial markets get a bit excited, Eastern Europe sees an opportunity with the German ruling and Johnson outlines a slight easing of lockdown
2. In CARS ‘N PLANES NEWS, car rental companies’ nightmares continue, pickup sales pickup in the US, Musk gets feisty and airlines continue to beg for money
3. In UK RETAIL NEWS, hedge funds short supermarkets and Burger King plans a gradual opening while Superdry and Primark benefit from European sales
4. AND FINALLY, I bring you an excited dog and a brainteaser…

So markets get excited, Eastern Europe looks at Germany’s decision with interest and BoJo outlines the next phase of lockdown lifting…

Strategists query sudden ‘sprint’ in US stocks (Financial Times, Philip Georgiadis) shows that some Wall Street analysts are saying that the US stock markets have risen too far too fast since recent lows but optimists are saying that the recent bear market rally is different to others because of unprecedented involvement of central banks. Asia stocks rise as China central bank hints at more support (Financial Times, Hudson Lockett) highlights more optimism in the Asian markets as China’s central bank, the People’s Bank of China, announced over the weekend that it was going to cut real lending rates and “place support for [the] recovery of the real economy in a position of greater priority”. * SO WHAT? * As I keep saying – and without trying to sound like some kind of mad conspiracy theorist – no-one’s got a clue about what’s going on right now because it’s never happened before. Stats are very difficult to rely on because the make-up and usual methods of collecting comparable data are all up in the air and so I believe that we are going to continue to see more volatile markets for the foreseeable future because they will just go up and down on coronavirus death rates and lockdown easing measures. I know that sounds harsh, but investors are grabbing onto any data at this point and trading on the back of it.

Eastern European states sense opportunity in German court ruling (Financial Times, Sam Fleming, James Shotter and Valerie Hopkins) follows on from what I was saying last week about the decision in the highest German court

that ruffled the ECB on current stimulus measures. Poland and Hungary are already having legal niggles with Brussels and they (and others) may see this latest decision as a useful precedent to follow. * SO WHAT? * This really is creating a right old kerfuffle and the ECB and Germany’s government are trying to formulate a co-ordinated response. As things stand at the moment, the court’s decision is putting the supremacy of EU law in question – something that has not happened before. This is the glue that keeps Europe together and if it starts to lose its teeth the ‘zone is going to look highly vulnerable.

I won’t spend too much time on Johnson unveils plan to get UK back to work (Financial Times, George Parker) because you probably know all this stuff already as the news is absolutely everywhere, but BoJo last night set out a three-stage plan to get Britain back on a “normal” footing. The first bit of the original message “stay at home” has been abandoned in favour of the rather fluffier “stay alert”, people who can work from home should continue to do so while those that can’t will be allowed to go back (if they can maintain social distancing) and restrictions on the amount of exercise you can take will be eased. The second phase, which could be June 1st at the earliest, will be a limited opening of shops and primary schools. * SO WHAT? * You will find that many people will be coming out of the woodwork saying that they know better than the government, but as I said last week I don’t think there is ANY workable perfect solution (the perfect one would be complete lockdown until a vaccine was found – and that DEFINITELY couldn’t happen). The government will continue to have to make a terrible choice between getting people back to work on the one hand and weighing up the risk of death on the other. Everything else is noise IMO.

Rental car company woes continue, pickup sales are strong and Musk rebels while airlines fight for money…

Running out of road: rental car groups fight for survival (Financial Times, Peter Campbell) follows on from another theme I mentioned last week – rental car companies suffering because of their huge exposure to the airline industry. Hertz just managed to survive bankruptcy by delaying debt payments due this month until May 22nd but then rival Avis announced a massive loss for the first quarter and an 80% fall in sales in April while Germany’s Sixt got a loan from the state development bank and Paris-based Europcar got a bank loan that was 90% backed by the French government. Enterprise, which is not a listed company, said it faced “significant and unprecedented challenges”. * SO WHAT? * If it wasn’t bad enough that its core business has been snatched away by anti-coronavirus travel restrictions hitting airlines, the other major problem here is that the companies have, over the years, had a tendency to own more of their respective fleets – which is all well and good when secondhand car prices are going up, but a nightmare when prices of used are falling. There is one slightly positive bit of good news, though – aversion to public transport and increasing numbers of people going back to work may well boost demand for people hiring cars. However, I would have thought this would be a drop in the ocean in terms of what the demand would have been. Still, better than nothing I suppose…

Meanwhile, there are a few things to cheer about for car manufacturers in China car sales bounced back a bit in April (Wall Street Journal, Trefor Moss) as the latest figures from the China Association of Automobile Manufacturers show a sales rise in the world’s biggest car market – something that backs up VW’s findings last week

– with commercial vehicle sales being particularly strong. Hardy truck sales bolster car companies during health crisis (Wall Street Journal, Ben Foldy) highlights some success in the US as well due to stronger sales of pickup trucks due to the fact that they are often needed for work and that states where they are particularly popular – Texas and Florida – have less strict lockdown restrictions.

In Elon Musk threatens to move Tesla HQ in row over lockdown (The Guardian) we see that Elon Musk is now suing California authorities because he wants to open his Fremont factory but they aren’t letting him. * SO WHAT? * I think Musk is just pouting. Wedbush analyst Dan Ives reckons that it would take 10 to 18 months to relocate Fremont production so he sounds like he is full of 💩. Still, I can fully understand why he wants Tesla to get back on track asap because the company needs to keep the momentum it’s been building in order not to slide back into its loss-making ways. We’ll just have to see who is going to blink first – Musk or California.

Airlines seek ‘urgent’ support after quarantine plan deepens crisis (Financial Times, Robert Wright, Peggy Hollinger and Tanya Powley) shows UK airlines continuing to push for government support – an appeal that has intensified following BoJo’s plans to introduce a 14-day quarantine for people arriving in the UK by air as part of his new tactics for fighting coronavirus. Airlines UK has appealed to the government to suspend air passenger duty, fees for air traffic control services and Civil Aviation Authority levies and executives are seeking an extension to the job retention scheme until October. * SO WHAT? * This is such a tricky situation, but the government surely has to get involved at some point otherwise there will be no industry left! Measures like quarantining will make things tricky, but Airlines/social distancing (Financial Times, Lex) shows that enforcing empty middle seats will do nothing, but doing it properly will mean that planes will have to fly 20-25% full – way less than the 70-75% number airlines need to be profitable, according to IATA, the industry’s trade body.

UK supermarkets are getting shorted and Burger King plans a gradual rollout while Superdry and Primark benefit from European sales…

In a quick scoot around some of the other news stories today, Funds bet on supermarket decline (The Times, Tom Howard) shows that hedge funds have doubled their short positions on Morrisons and J Sainsbury over the last month – Blackrock, Citadel, GLG Partners and Pelham Capital have taken bets worth over £566m – as they try to make money from “lockdown winners”. The feeling among some investors is that money will start to move out of stocks like supermarkets that have benefited most

markedly from the outbreak and into bombed-out areas that could start to pick up once lockdown restrictions start to ease.

There’s good news for fast-food fans in Burger King cooks up plan to reopen sites (Daily Telegraph, Hannah Uttley) as the burger purveyor is looking at opening high street outlets as soon as this week. The company said it was aiming to reopen one restaurant in every UK city by the end of May and then go from there.

There’s also good news in Primark and Superdry boosted by European store reopenings (Financial Times, Jonathan Eley) which shows that lockdown lifting is giving these apparel retailers a much-needed boost. Whether this momentum continues is another matter, however, as many consumers will have dented household budgets to contend with and buying a new t-shirt will be less of a priority for many.

And finally, in other news…

Most people will get pretty excited if they see themselves on the telly (I know I would be!), so we can all identify with Dog sees himself on the news and has priceless reaction to his TV appearance (The Mirror, Paige Holland https://tinyurl.com/yc7lqmy7). And if you have a few minutes today, why not have a go at this: Tricky pencil brainteaser takes 20 seconds to solve – but can you do it quicker (The Mirror, Paige Holland https://tinyurl.com/ybx3qqak).

1. In MARKETS & MACRO NEWS, the NASDAQ makes up all its coronavirus losses, China exports pick up, Lagarde bats away the German problem, Denmark and Norway talk lockdown lifting and the Bank of England predicts a baaaaad recession
2. In RETAIL NEWS, Neiman Marcus files for bankruptcy, Next aims to create beauty halls and Superdry makes ground in Europe
3. In INDIVIDUAL COMPANY NEWS, Virgin and O2 get together, Uber juices Lime and Nintendo benefits from lockdown game sales
4. AND FINALLY, I bring you Banksy’s latest creation…

So the NASDAQ recovers, China exports rise, the ECB brushes off the German threat, Denmark and Norway look to relax and the Bank of England predicts the worst recession for 300 years…

Rather incredibly, Nasdaq index recovers all of 2020’s losses triggered by Covid-19 (The Guardian, Julia Kollewe) shows that the tech-skewed index has benefited from the continued strong performance of Amazon, Microsoft and Netflix, among others. Basically, the “FAANGM” stocks (it’s funny how the FAANG acronym has grown to recognise Microsoft, although it’s now getting a bit unwieldy 😂) have all benefited from the current crisis requiring technical solutions. Whether it’s staying in touch with people via Facebook, shopping for essentials on Amazon, watching and consuming Apple content on its sleek devices, discovering Tiger King on Netflix, surfing the ‘net on Google (and watching the ads) or using Microsoft’s Teams while you’re working from home, it seems that tech has you covered. * SO WHAT? * The sector is now a bit of a crowded trade, so you do wonder whether traders and investors will seek better returns from other bombed out sectors as lockdown starts to lift.

Surprise increase in China exports gives world markets a lift (The Times, Ben Martin) shows that Chinese exports are starting to recover as the country reported a 3.5% increase in shipments last month versus the previous year. Cynics will say that this is just a result of order backlogs and therefore more of a one-off than a signal of things to come. On the subject of China exports, FDA pulls approval for dozens of mask makers in China (Wall Street Journal, Austen Hufford and Mark Maremont) shows that some exporters are going to get a nasty surprise as America’s FDA has reduced the number of manufacturers approved to export N95-style masks from around 80 to just 14. N95 masks filter out 95% of particles, hence the name and these manufacturers made masks that filtered out way less than that.

Meanwhile, in Europe, Christine Lagarde says ECB is ‘undeterred’ by German court challenge (Financial Times, Martin Arnold) shows that the president of the ECB is saying “what-evs” to Germany’s highest court that ruled earlier this week that the ECB should come up with a proper strategy for its massive bond purchasing programme within three months otherwise it will stop the Bundesbank from taking part. She effectively flipped the Germans the bird, saying that the ECB was answerable to the European Parliament and that it would do “whatever is needed, whatever is necessary” to help Europe through the current crisis, adding that central banks need to think outside the box given the current exceptional circumstances. It seems to me that the ECB are downplaying this at the moment, but I think it could become a serious problem. Surely Angela Merkel is going to have to step in to solve this.

Denmark and Norway announce further loosening of lockdown (Financial Times, Richard Milne) shows that the two countries are planning on making major steps back to normality in the next few weeks. Norway looks like it will be on of the first countries in Europe to open its entire school system and Denmark will allow shop openings from Monday with restaurants, cafes and school classes for sixth to 10th grade to follow a week after. Both countries locked down quite early, on March 12th.

BoE warns UK set to enter worst recession for 300 years (Financial Times, Chris Giles) highlights the rather gloomy outlook from our own Bank of England as it published its latest monetary policy report. The report forecasts output falling by 30% in the first half of the year and a whole load of other depressing numbers. The main message, though, from all this is that banks need to keep lending in order to get the economy back on track. Also, just a word of caution – forecasts made at times of dramatic economic upheaval tend to be wildly inaccurate and subject to almost constant change. Things are obviously going to be bad, but no-one really knows by just how much at this stage.

Neiman Marcus files for bankruptcy, Next aims for something new and Superdry benefits from Europe…

Neiman Marcus, the retailer to the rich, files for bankruptcy (Wall Street Journal, Suzanne Kapner and Soma Biswas) highlights the downfall of another US retailer as the luxury department store filed for chapter 11 bankruptcy yesterday. Canadian shoe retailer ALDO did likewise on the same day as more retailers go down the same path as J.Crew. It sounds like Neiman Marcus was felled by massive interest payments on huge debts, which proved to be terminal once Covid-19 came along, stopping all trading.  The company operates 43 Neiman Marcus stores, two Bergdorf Goodman stores and 22 Last Call discount stores and the company is going through chapter 11 to cut $4bn off its $5.1bn total debts. * SO WHAT? * Another one bites the dust (sort of). Saks Fifth Avenue’s parent Hudson’s Bay could be interested in buying the department store but while the vultures circle, chains like JC Penney (which has missed two interest payments totalling $29m over the last two months) continue to suffer. Retail is undergoing a brutal shake-out at the moment.

In the UK, Next to create new chain of upmarket beauty halls (The Guardian, Zoe Wood) highlights some “out of the box” thinking from the high street apparel retailer as it

confirmed plans to become a “new force in beauty retailing” by taking on the beauty hall floors of five “dead” Debenhams stores owned by property firm Hammerson. It will use the space to launch a new brand called The Beauty Hall from Next, with a view to launching as soon as possible after the coronavirus lockdown lifts. Next already sells brands including Estée Lauder, Clinique and Emporio Armani via its website, but also has access to premium brands like Bobby Brown, Lancôme and Nars via Fabled.com, which it bought from Ocado last year. * SO WHAT? * Sounds like a nice idea, but you wonder whether this is the right time to do something like this. OK, so you would get the space cheaply but is this what consumers are going to be flocking to buy at a time like this? I guess you could argue that this is “affordable” luxury stuff and people might like the idea of a new face on the high street but I’m not a raging fan of this yet. It’ll be interesting to see whether Next tries something funky or whether it’ll just look like yet another beauty floor of a department store with all the orange people hanging around, waiting to spray/paint you with their wares.

Superdry back in fashion as Europe opens its doors (The Times, Ashley Armstrong) shows that the fashion retailer had something to cheer about as it reported that shops in Germany, Sweden, Austria and Denmark were performing above expectations and continuing to improve. The company said that fourth quarter sales fell by 37% but online sales had almost doubled. A bit of rare good news for UK high street fashion!

Virgin and O2 get together, Uber buys a piece of Lime and Nintendo benefits from lockdown sales…

Virgin and O2 deal looks set to put BT in the shade (Daily Telegraph, Chris Johnston) shows that BT will have a bigger rival to compete against after Liberty Global (owner of Virgin Media) and Telefonica (owner of O2) decided to merge their UK TV, broadband and mobile interests in a £31bn deal. The deal is expected to close by mid-2021. * SO WHAT? * Further consolidation in the industry was bound to happen at some stage after BT bought EE in 2016, although the timing of such a deal in the midst of a pandemic will have raised some eyebrows. It’s unclear at this stage whether the Competition and Markets Authority (CMA) will be taking a close look. Surely, given current circumstances, it will wave this through – but you never know!

Uber banks on two-wheeled future with $170m stake in Lime scooter rental firm (The Guardian, Dominic Rushe) highlights Uber’s purchase of $170m worth of Lime, the electric bike and scooter rental company. Uber will transfer its own existing electric bike and scooter division (called Jump) to Lime and their apps will be integrated. * SO WHAT? * This sounds decent enough strategically and I

like the fact that Uber is folding its existing business into Lime’s, which will hopefully make both stronger. The only caveat I have with this is the fact that not all cities like e-scooters. Mind you, the companies might do OK for the time being as commuters may prefer to avoid public transport (although there is the question of how Lime is going to protect users from cross-contamination) and there is a chance that this may linger – because let’s face it, whizzing around on an electric scooter looks like a lot of fun!

Nintendo collects lockdown power-up as sales shift online (Financial Times, Leo Lewis) shows that the Japanese company has been doing very well from online sales of its games over the first quarter. A record 48.5% of its software sales were made online, bringing it into line with rival Sony – and it saw 21m units of the Nintendo Switch console sold globally during that time. * SO WHAT? * This is great for Nintendo so far, but if the lockdown continues for the longer term, it is likely to adversely affect new game developments. Also, console revenues tend fall every four years as gamers look to a new generation of console, and Switch was launched over three years ago. I think that the coronavirus will have helped to prolong the usual cycle by several months, but I think Nintendo may prove to be vulnerable especially when Sony and Microsoft launch their new consoles later in the year.

And finally, in other news…

I must say that I missed this the other day, but thought I’d bring it to your attention in case you missed it as well: A British nurse is the chosen superhero in new Banksy artwork (MSN, Paul Sandle https://tinyurl.com/yadhfqc3). Superb 👍👍👍

1. In MACRO NEWS, the US ratchets up the rhetoric with China, Brussels warns of the consequences of discord and UK business rates face a delay in their overhaul
2. In CORONAVIRUS “WINNERS” AND LOSERS, we see “winners” in online shopping, news and cycling versus trouble in ride-sharing, casinos and advertising
3. In OTHER NEWS, VW sees strong car sales in China, JD Sports whinges about Footasylum and there’s more about US meat shortages
4. AND FINALLY, I bring you a priceless reaction to Mentos and Coke…

So the US gets feisty, Brussels warns of discord and UK business rates overhaul faces a delay…

Following on from what I was saying the other day, US looks to step up economic action against China (Financial Times, James Politi and Lauren Fedor) shows that Trump is considering some feistier economic measures against China using the accusation that China caused the pandemic as an excuse explanation. * SO WHAT? * This sounds like a lot of hot air to me as Trump hasn’t produced any evidence of his accusations and it all sounds like a hastily put together way of Team Whitehouse trying to torpedo the January trade agreement before President Xi does. In the run-up to the November election, he clearly wants to give the impression that he is calling all the shots but I think there is a danger here that in trying to look like the hero, he may make economic recovery harder because many American companies NEED to do business with China (just ask Apple). Xi has the perfect excuse for walking away from the January agreement in the coronavirus, but if he keeps the January trade pact intact it would make me wonder whether Xi is telling us the real story about China’s underlying economy.

At the moment, it doesn’t look like Brussels could organise a p!ss-up in a brewery and Coronavirus threatens future of eurozone, Brussels warns (The Guardian, Daniel Boffey) highlights the difficulties in getting all the eurozone’s member states to agree on anything in the face of what is expected to be the worst recession since the Great Depression. * SO WHAT? * The EU’s economic commissioner, Paolo Gentiloni, called for more unity. However, this is easy to say and difficult to do because there is a growing divide between the poorer southern European countries who were already having problems before the outbreak and the more prosperous

northern European countries who are proving to be increasingly reluctant to take more of the collective financial burden. Let’s hope that for everyone’s sake they manage to sort this out as some of the numbers they are bandying around regarding the scale of the economic damage are frightening (although, let’s be honest, no-one’s got a clue – it’s all “best guess” stuff). The UK is expected to suffer more because of the additional complications of Brexit.

Government delays overhaul of business rates (Financial Times, Jonathan Eley) is the equivalent of the government kicking retailers in the genitals while they are already on the floor writhing around in pain from being punched in the face by thrifty consumers and given a wedgie by the coronavirus. It turns out that the government will delay the resetting of property-based tax from next year to 2022, according to the Department of Housing, Communities and Local Government yesterday. It argues that this will remove uncertainty for businesses, but critics say this will just mean higher bills for longer next year at a time when they could do with some help. * SO WHAT? * Business rates are reviewed every five years (the process is called “business rates revaluation”) by taking into account the rental values of company premises and then coming up with a multiplier that rises with inflation. At the moment, many retailers are “enjoying” a business rates holiday in 2020-21 to help them through the coronavirus effects, but this decision means that they will start to have to pay bills from April next year based on rental values last measured in 2015 (they were way higher back then, so the bills are higher). Things were rocking in 2015 – we had yet to have the Brexit vote, David Cameron had yet to buy his posh shed and of course there was no global pandemic to worry about either, so rents were high. I think that there’s still time before next April to come to some kind of compromise (or extend the rates holiday), but as things stand at the moment it does not look good and may mean that more businesses decide to call it a day.

Online shopping, news and cycling pop while ride-sharing, casinos and advertising flop…

Although Amazon gets most of the media attention for online shopping success, Shopify surges as retailers rush online (Financial Times, Tim Bradshaw) shows that the Canadian e-commerce group is also doing pretty well as it reported better-than-expected first quarter results along with accelerating growth in April. * SO WHAT? * Its success will cement its reputation as a player snapping at the heels of Amazon’s dominance (eMarketer figures now put it ahead of eBay in terms of market share for US ecommerce sales) and it said that it has not seen much of a drop in consumer spending during the course of the outbreak. The company added that retailers that were signed up to Shopify and who had to close their physical shops were able to claw back 94% of their sales volumes online between mid-March and late-April. The company has benefited from providing back-end support to thousands of businesses large and small who use its software to run independent online stores. New stores created via Shopify shot up by 62% in that time period and although things are going well now, the company was at pains to say that future spending patterns would be difficult to predict and did not provide guidance for the remainder of the year.

Times like these are a boon in New York (The Times, Simon Duke) is really interesting because it shows that, contrary to what we usually hear about newspapers, The New York Times has managed to sign up 587,000 new digital subscribers over the first quarter – its biggest quarterly increase since it implemented a digital paywall in 2011. The New York Times is the second most-read newspaper in America after USA Today and is not well-liked by President Trump who describes it as “the failing New York Times”. It started to push digital subscriptions in 2011 to reduce its reliance on advertising revenues.

Other “winners” include Wheel turns full circle as cycling gives Halfords a boost (The Times, Ashley Armstrong), which highlights Halfords as a beneficiary of the rejuvination of cycling amid lockdown. It has been classified as an “essential retailer”, which has meant that it has been able to stay open and its strong performance in yesterday’s trading update helped to push its shares up by an impressive 23%. Not bad for a company that said in March it was expecting a sharp drop-off in sales. Weakness in its motoring division (because of fewer car journeys during lockdown) was more than offset by the strength in its cycling division as people looked for alternatives to public transport to get to work. * SO WHAT? * I must say that I had been wondering at the beginning of the year whether we had reached “peak cycling” and that the years of growth enjoyed by industry following Bradley Wiggins’ triumphs at the London Olympics and beyond had started to tail off. Now I don’t know the breakdown of sales but I do wonder whether it’s not the sporting side of things that’s powering the renewed interest in cycling but more the commuting/leisure side of it that’s powering Halford’s pedals. It will certainly be interesting to see how sales go in the coming months as more people return to work and whether they decide to buy new bikes in greater numbers to get them there.

Peloton rides a coronavirus surge in home workouts (Wall 

Street Journal, Sharon Terlep and Micah Maidenberg) highlights the ongoing success of Peloton as its quarterly sales shot up by 66% as locked down Americans pedalled away their lockdown frustrations on their $2,000 bikes (which are experiencing delivery delays). The number of subscribers to its online workout classes almost doubled in the first quarter – as has its share price since mid-March. * SO WHAT? * I have always maintained that I think Peloton is a bit ridiculous due to having to stump up $2,000 for a bike that you can only use indoors and that you still have to pay something like $40 a month to have access to online classes. I use my own bike (which I can also use outdoors) on an old turbo trainer (I used to be into doing triathlons many moons ago!) connected to Zwift (about £12 per month). HOWEVER, given that social distancing is likely to continue for the foreseeable, that gyms may be closed and that people may feel uneasy about sweating in close proximity to others for a while yet, Peloton may well continue to benefit.

And in the losers’ corner today, Uber, Lyft cut costs as fewer people take rides amid coronavirus pandemic (Wall Street Journal, Tim Higgins and Parmy Olson) shows that the two ride-sharers are bracing themselves for fewer passengers and cutting 14% and 17% of their respective workforces as a result. Uber’s CEO, Dara Khosrowshahi, hinted in a memo to workers that there may be more cuts to come as the company advanced efforts to “adjust the company’s cost structure” (i.e. sack people). * SO WHAT? * Given what’s been happening, you can understand why these cuts are being made. Mind you, I do wonder whether some workers would prefer to get an Uber rather than sweat the commute on a bike or ride with other people on public transport. Anyway, it’s interesting to note that this announcement came not long after California announced plans to sue both companies for misclassifying their drivers as contractors rather than employees. The beef here is that if they are classified as employees, the companies will be forced to pay more in the form of benefits etc. which will eat away at their profitability.

Meanwhile, things are looking decidedly difficult in the world of casinos in MGM Resorts warns 63,000 workers of possible layoffs (Wall Street Journal, Katherine Sayre) highlights a gloomy message to the company’s employees due to the impact of travel restrictions and Wynn Resorts details coronavirus damage (Wall Street Journal, Katherine Sayre) shows that it is not alone as it announced a big net loss and huge revenue decline in the first quarter.

I was quite surprised to see Costco’s sales fall for the first time in over a decade (Wall Street Journal, Sarah Nassauer) as lockdown restrictions hit customer traffic, taking its sales down to levels not seen since July 2009. * SO WHAT? * Grocery retailers such as Costco, Walmart and Target all saw a big spike in sales at the beginning of the outbreak but then their costs increased as they had to employ more staff keep up with frenzied demand as well as to cover those who were ill. Some Costco stores are returning to normal hours as more states relax restrictions.

Back in the UK, Five more Debenhams stores to shut for good with 1,000 jobs at risk (The Guardian, Joanna Partridge and Sarah Butler) shows further suffering in department stores and ITV advertising revenues slide 42 per cent in April (Daily Telegraph, Chris Johnston) just puts a number to what I was saying on Monday as the company has born the brunt of massive cuts in advertising budgets by clients who are trying to conserve cash to survive.

VW sees a sales uptick, JD Sports has a huff and the meat sweats continue in America…

VW hails speed of car sales recovery in China (Financial Times, Joe Miller) highlights something that goes against what many car manufacturers have been saying as the company says that demand for cars in China is almost as high as it was this time last year, signalling a roaring comeback in an important market. It added that it expected its China business to recover to the same monthly levels as it did in 2019. However, the company did point out that this is largely helped by the high number of first-time buyers – which is different to most other regions. Its general outlook, however, remains uncertain.

JD Sports attacks regulator for blocking Footasylum merger (The Guardian, Sarah Butler) is now blaming the UK’s competition watchdog for putting jobs at risk as it torpedoed the merger between JD Sports and Footasylum. JD Sports – which also owns Blacks, Go Outdoors, Millets – is considering an appeal.

Regular readers of Watson’s Daily will know that I have been banging on about the American meat shortages – well A smart guide to the US meat shortage (Wall Street Journal, Jaewon Kand and Jacob Bunge) does a great job of summarising the story so far. The conclusion is that it is likely to get worse over the coming weeks as more processing factories shut down because their staff are getting ill. I would imagine that chopping up animal carcasses day-in-day-out is not a job that is easy to recruit for…more good news perhaps for the plant-based protein alternatives like Beyond Meat etc.?

And finally, in other news…

“Alternative” stories were a bit thin on the ground today, so I thought I would leave you with something that made me laugh so hard I genuinely almost fell off my chair when I first saw it. For those of you who don’t like swear words, I warn you that there is one at the end of this video. You can see what’s going to happen, but the reaction is priceless…