Category: Uncategorized

1. In MARKETS, MACRO & CORONOVIRUS MEASURES NEWS, markets rise and we look at the latest responses from China, Trump, Putin and Sunak
2. In GROCERY-RELATED NEWS, food service companies are roped in, better weather helps UK farmers, grocers continue to hire and Aldi staff are given a bonus
3. In CORONAVIRUS “WINNERS” , we take a look across the spectrum
4. In OTHER NEWS, I bring you what some people are doing under lockdown…

So markets rise while China, Trump, Putin and Sunak have varied responses to the crisis…

Dow soars more than 11% in biggest one-day jump since 1933 (Wall Street Journal, Alexander Osipovich, Caitlin Ostroff and Joanne Chiu) highlights the market response to signs that lawmakers were closing in on a massive coronavirus bailout package and just an hour ago, White House, reaches deal with lawmakers on $2trillion coronavirus stimulus bill deal (Wall Street Journal, Joshua Jamerson and Andrew Duehren) shows that a deal has been secured. I don’t know what the details of it are right now, but if it goes beyond expectations there will be further strengthening in the market but if it’s deemed to fall short, I would imagine yesterday’s gains would be wiped out and then some. US boost hopes trigger biggest one-day FTSE rise since 2008 (Daily Telegraph, Louis Ashworth) highlights big gains in the UK markets yesterday before a deal was reached so again, if it’s deemed to exceed expectations there will be another ramp up today, but if it falls short, I’d expect most (if not all) of the gains to be lost. The devil will be in the detail! Let’s hope it’s good – it seems that central banks will be running out of ammo…

Responses to the ongoing outbreak differ around the world. China to ease coronavirus restrictions on Hubei province (Financial Times, Tom Mitchell, Xinning Liu and Nian Liu) shows that there is potentially light at the end of the tunnel as travel restrictions in and out of Hubei are being relaxed from today (although Wuhan will keep current restrictions until April 8th); The cure’s not worth it, says Trump as he plans to reopen US by Easter (Daily Telegraph, James Titcomb) shows that the US president is keen to get things back to normal, even suggesting that the economy could reopen by Easter, April 12th and that people could return to work with the right precautions; Russian official questions Vladimir Putin’s coronavirus data (Financial Times, Henry Foy and Max Seddon) shows that Moscow’s mayor, Sergei Sobyanin, is casting doubt on Putin’s rather downbeat assessment of the coronavirus as he believes that the government’s official data is lowballing the number of coronavirus cases; and UK chancellor Rishi Sunak is clearly managing down expectations in UK chancellor: ‘We won’t be able to save every business’ (Financial Times, Chris Giles, Jim Pickard and Daniel Thomas) as he continues to try to cobble together a rescue package for the self-employed – and UK airlines and airports told not to expect sector bailout (The Guardian, Gwyn Topham), following calls from the industry for outside help as the International Air Transport Association (IATA) doubled its worst-case scenario figures from a fortnight ago.

Food service companies switch customers, farmers get planting, grocers continue to hire and Aldi staff get a bonus…

Food service groups enlisted to assist the vulnerable (Financial Times, Jonathan Eley and Laura Hughes) shows that the government is about to enlist the help of food service companies to put together and distribute groceries for vulnerable people who are self-isolating. Companies such as Brakes and Bidfood normally supply food in bulk to caterers, but given that cafés, pubs, restaurants, hotels and canteens have shut down and they still have a ton of product. The Department for the Environment, Food and Rural Affairs is putting together a scheme that will prioritise food deliveries to some of the 1.5m people classified as being vulnerable. The scheme isn’t yet finalised but it could be overseen by council and NHS representatives and delivered by the armed forces. * SO WHAT? * This is potentially great news and will give a lot of people hope. It really is quite something to see how organisations and companies are all trying to work together for the general good, don’t you think?

After the floods, a rainbow for farmers (The Times, Philip Aldrick) heralds more good news as this week’s better weather means that many of the UK’s farmers, who had suffered recently with flooded fields from a ridiculously wet February, are now able to do some spring planting. * SO WHAT? * Some farmers will still suffer, but at least that this means that the harvest won’t be a complete dead loss. Let’s hope that the weather holds.

Grocers launch big hiring sprees as coronavirus spurs demand (Financial Times, Alistair Gray and Jamie Smyth) highlights the grocery retailer bonanza as both online and

offline retailers are hiring like crazy to cope with the huge demand as customers continue to buy like there’s no tomorrow. I’ve already mentioned in past editions of Watson’s Daily Walmart’s plans to hire 150,000 extra staff, Amazon hiring of 100,000 and now Instacart, the grocery delivery service, says it is looking for an eye-watering 300,000 extra employees. Companies are seeing a deluge of applications and are working hard to fast-track inductions. Australian supermarket Coles saw 36,000 applications for 5,000 casual employees last week and CVS, the US drugstore chain, is looking to fill 50,000 positions immediately. * SO WHAT? * No-one could have foreseen this only a few months ago. Supermarkets have gone from being boringly essential to potentially the saviours of society! Clearly, many of these roles will be temporary/contract in nature but when this coronavirus thing calms down, supermarkets will have learned A LOT about their customers. I would expect the UK incumbents to use the extra money they’ve earned over this period to upgrade their delivery networks and capabilities while Aldi and Lidl will either have to significantly up their commitment to it or pay through the nose to try and get on board with Ocado or maybe even Amazon. Alternatively, they may just avoid delivery all together and put their money into lower prices or other initiatives – but I think that putting money into delivery is more likely.

Talking about Aldi, Aldi staff to be given 10pc bonus after tireless work (Daily Telegraph, Laura Onita) highlights the German discounter’s gratefulness towards their staff as they announce a 10% bonus (cynics will say that this is possibly a sweetener to stop them from going to rivals). The award will be backdated to March 9th and it has also cut its hours to 8am-8pm Monday to Saturday to give staff a rest and allow for restocking. * SO WHAT? * Tesco announced a similar bonus last week. From a human aspect this is great, but from a commercial aspect, treating staff well will be key to keeping them as EVERYONE is hiring and will continue to hire for a while yet.

I take you from the virtuous to the dubious in this list…

Let’s start on a positive note! How the viral app Houseparty is entertaining a generation in lockdown (Financial Times, Hannah Murphy) shows that viral video chat app Houseparty’s popularity is booming as millions of people stay home but want to keep in touch with friends. It is seeing a massive uptick in users from youngsters and their parents alike and the app’s developer, Epic Games (of Fortnite fame), said that it got 2m downloads worldwide last week alone! It is now #1 in the UK app store in 17 countries! If this is a more casual thing, Video apps: rising chatter (Financial Times, Lex) also mentions Zoom as a huge beneficiary of the current situation as more people work from home. * SO WHAT? * I think that Houseparty is a VERY interesting prospect as it touts itself as a more socially responsible alternative to Facebook. Epic Games bought it last June and has a LOT of money to chuck around – so expect more features and more games to get more people hooked. On the other hand, Zoom’s share price has doubled so far this year and expectations are high and I would say that there is a risk that the interest is fleeting and that many free subscribers won’t convert to paying ones. However, enforced video chat may make something that was a relative rarity into something much more commonplace. Coronavirus may well have created a more permanent demand for video conferencing.

Keeping on the positive, Facebook usage soars, but online advertising plunges (Wall Street Journal, Jeff Horwitz and Suzanne Vranica) shows that although the company is seeing a 50% increase in traffic across its apps, online advertising revenues are likely to take a drubbing as budgets are hit across virtually all companies. (As an aside, Facebook eyes multibillion-dollar stake in Reliance Jio (Financial Times, Anjli Raval, Tim Bradshaw and Benjamin Parkin) heralds a preliminary deal for the former to take a

10% stake in the latter to give Facebook a foothold in the Indian markets). Nike says digital orders offset damage to retail from coronavirus (Wall Street Journal, Khadeeja Safdar) shows that there may well be hope for some retailers post-coronavirus as Nike said that it was able to offset the majority of its lost retail sales with online orders and Punters stuck at home bet on 888 to break boredom (The Times, Dominic Walsh) shows that the share price of 888 shot up by 31.7% as it announced a strong performance. It is benefiting from a relatively low exposure to sports betting (which has been a massive growth area for others, but which has also been hit by the unprecedented levels of event cancellations) and increasing interest in online poker, which had been in decline, as punters confined to their abodes try to beat the boredom by gambling. * SO WHAT? * I think the rise in Facebook usage is unsurprising and Nike’s news is pretty interesting given that it could give other retailers hope. I’m a bit more circumspect on 888 though because I would imagine that the government will be keen not to let gamblers slide into old habits in a bid to “earn” money. OK, so playing online poker initially may provide cheap distraction for a while, but the danger is that it lures people into betting on a larger scale and I expect that the government will want to keep a lid on that.

Going down the dodgier end of the scale, but still staying with “winners”, Gilead criticised over ‘orphan status’ for potential virus treatment (Financial Times, Donato Paolo Mancini) shows that the US drugmaker is being accused of being greedy as it applied for “orphan status” under legislation that will give it exclusivity on sales and the ability to set prices for its remdesivir treatment for seven years. Critics say that this would give the company a virtual monopoly in the potential coronavirus treatment. Ooh, nasty. Then Sports Direct hikes prices of some goods by 50pc (Daily Telegraph, Simon Foy and Laura Onita) highlights bad news for home exercisers as it seems that Mike Ashley is trying to cash in on demand. Understandable, but morally questionable…

And finally, in other news…

I thought you might be interested in what some people are getting up to in the lockdown, so for those who like to party, there’s Don’t stop the music: DJ hosts 10-hour Instagram dance party (AFP https://tinyurl.com/vzl5fem). However, for those who want to do something a bit braver, how about Woman uses isolation to call exes asking ‘what went wrong’ – replies are telling (The Mirror, Paige Holland https://tinyurl.com/usv8zbx). This sounds very risky to me!

1. In MACRO NEWS, the US wades in, Germany takes action, BoJo gets stricter and Ramaphosa orders a three-week lockdown
2. In HIGH STREET/SUPERMARKET NEWS, Burger King wobbles, Eat shuts down for good and we look at US and UK supermarkets
3. In INDIVIDUAL COMPANY NEWS, Pearson takes a hit
4. In OTHER NEWS, I bring you a videoconferencing fail and the best cat video ever made…

So the US throws more money at the markets while Germany, the UK and South Africa take more drastic measures…

Federal Reserve launches aggressive plan to buy government-backed debt (The Guardian, Dominic Rushe) highlights the Fed’s latest intervention as it launched a plan to buy unlimited amounts of government-backed debt just as a massive business bailout was being debated in Congress. The Fed said it would relaunch a huge bond-buying programme, the snappily-titled Term Asset-Backed Securities Lending Facility (aka TALF), which was last used in the 2008 Financial Crisis, in order to keep the flow of credit to individuals and businesses. US stock-index futures and global equities rise after Fed move (Wall Street Journal, Joanne Chiu) shows that markets rose following this news after the Dow fell in trading on Monday due to the failure of a rescue package to get through Congress but Has Fed used up all its ammunition (The Times, James Dean) questions whether we are getting to the end of what the Fed can do to prop up markets. Its moves to unleash quantitative easing was expected but its sudden intervention in bond markets was not. It may have to look to the government to bolster its latest moves with a bailout package, but things look like they’re getting tight at the moment.

Elsewhere, Germany opts for drastic action to support economy (The Times) highlights the implementation of a hefty €750bn package of grants, loans and credit guarantees for companies and individuals which will push Germany into its first budget deficit since 2013. Measures include grants for the self-employed, unlimited credit for companies in crisis, a ban on landlords evicting tenants and extra money for hospitals among many other things. Johnson forced to close Britain in bid to halt rapid virus spread (Financial Times, George Parker, Sebastian Payne and Laura Hughes) shows that restrictions on movement will be tightening as “non-essential shops” were ordered to close down and people were told to stay at home unless they had specific reasons to go out. The new measures will be in force for at least the next three weeks. In Ramaphosa orders 3-week lockdown for South Africa (Financial Times, Joseph Cotterill) we see that South Africa’s president has now taken the most drastic measures in Africa to contain the spread of the coronavirus which will go into effect from midnight on Thursday. The number of cases in South Africa rose sixfold yesterday and the president said that “This is a decisive measure to save millions of South Africans from infection and save the lives of hundreds of thousands of people”. The armed forces will support the police in enforcing the new stricter rules. * SO WHAT? * Things are getting even more serious now but with the prospect of things slowly getting back to normal in China and South Korea reporting its lowest number of new cases in four weeks, at least there appears to be some light at the end of the tunnel – unless, of course, the loosening of measures results in a second wave.

Burger King wobbles, Eat closes and we look at US and UK supermarkets…

Burger King among UK businesses set to default on rents (Financial Times, Alice Hancock and George Hammond) shows that Burger King, Carluccio’s and Yo! Sushi are just some of the hundreds of businesses that will be witholding rents this week in order to save cash to survive. Burger King’s UK chief exec wants to save the money to be able to pay staff after the government said that employers who don’t pay will lose their leases. Quarterly rents are due tomorrow and many businesses will have difficulty in paying. * SO WHAT? * Everyone’s waiting for a government handout now – and Numis analyst Robbie Duncan said that if the real estate sector has to go two quarters without rent, it will be in dire need of one in order to survive. Landlord actions so far have been mixed, so I think it would be good for the government to have a clear policy.

Sandwich chain Eat closes permanently after 24 years (The Guardian, Rebecca Smithers) heralds a sad moment for many – including me (it was my joint favourite “chain” sandwich shop – the other one is Birleys FYI) – as Pret a Manger, which bought it in May 2019, announced it would be closing the remaining 90 branches permanently. You’ll have to go further afield to get your fix as the franchises in Paris Gare du Nord and Spain will be the only ones left. Pret itself announced the temporary closure of its 400 UK shops on Saturday due to the coronavirus outbreak. * SO WHAT? * This was predictable given the big losses Eat was

making, but I would have thought that the coronavirus accelerated its ultimate demise.

Supermarkets have spent decades planning for this crisis in the aisles (Daily Telegraph, Laura Onita) is a really interesting piece which informs us that supermarkets have been preparing for pandemics for years. Although pics on social media would have you think otherwise, supermarkets aren’t actually running out of food – they have just been edging towards a “just in time” supply chain over the years in order to minimise the storage of inventory. The problem now is that everyone is buying a bit more because there are more people are at home, no-one’s eating out and more staff are being sucked in to fulfil the massive uptick of online orders. New figures suggest that we have only spent 10% more than we normally would over the last three weeks and only 3% of buyers were hoarders. Clearly, the ordering from supermarkets themselves is now adjusting but the risk now is that staff will catch the disease and we see a second wave of bare shelves because there aren’t enough healthy staff to fill them. Grocers stopped stockpiling food. Then came coronavirus (Wall Street Journal, Annie Gasparro, Jennifer Smith and Jaewon Kang) shows that the same thing has been going on in the US. Supermarkets are now ignoring their own buying algorithms, contacting manufacturers directly and making decisions in real time. * SO WHAT? * You can’t really blame the supermarkets for moving to the “just in time” model given the savings they’ve made in rent, utilities and staff costs over the years – but now they are having to make drastic moves in additional hiring and product sourcing in order to keep up with the huge uptick in demand (one former Walmart exec observed that some major food sellers said they had sold three months of supplies in ten days!). Let’s hope that a “second wave” can be avoided.

Pearson’s profits take a pasting…

Test centre closures hit Pearson profit (The Times, Simon Duke) highlights a profit warning from the world’s biggest education publisher as its unexpected trading update sent the share price down by 9%. It had to close a whopping 22,000 testing centres that normally host nervous applicants for driving licences, nursing certificates and other professional qualifications but it expects pent-up demand to pick up once the coronavirus effects recede.

Pearson: school’s out (Financial Times, Lex) acknowledges the company’s shortcomings – especially its relative lack of virtual education capability – but points out that its strong balance sheet and education focus will ultimately prove to be a major boon to its longer term survival. * SO WHAT? * Pearson certainly has the content to make an impactful move to digital and maybe the coronavirus will give it more reason to do so sooner than it would otherwise have done. It may well have missed the current boat with online learning, but I would have thought that it has the wherewithal to rectify this sooner rather than later if it can get through this difficult time.

And finally, in other news…

Many people will now be working from home as the coronavirus hits harder. However, let the following be a lesson to all you WFH would-be multi-taskers out there: Woman suffers mortifying fail on video chat with colleagues while working from home (The Mirror, Luke Matthews https://tinyurl.com/tqx28tw). Oh dear. I don’t know how you recover from that one 😂. And then I thought I would end on what I think must be the greatest cat video ever made in Japan’s Cats and Dominos video warms the heart, makes us want to home and watch it all day (SoraNews24, Casey Baseel https://tinyurl.com/v6ow5ws). This should win an Oscar!

1. In NEWS ON UNUSUAL MEASURES, India goes into lockdown, the IOC considers postponing the Olympics, American jails release prisoners and debate rages about potential financial market closures
2. In NEWS ON CORONA-SUFFERERS, some predict a deep UK recession, WeWork looks vulnerable and councils take a commercial property hit
3. In NEWS ON CORONA-“WINNERS”, independent shops get a massive boost and luxury yachts ride a wave of demand
4. In OTHER NEWS, I bring you news on the tooth fairy and where thousand island dressing comes from…

So India goes into lockdown, the Olympics looks doubtful, prisoners get set free and the prospect of financial markets closure doesn’t go away…

India goes into lockdown as coronavirus spreads (Financial Times, Stephanie Findlay and Amy Kazmin) shows that India is putting large areas of the country into lockdown until the end of this month at least, in ongoing efforts to control the spread of the coronavirus. The lockdown was made official last night after Indians observed a “people’s curfew” request by PM Modi to stay at home for one day. Inter-city and long-distance trains have been suspended, along with the Delhi Metro. The restrictions will vary slightly between states but have been brought in because some experts believe that India has underestimated the rate of infection due to lack of testing versus other countries. India is the world’s second most populous country and had tested 20,000 people as of yesterday. Compare this to the 160,000 tests in Germany per week and South Korea, which is carrying out 15,000 tests per day – and you can see that there is more to do.

In International Olympic Committee in talks to postpone Tokyo games (Financial Times, Leo Lewis, Kana Inagaki and Murad Ahmed) we see that there are cracks beginning to form in Japan’s resolve to hold the games as originally planned. Japan’s PM Abe has conceded that delays were likely and followed comments by the IOC that the games could be postponed for up to two years. The IOC said it will come to a final decision within four weeks. * SO WHAT? * The coronavirus situation in Japan has actually improved recently to the extent that it started discussions on Friday to open schools again (it was one of the first to close them), although some said that this would risk an “explosive” increase in infections. However, the situation in other countries is rather different and many are complaining that the IOC’s feet-dragging is causing uncertainty and that the varying quarantine measures around the world would result in an uneven playing field. The drama continues…

Jails release prisoners, fearing coronavirus outbreak (Wall Street Journal, Zusha Elinson and Deanna Paul) highlights a rather dramatic development in America as local governments have started to release thousands of inmates to prevent a coronavirus outbreak in its crowded prisons. The ones being released are low-level, elderly and/or sick and there is now a complete ban on visitors. Given that there are often two or three prisoners to a cell, you can understand concern not only for the prisoners, but also the staff themselves.

Then in Reporting ban triggers fears of market closure (The Times, Miles Costello) we see that the City regulator, the Financial Conduct Authority, sent a letter to regulated companies over the weekend ordering Britain’s top list companies to stop publishing their annual results for at least the next two weeks in order to maintain “open and orderly markets”. This is the first time the FCA has issued a blanket ban on reporting. * SO WHAT? * Observers have extrapolated this action to mean that financial market closures must be close at hand and Markets remained open during wartime (The Times, Miles Costello) shows that although market closures are extremely rare, they have happened. The London Stock Exchange shut down in the early stages of WWI, once again for a few days in WWII after air raids and then most recently in 1987 following major storms which damaged the transport network to the extent that traders couldn’t get into work (remote working wasn’t possible back then!). Although closing them sounds like a sensible enough thing to do, reopening them would be very difficult as trading volumes would be huge and the levels would be all over the place. Also, companies would find it almost impossible to raise funds via stock issues and pension funds would be unable to reallocate capital for their underlying savers and investors. I would add that China – which extended the period of market closure it normally has in the New Year (so is therefore a recent example of what could happen if markets shut down) –  has been able to keep its markets surprisingly stable during the outbreak when you consider the market carnage elsewhere – but that’s presumably because China has vast sums of money it can throw at the problem (i.e. it can just buy stocks and other investments to prop up the market). This is not the case everywhere else, so what happened there may not necessarily be reflected in other countries and markets.

Some predict a UK recession, WeWork faces difficulty and councils take a hit…

When I see things like Factory and shop closures ‘will push UK into deep recession’ (The Guardian, Phillip Inman) I must admit that I roll my eyes because it hardly takes a genius to reach such a conclusion! Some study published by KPMG has shown that, surprise-surprise, there will be a “very substantial negative impact on the global economy” that will affect us for the next year or two. * SO WHAT? * OK so it’s their job to come up with these ground-breaking conclusions 😂 but still – TBH, I think that it would be far more interesting to see a report on how the UK and global economy could recover. Given the unique circumstances of what’s going on at the moment, you wonder whether conventional wisdom will go out of the window and as soon as the coronavirus effects calm down, what if there was an unprecedented rush of spending en masse as people that have been confined to their homes for months on end go out, spend on things other than food, go out to sporting events etc. in a mixture of relief and community spirit to support local businesses?? OK, so no-one is predicting that because it sounds like a pipe dream, but I do believe that this is potentially possible, especially if individuals don’t lose out too much financially because of government support. Of course there will be fewer places to go because many businesses will fail, but if governments give new grants, I think that there could be a rush of “independent” businesses on the high street,

making it look very different to before. Also, more people would be aware of the importance of supporting locals and perhaps be more inclined to spend. There will, of course, be a lot of pain as well but all I’m saying is that it is possible that we are in unique circumstances that are happening pretty much at the same time EVERYWHERE around the world. Like I said, conventional thinking may be inappropriate for unconventional circumstances…

Lockdown gives WeWork’s brave new world its biggest challenge (The Times, Simon Duke) shows that WeWork’s exposure to start-ups and month-to-month contracts could prove to be an Achilles heel for the highly-indebted company. * SO WHAT? * If WeWork’s problems get worse, it will no doubt make other landlords nervous as it is the largest private sector renter of commercial property in London and New York. This would be because its usual model of taking on long-term leases and the subletting space on shorter deals may come unstuck if tenants start to abandon en masse.

Talking of commercial property, Councils take a hit on £6.6bn investment in commercial property (Daily Telegraph, Rachel Millard) shows that local authorities will be facing massive falls in income as big spending since 2016 to attract more rental income is biting back. This is so acute for some councils that there are concerns about their ability to provide basic services. * SO WHAT? * Before everyone gets hysterical about this, a spokesman for the Local Government Association, which represents local authorities, said that they are working with the government on this problem. Still, the prospect of enforced lower rents will be damaging not only for local councils, but also the already-embattled British Land, Hammerson, Intu and Landsec, who are Britain’s biggest retail property owners.

Corner shops and luxury yachts see a huge rise in demand…

Independent UK food stores enjoy unexpected sales bonanza (Financial Times, Jonathan Eley) shows that a large number of independent shops are seeing a huge increase in business as customers flock to them when faced with empty supermarket shelves. * SO WHAT? * Although they may be enjoying a mini-boom now, the bonanza could be derailed as their own supply chains continue to feel the pressure. Although I have seen reports on social media of some shops taking advantage, one owner observed that “There’s a lot of people coming in here for the first time. I don’t want them to think I’m pulling their pants down”. Wholesale prices are increasing and deliveries are getting spread out more. Also, given that many of these operators are very small and employ family members, they are very conscious of the effect of getting the virus themselves. I think it is highly unlikely that

customers will continue to shop at these places once supermarkets come back on line properly, so I hope that they can make hay while the sun shines.

I don’t know about you, but I must say that I was unaware of Demand for luxury yachts fuelled by self-isolation of super-rich (Daily Telegraph, Alan Tovey) but given that some of the world’s super-rich are hoping to ride out the coronavirus storm by self-isolating aboard a luxury yacht, you can see why yacht brokers are being inundated with requests! Clients are getting their children schooled on board, getting cooking lessons from the yacht’s chef and tech lessons from the crew in the engine room! In case you were thinking of doing this yourself, it is worth pointing out that for a vessel of up to 150ft, it will cost you £100,000 a week plus crew costs and provisions, rising to £500,000 and the rest for some of the largest yachts! Private jets are also seeing a boom in demand as people want to fly home to their families without having to deal with all the cancellations for everyone else and mixing with the plebs at airports. * SO WHAT? * Not a bad option if you can afford it! Your swimming would improve no end if you were on a yacht for a few months! Maybe this is what Philip Green should be doing 😂

And finally, in other news…

As governments around the world put more restrictions on who can work and who can’t, Tooth fairy in quarantine? Argentina makes exemption in coronavirus lockdown (Reuters, https://tinyurl.com/vee9e93) shows that world leaders are able to be decisive about the things that matter 😁. Then I thought it would be important to take a moment to ponder one of life’s great questions – where does Thousand Island dressing actually come from? Wonder no more as the answer lies in The Mysterious Origins of Thousand Island Dressing (mental_floss, Michele Debczak https://tinyurl.com/u3fwurl). Other questions that need answering include: what is that weird scum stuff you get sometimes on the surface of a cup of tea and why is it, when you buy sausages at a supermarket that they still come in a string?? Don’t worry, when I get the answers, I shall reveal them…

1. In MACRO NEWS, banks and central banks implement more measures to combat coronavirus impact
2. In RETAIL/HIGH STREET NEWS, we look at the shops that would stay open through the crisis and some of the current strugglers and survivors
3. In INDIVIDUAL COMPANY NEWS, Microsoft and Slack benefit from remote working while Netflix agrees to lower picture quality
4. In OTHER NEWS, I bring you some toilet roll maths…

So governments and central banks announce more measures…

Sunak to launch massive rescue package for stricken UK companies (Financial Times, Chris Giles) highlights the latest rescue package for British companies and employees in the face of the coronavirus. Rishi Sunak is expected to unveil new measures today that will help companies retain staff and ensure their own survival following yesterday’s moves by the Bank of England to cut the interest rate to 0.1% (the lowest interest rate in its 325 year history) and buy more bonds.

Europe’s central banks pledge €1.7tn to fight virus (The Guardian, Juliette Garside) looks at the massive measures being taken around Europe as a whole so far. However, the

feeling is that these measures are just going to get bigger. Meanwhile, Australia slashes interest rate to record low (Daily Telegraph, Lizzie Burden) highlights another central bank that’s cut its interest rate to a new low as central banks around the world engage in an economic damage limitation exercise. * SO WHAT? * I’m not really giving you loads of detail here on the cuts being made because, TBH, it’s all changing on a daily basis anyway! The important thing is to remember the general direction of things. I think that it won’t be that long before we run out of conventional measures to tackle crises (cut interest rates, increase spending strategically) and some unusual creativity will be called for to raise money out of thin air. We need a country (specifically China), and ideally a region (maybe Asia?) to start to recover in order to see light at the end of the tunnel and then maybe new central bank and government measures can become more effectively targeted. At the moment, pretty much EVERYONE needs help…

We take another look at the winners and losers in retail and on the high street…

The ‘fortress firms’ best place to weather the coronavirus crisis (The Guardian, Julia Kollewe) takes a look at which shops may be given “essential retailer” status if we go down the same road as France where only supermarkets, pharmacies, banks, petrol stations and hairdressers (!) can stay open. Peel Hunt retail analysts say that the UK’s major supermarkets will be OK, as will M&S and convenience store/newsagents McColl’s. B&M, Pets at Home and WHSmith are also likely to be safe as well (I was wondering this myself yesterday when I went to my local one – especially because many of them now have post offices). Interestingly, Jefferies analysts put out a report yesterday highlighting companies that had strong enough balance sheets to weather the outbreak and Primark owner Associated British Foods looked good on the high street whereas Domino’s Pizza and pubs group Marston’s look wobbly. * SO WHAT? * I suspect that these retailers will be glad to stay open during this crisis and it could actually prove a reversal of fortune for some (M&S and WHSmith’s high street stores spring to mind!). Let’s hope they can hang on to enough staff to get them through the next few months.

Carrying on from this, Next boss says it can cope with £1bn hit from virus (The Times, Ashley Armstrong) shows confidence from the fashion retailer that it has the wherewithal to get through the crisis despite being in the midst of an “unprecedented challenge” but Burberry fears that worst has yet to come (The Times, Ashley Armstrong) is less confident and announced a very weak outlook for sales (which they say are set to fall by 70-80%). Over 60% of its 431 shops in Europe, the Middle East and Asia are closed, as are 85% of its shops in the US. On the other hand, most of its shops in China had reopened. * SO WHAT? * Maybe Burberry’s exposure to China will ultimately prove to be its saving grace, but I do wonder whether its recently-announced strategy to go more upmarket will chime well with Chinese who may not have earned much since the coronavirus outbreak started. Also, you do wonder whether people’s priorities will change, in the short-term at least, because of what has been going on.

In food-related retailing, Pret slashes staff pay and hours as customers stay away (The Guardian, Mark Sweney) shows the effect of customers staying away as the coffee shop chain has decided to cut wages by 25% and working hours, with the new measures taking effect from the end of next week for at least three months. Some people are trying to keep their favourite restaurants going in Vouchers keep restaurants on back burner (Daily Telegraph, Rachel Millard) as restaurants sell prepayment vouchers to be used when they reopen. Demand is currently strong as people try to save their restaurants and high streets. Some restaurants are also starting to deliver meals via Deliveroo

(or just delivering them themselves) and others are hosting online cooking courses. * SO WHAT? * I like this idea in theory, but fear that it is just delaying disaster. If the restaurants survive, they will be filled for some time with people that have these vouchers and will have to buy stock and cook it effectively for free (or at a much lower cost). Voucher holders would either have to bring all their non-voucher holding friends and family to make up the difference or just not use the vouchers at all for this to work.

In groceries, Shutting up shop may cost Ocado more than 4 days of orders (Financial Times, Kate Burgess) shows how Ocado has been deluged with orders to the extent that it is shutting down access for a few days to give it time to catch up. The company’s finance chief said that it had more orders on one day this week than it normally has in seven and basket sizes have ratcheted up. Sales have doubled in the quarter to March, the company is running at full capacity and its share price has shot up by 25% over the last month! Funnily enough, orders have increased so sharply that the company initially thought it was being hacked! Meanwhile, Co-op to create 5,000 jobs (Daily Telegraph, LaToya Harding) heralds a potential lifeline for those losing their jobs in the hospitality industry as the company has made a ton of temporary and permanent jobs available. It wants more people to keep the shelves stacked and fulfil online orders and joins the likes of Waitrose and Amazon who also announced hiring plans this week. Over in America, Walmart to pay $550million in staff bonuses, hire 150,000 temporary workers (Wall Street Journal, Sarah Nassauer) highlights moves to pay special cash bonuses to workers and hire extra staff to cope. The massive upswing in demand from concerned shoppers has resulted in reduced store hours and purchase limits on some items and it has struggled to keep its stores stocked and fulfil online orders. * SO WHAT? * It is incredible to see what’s going on with supermarkets at the moment. Never has stacking shelves looked so enticing – I remember doing it myself for many years when I was doing my A-levels and getting through university! Still, demand is set to continue as more people stay at home and make their own meals. I would have thought that the customer data that supermarkets will collect now will be incredibly useful as time goes on and will help to make their offering that much stronger in the future. It may also result in a serious boost in the number of online delivery customers not just now, but in the future as well. Many people who haven’t bothered to do online grocery shopping thus far will be setting themselves up – and once that faff has been sorted I would suggest that many of them will get used to it and carry on even after the coronavirus runs its course. Aldi and Lidl will be cursing this missed opportunity.

Elsewhere on the high street, Cineworld staff laid off after cinemas are closed (Daily Telegraph, Oliver Gill) heralds bad news for the company’s staff following the closure of all its cinemas. The future looks bleak for the world’s second biggest cinema chain and the proposed £1.6bn takeover of cineplex looks decidedly dodgy now.

Remote working boosts some and Netflix agrees to downgrade its picture quality…

Slack and Microsoft fight for millions of remote workers (Financial Times, Richard Waters and Tim Bradshaw) is a really good article that highlights increased interest in workforce collaboration platforms being experienced at the incumbent Microsoft and new-ish-kid-on-the-block Slack. The latter has seen an uptick in the number of paying customers since the start of last month that is 40% higher than is usual for the entire quarter – but then this is put somewhat into the shade by the number of Microsoft Teams users rocketing up from 20m only four months ago to 44m earlier this week. * SO WHAT? * Ultimately, I think that Microsoft will be the big winner from all this – although Slack and Zoom will certainly get some kind of

boost. The problem is that the coronavirus escalated so quickly that there probably wasn’t time for IT departments to consider “new” software and so the natural thing was to use something that was already part of their systems anyway as part of the Office 365 package. Unless people find Teams to be a complete disaster, I don’t see many companies swapping over – especially if their employees get used to Microsoft’s offering. Still, a potential expansion in remote working should be a boost to all in this area.

Following on from yesterday’s story, Netflix lowers picture quality to avoid broadband overload (The Guardian, Mark Sweney) shows that the streaming supremo has agree to slow download speeds across Europe by 25% to help broadband networks following talks with Thierry Breton, the European Commission’s industry chief. A spokesman said that it would “begin reducing bit rates across all our streams in Europe for 30 days” – so some of you will be seeing a reduction in picture quality. * SO WHAT? * This just goes to show how big streaming is becoming right now.

And finally, in other news…

In these unsettling times, it is worth taking a step back to take a long hard look at our behaviour as per the guy in Dad takes matters into own hands with quarantine maths lesson – and it’s epic (The Mirror, Courtney Pochin https://tinyurl.com/t9xdprn). Interesting analysis 😂

1. In MACRO & OIL NEWS, fear strikes markets and oil heads downward
2. In CORONAVIRUS NEWS, we look at the latest situation at home and abroad, the ongoing impact and “winners”
3. In INDIVIDUAL COMPANY NEWS, Apple updates the iPad
4. In OTHER NEWS, I bring you interesting 360° experiences…

So government measures fail to calm the market and oil weakens further…

Fear grips markets as faith in intervention runs out (Financial Times, Katie Martin, Chris Giles and Alex Barker) shows that markets failed to take comfort from more government intervention in the coronavirus pandemic. Sterling took a massive hit versus the dollar (5% at one stage) and government bonds were sold off buy funds trying to stay alive and individuals liquidating any assets they could to raise cash.

Meanwhile, Oversupply could force oil prices to go negative (The Times, Ben Martin and Emily Gosden) highlights oil prices falling by over 11% as Saudi Arabia

reiterated its commitment yesterday to ramping up production. One analyst, Paul Sankey at Mizuho Securities, mooted the possibility of oil prices going “negative”if oil storage facilities run out and that the cost of storing the extra oil is higher than paying customers to take it. * SO WHAT? * It seems to me that this is a calculated gamble by the Saudis – and maybe they are using the coronavirus as an opportunity to “finish off” their US shale competition quickly whilst ensuring that they will be the first to benefit when oil demand starts picking up again from China, the world’s biggest oil importer. News reports this morning say that there are no new cases in China today and Wuhan residents are being allowed outside after six weeks of confinement – suggesting that there might be light at the end of the tunnel.

We look at the latest developments as well as some of the “winners”…

Second wave of coronavirus cases hits Asia (Financial Times, Edward White, Kathrin Hille, Sun Yu, Stefania Palma, Alice Woodhouse and Primrose Riordan) sounds a warning against any complacency about the virus as officials in South Korea, Taiwan and some parts of China and South-east Asia are implementing new tighter measures after weeks of declines. The number of “imported” infections has gone up as people try to escape the outbreak in Europe and so many countries are now putting travellers into quarantine for 14 days no matter what their condition or travel history – and many will have to pay for food and accommodation themselves.

On a more positive note, Flu drug Avigan speeds up coronavirus recovery in early trials (Financial Times, Kana Inagaki) heralds some rare good news on the virus as Japan’s Fujifilm Holdings’ anti-flu drug Avigan (its generic name is favipiravir) has made progress in clinical trials in China. The company’s share price shot up by 15% on the news but it is early stages and doctors say that side effects can cause foetal abnormalities in pregnant women. Still, it sounds like a move in the right direction. UK to increase coronavirus testing to 25,000 a day (Financial Times, Camilla Hodgson) highlights BoJo’s plan to significantly increase the amount of testing in the UK within a month, versus 10,000 a day over the next week. NHS staff are being prioritised.

Industries continue to react to the outbreak as per Some UK property funds ban withdrawals over coronavirus (The Guardian, Hilary Osborne) which says that funds run by Standard Life Investments, Aberdeen, Aviva Investors, Legal & General and BDO were suspended yesterday after Kames Capital and Janus Henderson (the latter of which is the UK’s biggest property fund) did so on Tuesday. Funds shut down withdrawals because they can’t sell assets fast enough to return the cash and I think once that Kames and Janus Henderson did it on Tuesday, it was only a matter of time before everyone else started to shut the door. Meanwhile, Detroit car makers to temporarily close US plants over virus concerns (Wall Street Journal, Ben Foldy and Nora Naughton) highlights a temporary shutdown for factories in the US, Mexico and Canada as execs from General Motors, Ford and Fiat Chrysler Automobiles made a joint decision yesterday following discussions with union leaders.

On the other hand, there are companies that are seeing a major uptick in demand. Netflix urged to ease load on the internet as demand soars (Daily Telegraph, Margi Murphy) shows that EU commissioner for the internal market and digital economy, Thierry Breton, has asked Netflix’s chief exec Reed Hastings to consider streaming films in lower quality to relieve pressure on the internet! They talked about using a switch that could swap between streaming quality at peak hours as demand for streaming is continuing to soar.

Gym bunnies missing out on their fix are switching to alternative means of exercise in Fitness catches the streaming bug as coronavirus forces gyms to close (Financial Times, Eric Platt and Andrew Edgecliffe-Johnson) which says that chains like Barry’s Bootcamp, SoulCycle, Flywheel and high-end operator Equinox are all suffering due to tightening social distancing measures. Peloton is seeing its share price rise as investors bet that it will do a roaring trade in bikes and online memberships (it’s now offering 90-day free trials) but if you want to do indoor cycling for a lower cost you might want to have a look at Log on and join the pros in the peloton (Daily Telegraph, John MacLeary) which looks at the growing world of indoor cycling and how Zwift is benefiting. Basically, this isn’t a spin class – it’s virtual racing where you can ride alongside your friends and now, potentially world class cyclists as real world events continue to get cancelled. How Zoom parties are helping to break the self-isolation gloom (Daily Telegraph, Margi Murphy) suggests another platform that is benefiting from social distancing as all sorts of events are being held online via Zoom.

Another area that is already seeing a huge spike in demand is identified in Coronavirus proves a bonanza for Asian edtech start-ups (Financial Times, Mercedes Ruehl, Andrew Jack and Primrose Riordan) where demand is so big that one Chinese online education provider, Yuanfudao, was out of action for two hours after 5m people took up the offer of free live courses! Indian start-up Byju’s saw a 60% hike in students using its products since it offered school children free access to its app earlier this month and shares in GSX, a Chinese online education provider, have shot up by 92% since the start of this year. Other companies such as Snapask and Ai English have also seen a major rise in student numbers. I suspect the frenzy will continue!

Apple announces updates…

Apple updates iPad, MacBook Air with new keyboard (Wall Street Journal, Sarah E. Needleman and Tripp Mickle) highlights new Apple updates which investors normally lap up – but probably won’t this time as they are distracted by coronavirus news. It announced a new keyboard for the MacBook Air, replacing the problematic “butterfly” keyboard and an updated iPad Pro with a better camera, sound,

motion sensors and scanner. * SO WHAT? * I suspect that this news will pretty much go under the radar considering all the other things that are going on at the moment, but I think that the biggest announcement Apple could make in terms of new products is a new iPhone with 5G capability! I just wonder whether we will have to wait longer for such a launch to let production get back to normal. Also I think that people may need to feel a bit more stable with their finances before shelling out on something that will undoubtedly be incredibly expensive! 

And finally, in other news…

As many of you already know, I am half-Japanese. Over in Japan, there is a custom called “hanami” where people like to go and look at cherry blossoms – it’s such a “thing” that the weather section of the news gives you cherry blossom forecasts so that you know when the blossoming is going to happen in your area! As well as lots of individuals going to see the blossoms, everyone goes in groups to have cherry blossom parties where they sit with their colleagues under the cherry trees and drink beer. Great, right? But unfortunately, social distancing measures are now in force in Japan due to the coronavirus – so a Japanese website has published a whole load of 360° videos so you can see the blossoms from the comfort of your own screen! Have a look at VR cherry blossom parties: 360-degree video series provides beauty, dates for those stuck indoors (SoraNews24, Casaey Baseel https://tinyurl.com/sktfhgy). There is even a video where you can see the blossoms on a virtual date with your Japanese “girlfriend”! Spooky…

1. In MACRO NEWS, the US and UK unveil new packages and we look at why the UK stepped-up
2. In RETAIL NEWS, Amazon and Sainsbury’s start prioritising while Carphone Warehouse and Laura Ashley slip away
3. In MANUFACTURING NEWS, US factories face coronavirus pressures
4. In OTHER NEWS, I bring you some amazing virtual experiences…

So new economic packages are unveiled and we see why the UK stepped-up…

US ponders helicopter cash as Fed revives loan market (Daily Telegraph, Russell Lynch) highlights the real possibility that millions of Americans will be sent cheques for $1,000 to help them through the coronavirus crisis. This prospect of so-called “helicopter money” – a direct distribution of cash to the population – was brought up by Treasury secretary Steven Mnuchin as Donald Trump announced a $850bn package of measures to help with the coronavirus effort.

Then Rishi Sunak promises £350bn emergency rescue package for business (Financial Times, Jim Pickard, Sebastian Payne and Daniel Thomas) looks at the latest package unveiled by the new UK chancellor designed to give additional support to business and individuals over what he announced last week. Some of the highlights include a year’s break from business rates, grants of up to £25,000 for pubs and retailers and mortgage holidays for up to three months. If “Get Brexit done” was the conservative pre-election mantra, “We will do whatever it takes” (and its variations) was the message Sunak clearly wanted to get across yesterday. * SO WHAT? * No doubt there will be grumbles that some of this money is in the form of loans (not “helicopter cash”), but the chancellor was at pains to point out that this wasn’t the end of it and there could be more to come. In fact, when Labour shadow chancellor John McDonnell attacked the new package as forgetting renters, Sunak said that more measures would be announced “in the coming days”. I have to say that I think that the government is going to have to look at some form of direct payment to individuals in the very near future because people are just going to be running out of money. I think that it would be fair to say that many people go from month-to-month and don’t have the luxury of cash reserves

to cover such an unseen circumstance. If he doesn’t act quickly enough, he could start to face civil order problems.

Given the ongoing deluge of newsflow on the outbreak, I think it’s worth considering Coronavirus: why the UK stepped up its emergency response (Financial Times, Clive Cookson and Sebastian Payne) because there will be many people out there who will still have doubts in their mind about whether this is all overreaction. Yesterday heralded more “social distancing” guidance, but many are questioning why the government didn’t get more aggressive sooner. Well apparently, the government has been working with psychologists and behavioural scientists who have said that if strict social distancing measures were brought in too early, people might get bored with the restrictions and go back to their normal behaviour at the most crucial time for self-isolation. However, this has now changed as new medical and scientific evidence has pushed things into overdrive following a radical change in the NHS’ original projections for the spread that take into account the latest developments in Italy. UK measures are still pretty relaxed in comparison to other nations, but some people think we need to go further and ban all public gatherings and carry out much more testing – including priority testing for healthcare workers. And why are schools still open when many countries have shut theirs down? One reason is that there are concerns that closures may cut NHS capacity by forcing staff to stay at home to look after their children. I would have thought closures will come soon enough, though. One other thing I think is worth mentioning is South Korea’s apparent success at controlling the virus. You may recall that South Korea has been hit badly by the outbreak (in part, due to a religious cult actively trying to infect other people), well it has been said to be seeing success because it has an extensive testing programme, with over 270,000 people tested so far. Although the UK plans to increase testing, we’re only doing 10,000 tests a day and they are being prioritised (for those who are very ill) because of a current lack of testing kits. The drama continues…

Amazon and Sainsbury’s prioritise while Carphone Warhouse and Laura Ashley succumb…

Amazon stops accepting non-essential goods into warehouses (Financial Times, Dave Lee) highlights a change in strategy for the e-tailer as it is suspending shipments of all non-essential goods until at least April 5th in order to prioritise capacity for household essentials, medical supplies and other related high-demand products. The company said that it was changing its strategy due to a shortage of important household goods and was communicated to vendors yesterday. * SO WHAT? * This will result in a major fall in the number of third party goods being offered via Amazon’s Prime service and is likely to affect the vendors badly. When you consider that data from Superfly Insights showed that demand for hand sanitiser alone on Amazon shot up by 250% at the end of February/beginning of March, you can understand the need for prioritisation.

Sainsbury’s to close its meat, fish and pizza service counters to free up staff (The Guardian, Sarah Butler) shows that the supermarket is closing any extraneous areas, including its cafés, in order to allocate more staff to stock the shelves and ease deliveries (even head office staff have been drafted in to help at the stores). The closures will happen from tomorrow, but it will also bring into force today a limit of three items of any grocery product and two packs of items like toilet paper, soap and UHT milk. Chief exec Mike Coupe said in a letter to customers that “We have enough food coming into the system, but are limiting sales so that it stays on shelves for longer and can be bought by a large number of customers”. Other supermarket chains are expected to follow, although some already have restrictions in place. * SO WHAT? * It seems that it’s all hands to the pump at the moment as members of staff from HQs of all the major supermarkets

join the shopfloor workers to keep things going – Waitrose is even asking store workers to recommend friends and family who can help out as well. Currently, supplies of fresh produce are OK but there has been, rather unsurprisingly, an increase in demand as people switch away from shop-bought sandwiches and canteen lunches.

Elsewhere, Dixons Carphone to close 531 stores, with loss of 2,900 jobs (The Guardian, Sarah Butler and Julia Kollewe) highlights the closure of all of its standalone stores on 3rd April and its future focus on selling mobiles at its Currys PC World stores. * SO WHAT? * Hardly surprising as it had already been suffering from the lengthening mobile replacement cycle anyway. It’s difficult to tell how much the coronavirus factored into this decision, but you would have thought it would have at least hastened the process. Until now, I thought that this year could be a good year for mobile phone sales as 5G services are rolled out and new handsets are introduced to ride the wave, but now I wonder whether product launches will be delayed. If they are, then maybe sales won’t quite be where they could have been. After all, if you have had to work from home for three months with possibly less money coming in, are you going to want to pay $1,500 for an all-singing, all-dancing 5G phone?

In Laura Ashley calls in the administrator (The Times, Ashley Armstrong) we see that the coronavirus outbreak has become the last straw for the troubled fashion and homeware retailer as the company called in the administrators from PwC. It has 155 shops and employs 2,700 staff. Restructuring firms Hilco, Alteri and Gordon Brothers are said to be among those expressing an interest in the brand and its international business but it seems that no-one wants the British shops. * SO WHAT? * Good luck in finding a buyer for the shops against a nightmare retail backdrop and the coronavirus decimating footfall. This business has been suffering for some time and the coronavirus outbreak has provided the coup de grâce of what was once a sought-after brand. A sad demise, but not an unexpected one. Yet another gap for the high street…

Factories face tough dilemmas…

In manufacturing, Coronavirus pushes factories to stagger shifts, separate workers (Wall Street Journal, Austen Hufford and Bob Tita) looks at how the current epidemic is forcing manufacturers around the world to improvise in order to keep factories going. They are implementing measures like staggering shifts, banning visitors and putting barriers between workers to protect them from infection – but they are racing against time as more and more people get infected and have to stay at home. Stories like UAW presses auto makers to close US plants amid pandemic (Wall Street Journal, Mike Colias and Ben Foldy), where the United Auto Workers Union is pushing for

a two-week shutdown across the US and Sheriff quashes Elon Musk’s aim to keep Tesla production humming (Wall Street Journal, Tim Higgins) show the conflict between companies wanting to crank out product on the one hand and concern for worker welfare on the other. The Alameda County Sherriff ordered Tesla to cut production at its Fremont factory to “minimum basic operation only” after counties in the San Francisco area were ordered to close down non-essential businesses. * SO WHAT? * This is clearly a nightmare and shows that there are opposing forces of companies wanting to keep operations going (in order to survive!) and wider responsibilities towards the health of the nation. I guess that the latter is going to win, but the government needs manufacturing to survive so it will need massive injections of cash. The question is whether any injections will be enough.

And finally, in other news…

Given the increasing amount of social distancing we are all having to do at this time, I thought it would be a good idea to highlight some really great “virtual” experiences you can have whilst being stuck at home: All the virtual concerts, plays, museums and other culture you can enjoy from home (CNN.com, AJ Willingham https://tinyurl.com/wybb5u4). There are some amazing things in this!

1. In MARKETS & MACRO NEWS, the Dow collapses but there’s still ammo
2. In RETAIL & HIGH STREET NEWS, Amazon announces a hiring spree, Halfords, Primark and Debenhams all have problems while LSL abandons talks with Countrywide, hospitality faces death and the lack of sporting events is to damage bookies
3. In TRAVEL & LEISURE-RELATED NEWS, Airlines ask for help, Tui applies for state aid and railways could go under state control while streamers are doing very well
4. In OTHER NEWS, I bring you some amazing egg art…

So markets take another pasting but the Fed has more up its sleeve…

Dow plummets nearly 3,000 points as virus fears spread (Wall Street Journal, Caitlin McCabe, Anna Hirtenstein and Chong Koh Ping) highlights the benchmark’s sharpest decline in the recent sell-off (which is saying something!) and reflects ongoing concerns about whether the Federal Reserve has enough in the tank to head off a recession. Fed deploys its full arsenal, but it still has some tools (Wall Street Journal, Nick Timiraos and Julia-Ambra Verlaine) highlights a few more tricks that the central bank could still use to help things – namely, the Term Auction Facility (which provides short-term loans to banks without the banks having to dip into the Fed’s emergency-loan discount window. The latter is something which they usually try to avoid because some interpret doing so as desperation) and the Commercial Paper Funding Facility, which it used in the wake of the financial crisis to increase the flow in the commercial paper market. Some are also urging the Treasury and the Fed to use a pool of money called the Exchange Stabilization Fund, which has $94bn, in

order to fund cash-starved businesses and healthcare systems. * SO WHAT? * TBH, the important things about these measures is the fact that they are there, that Fed chair Jerome “Jay” Powell is aware that he has access to them and that there is the will to use them if necessary (and they will be!). If he can conjour anything else up, I’m sure everyone would see that as a bonus. Clearly, in times like these, you don’t want to release everything at once (well, not too early, at any rate) otherwise you will be in a whole world of hurt with nothing left in reserve.

Equities buoyed by hopes of US coronavirus stimulus package (Financial Times, Hudson Lockett, Daniel Shane and Leo Lewis) shows that Asia stocks stabilised and US futures rose after yesterday’s biggest Wall Street sell-off for 30 years. Investors look inclined to believe that Washington will do enough to mitigate the impact of the coronavirus (at least today, anyway!). * SO WHAT? * It’s good to see the market taking a bit of a breather, but we are by no means out of the woods yet. Expect more volatility over time as we see rises on  governments announcing various stimulatory measures and falls on investor disappointment and negative company news. Having said that, I would expect a marked surge if and when the number of new cases starts to fall (as it is supposedly doing in China).

Amazon goes on a hiring spree, retailers have a very tough time, hospitality faces extinction and betting is also looking tricky…

Amazon to hire 100,000 warehouse and delivery workers amid coronavirus shutdowns (Wall Street Journal, Dana Mattioli) heralds a big move by the e-tailing giant as it plans to hire 100,000 employees in the US whilst also raising pay for those working in fulfilment centres, transportation, stores and deliveries in the US, Canada, UK and Europe. This sudden move reflects the need to meet rising consumer demand (Amazon already accounts for 39% of all online orders in the US!) whilst at the same time ensuring existing employee welfare. It is a significant uplift in numbers as the company employed almost 800,000 workers on a full and part-time basis as at the end of last year. * SO WHAT? * Given the sudden uptick in online retail activity for daily staples, this makes a lot of sense. Amazon is one of the few firms that has the financial firepower to do this. It also has the ability to take up any online retail slack from other companies who are struggling with the sudden increase in volumes.

Gear change at Halfords calls time on cycling shops (The Times, James Hurley) highlights the company’s decision to shut all of its 22 Cycle Republic shops and its Boardman Performance Centre next year, putting 200 jobs in the balance. After a strategic review found that the business was too stock-intensive with poor profit margins, it has decided to concentrate more on its profitable motoring business. It’s not completely abandoning cycling, though, as it said that it will still put money into Tredz, its online cycling business. * SO WHAT? * Given that the company announced three profit warnings last year and that the appeal of cycling appears to have peaked out for the time being at least, the writing was on the wall. It’ll be interesting to see whether the “new” owner of rival Evans Cycles, Frasers Group (which changed its name recently from Sports Direct) comes to the same conclusion or decides to double down on this area. I think that cycling has had a really strong few years since British success at the Tour De France and on the track at the Olympics, but it is losing momentum somewhat. Maybe Evans could take advantage of having one less competitor – or maybe Frasers Group’s chief exec could use the coronavirus and changing consumer behaviour as an excuse to make big cuts.

Elsewhere on the high street, European lockdown hammers Primark (The Times, Simon Duke) highlights drastic measures taken by the retailer, owned by Associated British Foods, to temporarily close 20% of its stores in France, Spain, Italy and Austria as Europeans

become increasingly homebound and Debenhams asks for rent holiday as shoppers shun streets (The Guardian, Angela Monaghan and Julia Kollewe) just reflects ongoing troubles at the embattled department store – but is also something that will no doubt become a cause that other retailers will be latching on to as shopper numbers continue to fall sharply.

LSL withdraws from Countrywide merger talks (The Guardian, Angela Monaghan) is another unsurprising consequence of the coronavirus effects as the estate agent mega-merger has been called off. It would have created a behemoth – and both Countrywide’s and LSL’s share prices fell on the news by 54% and 29% respectively. * SO WHAT? * It sounds to me like they are still trying to talk a good game, saying that housing sales have “seen some softening”, but surely the coronavirus has killed the market stone dead. Estate agents were starting to get cocky about rising prices and the positive momentum of a “Boris Bounce” at the beginning of this year, but I would imagine that the immediate effect of the anti-coronavirus measures will be to stop people from looking as they face potential uncertainty with their jobs – and the very practical thing that they probably won’t be able to physically carry out property viewings. I would expect more closures and job losses to come among estate agents.

‘Government has effectively shut hospitality sector down’ (Daily Telegraph, Hannah Uttley) shows trade body UKHospitality highlighting the potential terminal impact of BoJo’s latest pronouncements yesterday on “social distancing” that specifically targeted pubs, restaurants and mass gatherings. Restaurant bookings have fallen by up to 50% on average in the UK so far – but that is obviously going to get a lot worse. * SO WHAT? * This means that many businesses won’t be able to claim insurance and may struggle to pay staff. Unfortunately, I would have thought many businesses in this area will shut down and not open again given how much they rely on regular cashflow. On the positive side, I believe that any business that can survive long enough to weather the coronavirus storm will see a MASSIVE uptick in business as customers suffering from state-imposed cabin-fever will rush back to these places when things calm down. Unfortunately, I would have thought that it is more likely that the larger, more boring, chains are the ones that will survive as legions of independents fail. Things were already looking difficult for casual dining operators – and this will potentially be the hardest test of them all.

Going will get £110m heavier, says Paddy Power and Betfair owner (Daily Telegraph, Simon Foy) shows that bookmakers will be suffering as the number of events to bet on dwindles by the day. Flutter, the owner of Paddy Power and Betfair, says that the coronavirus could hit earnings by as much as £110m. Clearly, the more events that are cancelled, the more the gambling industry will lose.

Anything travel-related continues to suffer but music streaming benefits…

Most airlines ‘will become bankrupt by end of May’ (The Times, Robert Lea) cites warnings from the Centre for Aviation, a leading aviation consultancy, as flag-carriers around the world ask governments for handouts. It said that many will already be technically bankrupt and that cash reserves will be running down rapidly as more planes are grounded. The consultancy also pointed out that, thus far, governments have been uncoordinated in their response. Airports are already drawing up plans for job cuts. Travel giant in lockdown as it applies for state aid (The Times, Dominic Walsh) shows that Tui, the operator that benefited so much from Thomas Cook’s demise last year, has decided to cancel package tours, cruises and hotel operations “until further notice”. It says that it is in a strong financial position but it is also now applying for state aid guarantees to help the business until things get back to normal. * SO WHAT? * I bet that Hays Travel and Easyjet will be ruing their purchase of high street shops and launch of a new package holiday business respectively. They swooped in when Thomas Cook collapsed last year but will surely face a very difficult future as their business is decimated.

And on the subject of bailouts, Next stop, state control

after rail firms appeal for bail-out (Daily Telegraph, Oliver Gill) says that our railways could revert to state control as calls increase from rail firms for help as passenger numbers plummet. Existing rail contracts could be voided and replaced by a system that pays firms a fixed fee that doesn’t depend on the number of passengers who use their services. Negotiations are ongoing with the Department of Transport and other options are being considered. * SO WHAT? * I guess that this will at least keep our networks going in the meantime, but a long term plan needs to be put in place. In a way, I wonder whether a network shutdown (surely something like this is going to happen at some point in the near future?) would provide a rare opportunity for a complete re-set as private company and state priorities change. This would be nice in theory, but I suspect that any solution will be a rush-job given everything else that’s going on. It may even be one of those things where temporary measures end up becoming permanent ones given problems elsewhere in the economy.

On a positive note, Streamers on song in musical bonanza (The Times, Simon Duke) says that revenues for the British music industry are continuing to climb on the continued popularity of streaming and the resurgence of vinyl. Revenues at labels including EMI and FAMM are up, according to the latest figures from the BPI and money from subscription services like Spotify and Apple Music helped streaming to be the biggest contributor to the uplift. * SO WHAT? * I think that streaming is one of the few areas that will continue to grow as more of the world goes on lockdown and people’s need to be entertained continues unabated.

And finally, in other news…

I know that coronavirus news is everywhere and it’s all rather depressing – so how about we all forget it for a moment and marvel in Japanese mom wows us with her ‘eggstraordinary’ food art (SoraNews24, Katie Pask https://tinyurl.com/w764y2a). Just. Wow.

1. In MACRO, MARKETS & OIL NEWS, US interest rates get another drastic cut (but Asian markets still fall), Spain and France go on lockdown and BoJo comes under pressure to do more while Saudi Aramco cuts spending and UK oil stocks weaken
2. In SECTOR-BY-SECTOR NEWS, Airlines cry for help, airports face uncertainty and manufacturers ask for government support
3. In RETAIL & CONSUMER-RELATED NEWS, Amazon tries to tempt rivals, US retailers close while stocks of a key sanitiser ingredient run low
4. In OTHER NEWS, I bring you a heart-warming event put together by kids in Minecraft…

So the US cuts rates again, Spain and France shut down, BoJo faces more flak, Saudi Aramco cuts spending and UK oil companies face difficulties…

Federal Reserve cuts interest rates to near zero in attempt to prop up US economy (The Guardian, Dominic Rushe) highlights drastic actions by America’s central bank as it cut its benchmark interest rate by another 0.5% to the 0-0.25% range – less than two weeks after its previous 0.5% cut – and said that it would buy back $700bn in Treasury and mortgage-backed securities to avert a major economic slowdown. It added that it was working with the Bank of England and the ECB, among others, to co-ordinate the response and would keep the current ultra-low rates “until it is confident that the economy has weathered recent events and is on track” to stabilise prices and employment. Asian stocks fall despite Fed cutting rates to zero (Financial Times, Hudson Lockett, Katie Martin, Robin Wrigglesworth and Colby Smith) shows that markets remained unconvinced as investor fears continue to mount regarding an uncertain future.

Meanwhile, Millions confined to homes after Spain and France impose coronavirus lockdowns (Financial Times, Daniel Dombey, Victor Mallet and Ben Hall) shows that

more Europeans are readying themselves for home confinement as the outbreak continues to spread. Spain used emergency powers to bring in the shutdown on Saturday night as the epidemic is now spreading there at a faster rate than anywhere else in the world. France closed all cafés, restaurants, non-essential shops and entertainment venues and schools are now only open to children of health workers. Maybe this is a taste of things to come as Johnson set to ramp up UK response to coronavirus (Financial Times, George Parker and Laura Hughes) shows that we may be in for more drastic measures very soon.

Aramco cuts spending as the oil price war rages on (The Times, Emily Gosden) highlights the state-controlled oil giant’s decision to make a $10bn cut to its spending plans as it digs in amid prospects of a “lower for longer” oil price. The company said that this move took into account current market conditions and commodity price volatility. It’s amazing to think that the oil price has halved since the beginning of the year! Although Saudi Aramco has the resources to weather an oil price war, UK-listed oil groups hit hard as investors dump shares (Financial Times, Donato Paolo Mancini) shows that the likes of Premier Oil, EnQuest and Tullow Oil have seen their value decimated from a combined £17bn at their peak eight years ago to £500m now. Their share prices have dropped by 85%, 76% and 63% respectively over the past month although they had a bit of a rally on Friday. The problem here is, clearly, how long the low oil price continues. As things stand, Tullow Oil looks the most vulnerable.

Airlines, airports and manufacturers all face uncertainty…

In Airlines appeal for government bailout (The Times, Emily Gosden) we see that Airlines UK, the industry body, called for the UK government to step in while Unite, the trade union, wants it to contribute towards workers’ pay and potentially take stakes in the airlines to help them survive. The airlines themselves are now preparing to lay off thousands of staff this week due to a massive fall in passenger numbers and the increasing number of travel bans. Coronavirus: Future looks bleak for global airports (Financial Times, Joe Miller, Tanya Powley and Alexander Vladkov) shows that it’s no better for airports either. * SO WHAT? * Travel restrictions and the increasing inability of people to get outside of their homes, let alone get to the airport in order to fly abroad, is hitting the travel industry hard and will continue to do so until flights and people movements start to normalise. It will take some time for the industry to recover even if oil prices stay low so you can’t blame the industry for trying to put itself at the head

of the queue to get some kind of government funding. I think that pretty much EVERY industry is going to try to get money out of the government at some point in the next few months and, given that there isn’t an endless supply, it will pay to be the among the first in line to get handouts because they are surely going to run out.

Manufacturers ask government to step in to limit damage (The Guardian, Rupert Jones) highlights manufacturers’ efforts to get the government to mitigate some of the coronavirus impact as a recent survey conducted by the industry body Make UK (which used to be called EEF) and business advisors BDO showed that exports have fallen to their lowest level for three years. The survey was actually carried out before coronavirus hit, so clearly things may get worse. * SO WHAT? * Things have been looking tricky for the manufacturing sector for some time now, but the coronavirus will hit hard. In a way, the outbreak may turn out to be a “good” thing for manufacturing because it could increase its chances of getting government support. HOWEVER, IMO the longer this situation continues, the more likely it will be that the government decides to prioritise handouts. Given that services make up about 80% of the UK’s GDP, it may well be that manufacturing gets less of the freebies as the government puts services ahead of it.

Amazon tries to appeal to rivals, US retailers shut and there are developments in hand sanitiser…

Following on from recent news of Amazon selling its cashierless tech to others, Amazon courts Walmart, Target to join cashierless tech group (Wall Street Journal, Aaron Tilley and Sarah Nassauer) shows that the e-tailing giant is trying to get America’s biggest retailers to buy the technology that powers its “Go” stores, but that Walmart and Target are, so far, not going for it. * SO WHAT? * Amazon is, seemingly, trying to make its tech offering more “open source” but rivals are understandably wary about helping Amazon develop the technology, given the latter’s huge power. Amazon will no doubt argue that an “open source” approach will accelerate developments, but for the moment it seems that other retailers are electing to remain on the sidelines.

Elsewhere, Coronavirus prompts Abercrombie, Nike, others to close shops (Wall Street Journal, Suzanne Kapner and Sarah Nassauer) highlights further closures among retailers such as Lululemon, Under Armour, Urban Outfitters, Abercrombie & Fitch, Nike and Apple as people continue to get to grips with the outbreak. Walmart and Target are proceeding relatively normally, although they are

starting to impose quantity limits on certain items that have seen unusually huge demand. * SO WHAT? * If a shutdown goes on longer than a few weeks, it is much more likely that retailers will start to suffer very badly. Mall traffic is already down and many consumers are cutting down on non-essential purchases. Given that the retail sector was already looking pretty shaky, this has all come at a particularly bad time.

Then in Stocks of hand sanitiser ingredient run low in Europe (Financial Times, Michael Pooler and Judith Evans) we see that stocks of isopropyl alcohol (aka IPA) are running low, meaning that hand sanitiser prices are likely to rise and scarceness will increase. Data from market information service ICIS says that IPA prices doubled to €2,250 per tonne in a fortnight! The UK does not manufacture any IPA. As everyone scrambles to catch up with demand, Perfume factories to make sanitiser for French authorities (Daily Telegraph, Hannah Uttley) shows that luxury goods giant LVMH is going to repurpose some of its facilities to make hand sanitiser for health authorities, prioritising hospitals in Paris. It will be making “substantial” quantities of alcohol hand gel from today. * SO WHAT? * I would expect a lot of manufacturing facilities to be repurposed like this over the coming months in order to meet unusually high demand for certain products. No doubt manufacturers will be keen to help, not only because they actually want to, but also that it might mean they could be more likely to get help further down the line from the government.

And finally, in other news…

Given all the stuff that’s going on currently, I thought it would be good to have a nice story for a change like Japanese students hold graduation ceremony in Minecraft amid school cancellation (SoraNews24, Scott Wilson https://tinyurl.com/vn6nknx). How great is this??

1. In MARKETS NEWS, the US fails to calm markets and Lagarde’s attempts fail to inspire confidence either
2. In CORONAVIRUS NEWS, increasing numbers of Europeans face lock-down, indebted companies look shaky and Starbucks’ frontline staff want more support
3. In SECTOR NEWS, travel firms suffer and tech firms get a mixed impact
4. In OTHER NEWS, I show you what Domino’s Japan is doing during the outbreak…

So market carnage ensues despite America’s and Europe’s efforts…

Fed fails to calm market fever (The Times, James Dean) shows that the US Federal Reserve’s $1.5tn cash injection failed to avert a massive sell-off of global markets and Lagarde disappoints despite €120billion growth package (The Times, David Crossland) shows that the European Central Bank’s promise to provide €120bn-worth of stimulus didn’t do much to help either – especially because

it left interest rates unchanged (everyone was hoping for a cut). Stocks plunge 10% in Dow’s worst day since 1987 (Wall Street Journal, Caitlin McCabe and Caitlin Ostroff) shows just how bad everything got on the markets with the Dow, S&P and Nasdaq all falling by around 10% as fears of a global slowdown increased and Global selloff extends in Asia (Wall Street Journal, Joanne Chiu) shows that the fear spread in markets such Hong Kong, Japan, South Korea and Australia to the extent that market circuit-breakers were triggered in Indonesia, the Philippines and South Korea to avert an unstoppable sell-off. Many markets in the region hit new lows.

Europeans face shut-down, debt-fuelled companies look vulnerable and Starbucks staff seek more support…

More than 190m Europeans face life under coronavirus controls (Financial Times, Sam Fleming, Jim Brunsden, Victor Mallet, Guy Chazan, Daniel Dombey, Richard Milne, James Shotter and Valerie Hopkins) shows that over 40% of European residents are now facing coronavirus controls of some kind as new restrictions were announced in Ireland, Spain, Poland and the Czech Republic yesterday. The closure of schools, universities and government buildings – as well as the banning of various sizes of public gatherings – is bringing everyone closer to the situation in Italy, which is under complete shutdown at the moment. * SO WHAT? * The increasing restriction of movement is making severe recession much more likely and the varied approaches by every government would imply that there is not much co-ordination of effort going on between countries. So far, the UK government’s approach is looking fairly relaxed verses countries on the Continent, but obviously this can change.

Will the coronavirus trigger a corporate debt crisis? (Financial Times, Andrew Edgecliffe-Johnson, Peggy Hollinger, Joe Rennison and Robert Smith) takes a look at companies with a load of debt that may become increasingly vulnerable if the coronavirus effects get progressively worse. Companies that have taken advantage of cheap credit since banks lowered interest rates to encourage lending following the 2008 financial crisis may soon be finding themselves in difficulty. Companies that are in the most imminent danger include the airline, hotels and cruise industries – for instance, Carnival and Royal Caribbean are among those on ratings agency S&P’s “watch negative” list. Car manufacturers, electronics makers and chemicals companies are also

looking vulnerable because of the supply chain disruptions that they’ve had to face. At the other end of the size scale, a regional managing partner of restructuring specialist Begbies Traynor estimated that 490,000 UK companies were in trouble before the coronavirus hit and if even 5% of those fail, the rate of corporate involvencies would double. There is a really good chart in this article that gives you a lot more detail on which sectors are most and least exposed to debt. * SO WHAT? * It’s easy to be pessimistic at times like this, but these circumstances can often present opportunities as well – especially for banks that are well-capitalised and have long term plans and companies that have stronger balance sheets. As I have said before, there may be a raft of otherwise good companies out there that just can’t weather the buffeting of the coronavirus and bigger companies may be able to buy quality on the cheap when things die down.

Bringing things down to a company level, I thought that Starbucks baristas confront coronavirus pandemic (Wall Street Journal, Heather Haddon) was worth mentioning as the 200,000 workers at its cafés are getting increasingly concerned with their exposure to potentially infected customers. One employee in Orlando pointed out that “We take cash from customers. They are sneezing and coughing and not covering their mouths” – a concern that will no doubt be felt by many workers not only at Starbucks, but at other retailers, bars, hotels and restaurants. The company said on Wednesday that it would pay US workers in a 14-day quarantine after being exposed to the coronavirus, but not all outlets are owned directly by Starbucks – there are many franchisees. McDonald’s, Darden Restaurants and Olive Garden are just some of the restaurants who are trying to protect workers and make sure their working environments are safe. * SO WHAT? * It’s too early to quantify how much all these extra measures are going to cost such chains, but I would have thought that when things get easier there will be a LOT of pent-up demand as people who have been under restrictions decide to get out there and enjoy themselves. In the meantime, though, times will obviously be tough.

Travel firms suffer and tech presents a mixed bag…

Travel firms lead fallers as bleak warnings are issued (The Guardian, Joanna Partridge) takes a look at the effect that the coronavirus is having on companies involved with travel. WH Smith’s cash-cow business of its train station and airport outlets is suffering from lower traveller numbers, Cineworld is suffering from being an activity that involves lots of people in confined spaces (and postponed blockbusters), while companies like Go-Ahead Group (operator of Britain’s biggest commuter rail franchise, Govia Thameslink etc.) and the owner of Travelex, Finablr, are also in turmoil. I touched on this earlier, but shares in Carnival, the world’s biggest cruise company, were down 18% in trading yesterday on the news that it was stopping voyages for all ships in its Princess Cruises line for two months. Other firms that are related to travel also suffered, as per Airbnb bookings plunge amid coronavirus pandemic (Wall Street Journal, Preetika Rana) and Disney to close US and Paris resorts temporarily as coronavirus spurs cancellations (Wall Street Journal, R.T Watson).

On the tech side of things, Slack, Broadcom among tech companies seeing mixed coronavirus impact (Wall Street Journal, Aaron Tilley and Asa Fitch) shows that it’s not a

complete disaster for everyone as Slack is saying that they are seeing a surge in interest for their workplace collaboration software, but then it added that it may be harder to close big deals because of current travel restrictions. Zoom Video Communications said that it has seen a rise in user numbers for its videoconferencing systems, but it is unclear how many of the new users will convert from the free service to the paid version. On the other hand, Broadcom (a giant in infrastructure software and chip-making) cancelled its revenue guidance announcement yesterday saying that its was unable to predict this year’s sales due to lack of visibility. Apple and Microsoft have already warned investors to brace themselves for big dents in their earnings due to the coronavirus. On the hardware side of things, ‘Surge in home working may trigger laptop shortage’ (Daily Telegraph, Hannah Boland) highlights an immediate more practical problem as demand for laptops rises at a time when supply from China, which makes most of them, is not at full tilt just yet. It sounds like that will be changing soon, though. * SO WHAT? * OK, so it’s a bit of a mixed bag, but I think that the whole “working from home” thing is a very interesting subject. I wonder whether a prolonged coronavirus outbreak that forces more people to work from home more or less permanently until further notice will actually break the mindset of presenteeism in the office and make companies get a much better picture of what really is and isn’t possible to do from home. The conversion rate from free to paid services will be interesting to see.

And finally, in other news…

I did actually mention this briefly above, but given that there might be a lot more food deliveries if increasing numbers of people are holed up in their homes due to the coronavirus, it’s interesting to see what other countries are doing as per Domino’s, Pizza Hut introduce “Zero Contact” delivery service in Japan amidst coronavirus fears (SoraNews24, Oona McGee https://tinyurl.com/r25cl4n). 😱

1. In MACRO, CORONAVIRUS & OIL NEWS, Rishi Sunak unveils a massive Budget, Wall Street’s bull-run ends and we look at more coronavirus effects while Saudi Arabia turns the screws
2. In CONSUMER GOODS NEWS, PepsiCo buys energy drink maker Rockstar while Puma and Adidas suffer
3. In INDIVIDUAL COMPANY NEWS, Morrisons cuts prices to boost sales
4. In OTHER NEWS, I look at why everyone’s buying toilet paper and the UK’s most popular book…

So Sunak unleashes spending, the bull market ends, fallout from the coronavirus continues and Saudi Arabia turns up the heat on oil…

Sunak Budget aims squarely at tackling coronavirus (Financial Times, Chris Giles and George Parker) is the lead story in the FT today heralding an important first Budget for the new government and new Chancellor smack bang in the middle of a global pandemic! As Greg Wallace from Masterchef might say, “It doesn’t get tougher than this” (BTW, you’ll hear Greg’s superb song if you click on that link, so if you’re at work you might want to keep the sound down 😜). If you want to see the full transcript of his speech yesterday, get yourself a bucket of coffee and settle down for Budget 2020: the chancellor’s speech in full (Financial Times). I joke, but it really is quite something. For brevity’s sake, though, I thought I’d highlight a few areas. For the consumer: household energy bills could rise slightly on the introduction of a new “boiler tax” (a surcharge on energy suppliers using natural gas – it’s designed to encourage them to go greener and the rise will probably be passed on to consumers in the form of an extra £5 a year); pension income rises could slow down as the measure of inflation will shift from the Retail Price Index (RPI) to the Consumer Price Index (CPI), which always tends to be lower; VAT on e-books and online newspapers will be axed; the threshold for paying National Insurance will rise from the current £8,632 to £9,500. For businesses: the rumoured corporate tax rate cut is NOT happening (in order to fund the spending spree); £640bn will be spent on infrastructure – the biggest spend in 65 years – in order to “level up” Britain’s regions and increase productivity; business rates will be cut for smaller companies but will remain unchanged for the bigger ones, with the prospect of a “fundamental” review to come and changes to be announced in autumn; there will be a new £200 plastic tax to come into force in April 2022 that will affect all packaging with less than 30% recycled content; spending on R&D will double from £11.4bn this year to £22bn in 2024 or 2025 and was described as the “largest increase in R&D spend ever”. For government: over 20,000 civil servants will move from Whitehall to the regions to “make sure economic decision-making reflects the economic geography of the country” and there will be a government “campus” in the North of England; regional mayors will get new powers to run their bus and train networks. In conclusion, Biggest splurge since Lamont (Daily Telegraph, Tim Wallace and Russell Lynch) highlights that this is the biggest spending spree since the former Chancellor’s pre-election giveaway budget of 1992, according to the Office for Budget Responsibility. We will have to wait and see how effective this will be!

Wall Street ends 11-year ‘bull market’ as coronavirus fears spread (The Guardian, Dominic Rushe) heralds the end of the good times as the Dow Jones Industrial Average has now fallen by 20% from its recent highs (this is the definition of a bear market) and the S&P500 has fallen 19%. Economists believe it could fall further.

In terms of other coronavirus repercussions, US to ban travel from Europe for 30 days due to coronavirus (Wall Street Journal, Andrew Restuccia, Alex Leary and Kate Davidson) highlights a travel suspension announced by Donnie T in a national address that will  come into force this Friday at 11.59pm. Travellers from the UK, however, will be excluded from this. Following the address, the State Department advised US citizens against all travel abroad! Meanwhile, UK to move to next coronavirus phase as WHO declares pandemic (Financial Times, Laura Hughes and Sarah Neville) suggests that a change in status from “contain” to “delay” will be announced by BoJo today meaning that schools and colleges could be closed temporarily and public gatherings could be banned.

In terms of effects on companies and industries, Flight bans cripple Australia travel and tourism industry (Financial Times, Jamie Smyth) cites data from Sydney Airport which shows that passenger numbers have fallen further than they did in the wake of the September 11th terrorist attacks in 2001 or after the SARS outbreak in 2002-3. Chinese passenger traffic fell by a whopping 72% in February! Fiat Chrysler warns it may shut Italian factories because of coronavirus (Financial Times, Peter Campbell), although for now it is just going to cut production and Coronavirus poses threat to China’s electric vehicle goals (Financial Times, Christian Shepherd) shows that China’s relentless march towards electric vehicle ubiquity may pause as price-conscious Chinese consumers may be less keen to go electric because of the recent reduction in incentives and the plunging oil price. Some are also speculating that the government may be more inclined to help the bigger domestic manufacturers than the smaller electric start-ups because they employ more people and make a bigger impact on the economy. * SO WHAT? * FWIW, I have never seen anything like this before – and I hope it will never happen again. The magnitude of this disease is astounding and businesses and investors alike are in self-protection mode given the uncertain future. However, I do think that when things start returning to normality, pent-up demand and economic stimulus measures will power an almighty surge in investment and spending overall. However, it all depends on how long the global lock-down goes on for. If things don’t calm down by the summer we could be in for a whole world of hurt IMO.

Then in Saudi Arabia steps up oil price war with big production increase (The Guardian, Jillian Ambrose) we see that the Saudi government has ordered its state-owned Saudi Aramco to raise its production even more to hit record levels of 13m barrels a day. * SO WHAT? * Saudi Arabia is the world’s biggest oil exporter and this latest move appears to be designed to punish the Russians (who rejected appeals to CUT production in order to stabilise the price), get rid of American competition (US shalers are having a nightmare) and grab market share by offering discounted pricing to key buyers. It is able to turn the screws because it has among the lowest production costs in the world, although on the other hand it is more reliant on oil revenues than most. If this low oil price persist around the $30 mark, oilfield services companies could be in trouble as new projects could get cut, according to analysts at Rystad Energy.

PepsiCo buys Rockstar while Puma and Adidas have problems…

Rockstar energy drink gives Pepsico a real boost (The Times, Ashley Armstrong) highlights PepsiCo’s $3.85bn takeover of Rockstar Energy Beverages. This is the company’s first foray into energy drinks, an area that was worth $53bn last year and is projected to be worth $86bn by 2026, according to Allied Market Research. * SO WHAT? * I guess this just confirms a trend of cola companies trying to broaden their product portfolio. For instance, Coca-Cola has a stake in Monster Beverage and recently

launched its own-branded energy drinks in the US. I am going to sound like a miserable old man now, but I think energy drinks are a terrible fad. They are loaded with tons of sugar and caffeine – hardly healthy! Surely people will realise this in time…

Puma and Adidas take a nasty fall (The Times, Ashley Armstrong) shows that both sportswear makers have warned that their sales have taken a dive in China because of the coronavirus and that the impact has already spread to markets in Asia and Europe. Almost a third of Adidas and Puma’s sales are made in China. On the plus side, Puma’s China factories have opened up and container shipping is back to normal – useful because China supplies about 20% of its goods.

Morrisons cuts prices to boost sales…

Morrisons slashes prices on hundreds of items to tackle drop in sales (The Guardian, Zoe Wood) says that Morrisons has cut prices of over 500 daily staples by around 15% in order to boost sales. Hundreds more cuts

are due to be made in the next few weeks. * SO WHAT? *Morrison’s share price has fallen by 17% over the last year, it had a poor Christmas and industry data shows that it was the worst-performing member of the big four UK supermarkets in terms of market share. Clearly it needed to do something drastic to address the situation. This may work if they are the only ones to do this, but if the other supermarkets get involved to protect their own positions we could have a price war on our hands…

And finally, in other news…

Just in case you have been wondering, here is a scientific explanation of a current phenomenon: The Psychological Reason Coronavirus Is Prompting People to Hoard Toilet Paper (mental_floss, Jake Rosen https://tinyurl.com/tthotr3). I also thought I’d leave you today with Most popular book in the UK named – and it’s not the Bible or Harry Potter (The Mirror, Paige Holland https://tinyurl.com/yxyp8men). Can you guess what it is before you read this?

1. In MACRO, CORONAVIRUS & OIL NEWS, Putin enshrines his own power, the UK Budget goes for growth, the Bank of England makes a deep interest rate cut and we see more losers from the coronavirus while the oil shock endangers renewables
2. In RETAIL NEWS, Ikea teams up with Alibaba and DFS announces a drop in sales
3. In INDIVIDUAL COMPANY NEWS, events organiser Informa cancels, Tesla aims for another US gigafactory and ambition increases for meat alternatives
4. In OTHER NEWS, I bring you (possibly) the world’s thinnest sandwich…

So Putin consolidates his power, Sunak aims for a growth Budget, the Bank of England cuts interest rates and we learn from returning Chinese workers as more coronavirus losers emerge while the oil shock threatens renewables…

Vladimir Putin sets stage for retaining his grip on power (Financial Times, Max Seddon) highlights the Russian president’s latest efforts to ensure his power lives on by backing constitutional changes that could allow him to stay in office until at least 2036. * SO WHAT? * The current constitution, which was came into force in 1993, restricts presidents from serving more than two consecutive terms. However, Putin has managed to bend and fudge the rules over the years to hang on to power. What he is proposing would let him stay in power until he is 83 (which would make him longer-serving than Joseph Stalin and older than Leonid Brezhnev) but then forbid any successor for holding more than two six-year terms 😱! Nothing like making up your own rules! His current term is due to expire in 2024 – but I wouldn’t bet on him stepping down 😂. You do wonder, though, how Putin is going to get through the current oil war as I would have thought that Saudi Arabia is better-placed to weather the lower prices for longer…

Rishi Sunak to signal end of austerity with huge leap in borrowing (Financial Times, Chris Giles and George Parker) trails what the Budget announcement will bring later on today when it is officially announced. Chancellor Rishi Sunak is to unveil the biggest hike in public borrowing for 30 years in his first ever Budget and spend the money on short term fixes to help the NHS, companies and individuals tackle the coronavirus. He will also be looking to invest in infrastructure projects over the next five years and will announce a review of the UK’s economic framework. Sunak will also be expected to come good on manifesto promises, like cutting national insurance contributions and investing more of the government’s money. It’ll be interesting to see the detail later.

*** NEWS JUST IN *** Coronavirus latest: Bank of England cuts interest rates to 0.25% (Financial Times, Alice Woodhouse) heralds an unscheduled cut in the UK interest rate by 50 basis points to 0.25% (it was 0.75%). This is a big cut, but the Bank’s Monetary Policy Committee agreed unanimously to the move. This will be its lowest level since the 2016 Brexit referendum and follows the 50 basis point cut announced by the Fed last week.

In coronavirus news, Chinese companies get back to work – but with stricter rules (Financial Times, Ryan McMorrow and Qianer Liu) shows that Chinese companies are starting a phased return to the office, but are adopting new strategies to try and avoid a resurgence of the coronavirus outbreak. Most companies are allowing only half of their

employees back and they are subject to having their temperatures taken multiple times, having to wear facemasks all day and are being discouraged from using public transport. Employees are instructed not to stand too close to each other, office seating is in square metre grids to keep them separate and food is delivered to their desks to ensure they eat alone 😥. Food delivery giant Meituan has even started to provide “contactless shields” to employees to prevent the virus spreading while they eat (it makes it look like you are eating in some kind of box) and staff have to fill in a daily health questionnaire on an app that asks about their travel history, health and mood. You have to show the app result to security guards and take a temperature test in order to leave the building. One poor bloke mistakenly said he had symptoms and the next morning he got a phone call from HR asking if he still had symptoms – so he redid the survey. On the flip side, one guy from Baidu said that “I can sleep in until 9am or 10am every day – it’s amazing. I don’t need to change clothes or crowd on to a bus”. So that’s at least one worker who is enjoying sitting around in his pants all day. Will this be coming to the UK I wonder?? I would be surprised if British workers will be quite so compliant.

Airlines slash flights to cut costs as coronavirus hits travel demand (Financial Times) highlights ongoing troubles for airlines as American Airlines, Delta Airlines and United Airlines have all delayed publication of their financial forecasts, Qantas, Norwegian Air Shuttle, Korean Air, Air China, China Eastern Airlines, China Southern Airlines and Hainan Airlines are among the many who have cancelled flights and are in varying degrees of financial precariousness. Wedding’s off: the less obvious victims of coronavirus (Financial Times, Katharine Gemmell) looks at how the outbreak has basically closed down the UK’s wedding insurance market as John Lewis and Debenhams have withdrawn cover while Asian Wedding Insurance, Dreamsaver Wedding Insurance, Emerald Life Insurance, Wedding Plan and the National Wedding Show have all temporarily suspended applications for cover that generally tends to compensate for loss or damage due to unforeseen circumstances like fire damage to the wedding dress of loss of rings as well as unavoidable cancellations. On a slightly positive note, UK lenders provide relief to customers hit by coronavirus (Financial Times, Myles McCormick) highlights that UK banks including the Royal Bank of Scotland, Lloyds Banking Group, Barclays and TSB are announcing various measures – like mortgage holidays and fee-free refinancing – to ease the potential pain of borrowers.

With regard to current oil shenanigans, Oil shock threatens to sap wind out of sails for renewables shift (Financial Times, Leslie Hook) shows that the recent plunge in the oil price is likely to lessen any recent urgency for renewables as the traditional black stuff is getting cheaper. It may also dampen demand for electric vehicles in the short term at least. On the other hand, it may make investors like oil companies even less because of short-term volatility whereas renewables may offer more stability on a longer-term basis.

Ikea teams up with Alibaba and DFS announces weaker sales…

Ikea launches virtual store on Alibaba to lure Chinese customers (Financial Times, Richard Milne) heralds a big moment for the world’s biggest furniture retailer as it announced the launch of a virtual store with Alibaba in order to reach more Chinese customers. Ikea products are sometimes available on third-party websites – but not directly from them. Execs vetoed using Amazon but found selling product via an external website more problematic than they had originally thought. Ikea will be selling its wares via Tmall, Alibaba’s consumer platform, to

customers in Shanghai, Jiangsu, Zhejiang and Anhui initially, rolling out to other cities later. * SO WHAT? * This is all part of Ikea’s massive business model overhaul – and it is continuing to open smaller city-centre stores whilst also looking into other initiatives like becoming a broader online furniture retailer (i.e. to become the Asos of furniture) and renting out furniture via subscription.

High street stalwart DFS Furniture unveils slump in sales (Daily Telegraph) is an altogether less exciting development for DFS as it announced yesterday a 5.7% drop in group revenues for the first six months of the year. It said, unsurprisingly, that the trading backdrop was “challenging”, that consumer confidence was still fragile and that it expected lower footfall as customers avoided the high street. Not great.

Informa cancels events, Tesla scopes out a new gigafactory site and meat alternatives get more ambitious…

Informa postpones global events worth £400million (The Times, Simon Duke) highlights more coronavirus casualties as the events organising company, which puts on over 500 events per year, has decided to postpone 115 events until later on in the year. It has also cancelled 13 other exhibitions worth £25m in sales but hopes to put them on next year instead. * SO WHAT? * Given that exhibitions bring in about 65% of revenues, this is clearly a big deal – but I guess there’s nothing else it can do. Informa’s chief exec Lord Carter believes that pent-up demand and a realisation that conferences are actually quite valuable will power revenues once the coronavirus outbreak calms down. I would say that there is a danger that it could go the opposite way if people start to think that they are a waste of time!

Elon Musk says incentives, costs will influence site of new US Tesla factory (Wall Street Journal, Tim Higgins) shows that Tesla is on the lookout for a new location for its next assembly facility. Tesla’s founder was open about the fact that incentives could play a role in the decision. He indicated that the site should be somewhere in the middle of the US and that it would be building the new Model Y as well as its new pickup truck. The company continues to target at least a 36% increase in deliveries this year and is due to announce first quarter delivery figures early next month.

Then in Alternative meat industry moves beyond the burger (Financial Times, Emiko Terazono) we see that companies are now looking beyond making “meat” patties and “sausages” in order to make meatless alternatives with texure akin to real “cuts” of steak and chicken breast. Novameat is a company that is trying to replicate the look and sensation of meat, which is more difficult to do for a cut than it is for a minced product. Other companies with the same aim include UK start-up This. Carnivores will prefer the travails of Memphis Meats and Future Meat Technologies, who both “grow” meat from cells. There really are some interesting developments afoot!

And finally, in other news…

Given all the coronavirus gloom out there, I thought that maybe you could use a few moments of distraction and admire the skill of the bloke in Japanese knife pro makes world’s allegedly thinnest sandwich (SoraNews24, Eli Pang https://tinyurl.com/vfjokvz). Impressive! Mind you, you wouldn’t want him to make your packed lunch (unless you were on a diet of course) 😂

1. In MACRO, MARKETS & OIL NEWS, the US and UK consider further measures to mitigate coronavirus damage and we see market carnage and oil nightmares
2. In RETAIL & LEISURE-RELATED NEWS, Tesco sells its Asian business, Amazon offers its tech and Cineworld takes a hit
3. In TECH/MEDIA NEWS, Twitter comes to a Dorsey/Elliott agreement, Apple reports horrendous China sales and Quibi faces a hitch
4. In INDIVIDUAL COMPANY NEWS, Aon buys Willis Towers Watson
5. In OTHER NEWS, I bring you the weirdest new KitKat flavour yet…

So the US and UK consider ways to pep things up, markets crash and oils prices crater…

Brace yourselves – there’s a LOT to cover today so let’s dive in!

Donald Trump floats tax cuts as response to coronavirus impact (Financial Times, Demetri Sevastopulo and James Politi) shows that Donnie T is considering a “major” economic relief package in order to mitigate some of the negative impact of the coronavirus outbreak. Bank expected to cut rates to 0.25% to battle recession (Daily Telegraph, Tom Rees) shows that investors are now expecting the Bank of England to cut interest rates by 0.5% (aka “50 basis points”, aka “50bps”, aka “50 bips” if you are talking about it) to 0.25% from the current 0.75% in order to boost the economy in the face of potential global recession. This is why Oil and stock futures rise after historic rout (Financial Times, Hudson Lockett and Leo Lewis) is happening today after headlines such as US stocks fall 7.6% in worst day since December 2008 (Financial Times, Philip Georgiadis, Adam Samson, Richard Henderson, Colby Smith and Hudson Lockett) are splashed across all of this morning’s broadsheets after yesterday’s market carnage. Things got so bad yesterday that we saw something very rare happening in Circuit breaker halts stock trading for first time since 1997 (Wall Street Journal, Akane Otani) where trading was suspended shortly after US stock market opening for the first time since October 27th 1997, aka “Bloody Monday”, when trading got suspended twice. Trading is automatically suspended when markets fall by 7% from the previous close to allow market participants to catch up with buy and sell orders and calm activity down. This “circuit breaker” was implemented following the “Black Monday” crash of 1987 where the S&P fell by 20%, in order to avoid the same thing happening again. If you are interested in seeing how events unfolded yesterday in a bit more detail, Twenty-four hours of mayhem (Daily Telegraph) does a brilliant timeline of what happened. Given that you are probably going to see a ton of articles that make comparisons with 2008, How this market crash is different from 2008, and the same (Financial Times, Mohamed El-Erian) is a very useful piece which compares yesterday’s crash with the one in 2008. In terms of differences, it was not instigated by a crisis in banking and settlements systems (they are actually OK) –

it was as a result of the confluence of three things. Firstly, the coronavirus is reducing supply and demand at the moment, hobbling global economic growth momentum; secondly, central banks have virtually no ammo to combat financial volatility because they cut their interest rates to the bone in the wake of the financial crisis and some of them left them there (look at the eurozone with its zero-per cent interest rate); thirdly, Saudi Arabia just picked an oil price war with Russia.

Following Saudi Arabia’s decision to increase oil production, Oil crash: why Saudi Arabia has started a global crude price war (Financial Times, Anjli Raval and David Sheppard) looks at the motivations behind this dramatic move after prices cratered by up to 30% in trading yesterday. Some say that the about-turn was a punishment for Russian non-compliance (OPEC members had previously agreed to oil production cuts and Russia refused to uphold this decision). It could also have been an attempt to consolidate its position as the world’s biggest oil exporter as it offered to undercut other suppliers by offering discounts. Saudi Arabia can raise production quite easily as it has loads of spare capacity and it can also use existing inventory to boost exports. Russia’s production, on the other hand, is currently running at peak levels. Coronavirus/oil price: war gaming the end of hydrocarbons (Financial Times, Lex) says that Saudi Arabia can still make money from oil even if prices go down to $13 a barrel whereas Russia prices in $30 a barrel for budgeting purposes (although I saw recently that it really needs oil prices to be at $42 a barrel to be profitable). * SO WHAT? * Saudi Arabia’s decision shocked markets and the subsequent sell-off was a knee-jerk reaction. Price recovery is happening as I write this, but I don’t really see how sustained this can be at the moment. In terms of what it means for the industry and consumers like you and me, Saudi Arabia’s gamble may push crude below $20 a barrel (Daily Telegraph, Andy Critchlow) cites some “expert” predictions, meaning that Price of petrol could fall to £1 a litre for first time in five years (Daily Telegraph, Ed Clowes). In the meantime, though, prolonged oil price weakness will hit some areas of the market particularly hard, as per US shale drillers could be casualties of oil-price war (Wall Street Journal, Collin Eaton and Rebecca Elliott) which says that shale drillers with high levels of debt, like Chesapeake Energy and Whiting Petroleum Corp, will get a massive pasting. In fact, the chief exec of Pioneer Natural Resources, Scott Sheffield, said that he thinks around half of the exploration and production (aka E&P) sector will go bankrupt within the next two years.

Tesco offloads its Asian business, Amazon offers its cashierless tech to others and Cineworld takes a hit…

In Tesco uses Asia sale to top up pension fund (The Times, Alex Ralph) we see that the supermarket has agreed to sell its Asian operations to a Thai conglomerate for £8.2bn. The sale is subject to shareholder and regulatory approval, but is expected to complete in the second half of this year if there are no hitches. * SO WHAT? * This move has been well-flagged and the proceeds will go to shareholders and Tesco’s pension scheme. Naysayers will say that this cuts off Tesco’s one true avenue of decent growth while supporters will commend it for acting on an opportunity and getting a decent price. Tesco will now have to concentrate on its 3,800 shops in the UK and Ireland as well as its Booker wholesale business.

Amazon signs smart shopping deals (The Times, James Dean) highlights the company’s signing of a number of deals to sell its cashierless technology (which it calls “Just

Walk Out”) to other retailers. The tech enables customers to swipe their credit card on entry to a shop and then leave with their purchases without having to go through a checkout, as per its own Amazon Go and Amazon Go Grocery formats. Amazon did not say who had made the deals or for how much they paid. * SO WHAT? * This sounds like another smart move by Amazon and gives it another good income stream. I would have thought that barriers to entry to this will be considerable given the complicated tech involved, and so I don’t see many other competitors being able to replicate Amazon’s expertise.

Cineworld’s biggest shareholder GCT cuts stake by a third (Financial Times, Alice Hancock) highlights a blow for Cineworld as Global City Theatres announced that it had agreed to sell a 7.9% stake in the business for around £116m. * SO WHAT? * This will be an annoyance for the company that is currently in the throes of buying Canadian cinema chain Cineplex for $2bn and comes a week after share prices in cinema companies got mullered by news of blockbuster film launch delays due to the coronavirus response. OK, so it’s not a complete withdrawal, but it does add to the company’s air of vulnerability. Tough times for Cinworld (and everyone else!).

Dorsey stays, Apple reports China sales and Quibi hits a hurdle…

Twitter, Elliott strike truce that leaves CEO Dorsey in place (Wall Street Journal, Corrie Driesbusch) heralds a truce between activist investors Elliott Management and celeb-CEO Jack Dorsey that will bring changes to Twitter’s board but leave Dorsey in place. Elliott’s attack dogs were also calmed by the company agreeing to allocate $2bn to share buy-backs. * SO WHAT? * This all blew up initially because Elliott Management wasn’t a fan of Dorsey splitting his time by being the CEO of Twitter and Square simultaneously. They argued that this meant he wasn’t maximising Twitter’s opportunities. Anyway, a potential high-profile battle has been averted for the moment, but Twitter/Elliott: peace in our time (Financial Times, Lex) wonders whether he will actually want remain as CEO going forward given the increasing number of babysitters.

Apple iPhone sales down 61% in China (The Times, James Dean) cites figures from the China Academy of Information

and Communications Technology which show a massive fall in iPhone sales last month. * SO WHAT? * Unsurprising given the circumstances, but the two key things to watch here are a) how long the coronavirus will go on for and b) how quickly consumers will start spending again – which no-one knows!

Streamer Quibi faces patent infringement claim over video feature (Wall Street Journal, Amol Sharma) heralds a fly in the ointment for short-form streamer Quibi, which is aiming for a launch of its service next month. Quibi offers content that is 10 minutes or shorter and is designed to be viewed on smartphones. The controversy centres on its “Turnstyle” tech that plays different videos depending on how users are holding their phones (vertically or horizontally – it means that you can toggle between different points of view), which New York-based company Eko says it is responsible for. Obviously, Quibi denies this. * SO WHAT? * Quibi is trying to be The Next Big Thing by doing something different (providing high quality short-form video content for between $4.99 and $7.99 per month), so this will be a bit of an annoyance. I don’t think this will disrupt the launch but it will dent a bit of the feelgood factor.

Aon announces a purchase of Willis Towers Watson…

Aon’s $30bn deal to create insurance giant (Daily Telegraph, Michael O’Dwyer) highlights the company’s purchase of Willis Towers Watson that will combine the world’s #2 and #3 insurance brokers to create the world’s biggest commercial insurance broker. This follows last

year’s purchase of Jardine Lloyd Thompson by Marsh & McLennan. * SO WHAT? * The industry has been consolidating in an effort to diversify income streams, increase commissions and become “one-stop-shops”. The deal will be subject to shareholder and regulatory approval.

And finally, in other news…

What is it about Japan and KitKats?? I love both, but just can’t work out the logic behind Yoghurt Sake is the newest Japanese KitKat we need to get our hands on right now (SoraNew24, Oona McGee https://tinyurl.com/rjhsznq). Whaaaaaat???

1. In CORONAVIRUS & OIL NEWS, Italy goes into lockdown, anti-coronavirus efforts increase and Saudi Arabia ignites an oil price war
2. In CONSUMER TREND & RETAIL NEWS, US make-up takes a turn, US plant-based food sales increase and the UK high street calls for more support
3. In INDIVIDUAL COMPANY NEWS, Princess Cruises get turned away and Merlin waits for China go-ahead
4. In OTHER NEWS, I show you ways to stop your smart devices spying on you…

So Italy gets dramatic, the world ups anti-coronavirus efforts and Saudi Arabia starts an oil fight…

Italian lockdown puts 16m people in quarantine (Financial Times, Davide Ghiglione, James Politi and Miles Johnson) highlights that more drastic measures are being taken in the face of a continued increase in the numbers of coronavirus cases and deaths in Italy. The government has restricted movements in Lombardy and its capital Milan, effectively putting 16m people in quarantine. It has also closed museums, schools, gyms, universities and ski resorts. The restrictions have also been implemented in Parma, Modena, Padua and Venice. * SO WHAT? * Although Conte said he wanted to contain the virus, news of these restrictions leaked a few hours before the official announcement, prompting an exodus of people from the region before they came into force. The Italian economy was already looking tricky before, but the coronavirus outbreak is highly likely to push it over the edge into recession.

Efforts to battle coronavirus escalate around the globe (Wall Street Journal, Talal Ansari, Chun Han Wong and Erin Ailworth) takes a look at current developments around the world. The virus is now in well over half of the states in the US (with the majority of deaths in Washington state and states of emergency being declared in New York, California, Florida, Kentucky, Maryland, Utah, Washington and Oregon), Italy imposed major restrictions (as per the above), the Maldives started to impose stricter health screenings for travellers in response to reporting its first two cases on Saturday and Iran has urged people to stop travelling in the country. If official figures are to be believed, the rate of infection appears to be slowing down in China. The drama continues.

In Oil crash as Saudi price war routs the market (Daily Telegraph, Tim Wallace and James Cook) we see that lack of progress at last week’s meeting with Russia prompted Saudi Arabia to go nuclear and increase oil production (remember, they had been recommending doing the exact opposite last week) driving prices down by 30% following the announcement. This was the steepest price fall since 1991 and brings prices down to levels not seen since 2016. Brent has fallen from around $70 two months ago to $35. According to Saudi Arabia launches oil price war after Russia deal collapse (Financial Times, Anjli Raval, David Sheppard and Derek Brower), Saudi Arabia has gone even further than increasing production – it has offer its crude at discount prices to win new customers! It is basically saying to the US shalers and Russia “ave some of that!”.  * SO WHAT? * If this move is sustained and not just a one-off, it may stimulate the world economy as airlines and logistics companies could benefit – and consumers would potentially have more money to spend as petrol will be cheaper. On the other hand, this could suck the urgency out of green energy efforts and kill oil companies with big debts. It will also cause a headache of epic proportions for Russia and US shale producers, especially as Saudi Arabia is offering big discounts to customers in north west Europe who normally buy Russian oil as well as to customers in the US and Asian markets. Producers like Nigeria and Angola are likely to be hit hard by a lower price as they can’t easily increase output and have limited scope to borrow money to tide them over. If everyone increases oil production and OPEC loses control of its members, I would expect oil prices to plunge further at least in the short term – but there will be more volatility in the longer term as production limits go ignored. One of the main reasons why OPEC was founded in the first place was to control the volatility, but if everyone just goes off to do their own thing, then the cartel will become toothless.

US make-up sales falter, US plant-based food sales increase and the UK high street cries for help…

Bubble bursts for US make-up market (Financial Times, Leila Abboud) shows that the “cake face” make-up look that has been powering cosmetic sales over the last few years may be on the wane. Figures from market research firm NPD Group show that sales of high-end make-up have fallen by 7% – the first time they have fallen for ten years. On the other hand, US skincare sales increased by 5% – overtaking make-up sales growth for the third consecutive year. Established names like L’Oreal, Estee Lauder and Coty – as well as newer independent brands like Anastasia Beverly Hills and ColourPop Cosmetics – have all been suffering as a result of this shift to a more natural look. Outside the US, cosmetic sales have increased significantly in Asia but been mainly flat in Europe. * SO WHAT? * These things just go in cycles. Trends vacillate between make-up and skincare all the time and it seems that we are at a turning point. I also wonder whether we have also hit “peak beard” as well. Interestingly, NHS workers have recently been asked to go clean-shaven where possible – as per NHS urges staff to shave beards in fight against coronavirus (itv.com) – and I wonder whether this will signal facial hair’s longer term demise. If so, razor makers like Edgewell Personal care (which owns brands like Wilkinson Sword, Schick etc.) and Procter & Gamble (which owns Gillette, among other things) may stand to benefit…

Sales of plant-based foods surge in US (Financial Times, Emiko Terazono) shows an 18% increase in US sales last year as consumers show an increasing interest in dabbling with alternative proteins. According to a report commissioned by the Good Food Institute and the Plant Based Foods Association, overall plant-based food sales increased by 11% in 2019 versus the whole US retail food market, which only grew at 2%. Increased concern for the environmental impact of keeping livestock and animal welfare are among the drivers behind the boost and innovations in this area and the momentum seems to be continuing. * SO WHAT? * It’s not only been meat substitutes that have seen a boon – sales of plant-based milk is also surging in popularity, with almond milk being the most popular milk-alternative and oat milk being the fastest-growing alternative. The agricultural industry will no doubt continue to resist, but if customers vote with their wallets, the farmers are going to have to listen.

Meanwhile, back in the UK, Perfect storm of bad weather and business rates fuels crisis (The Guardian, Simon Godley) brings the gloom as the latest figures from Springboard show that severe rain hit high street visitor numbers in February and data from the Centre for Retail Research shows that job losses this year in the retail sector currently stand at 18,466 as at February 27th. * SO WHAT? * This will put even more pressure on Rishi Sunak to do something about business rates in this week’s Budget and just acts as further proof that the retail sector is having a nightmare. I would have thougth that it’s likely to get worse as well because the latest figures don’t take into account falling customer numbers due to coronavirus panic.

Princess Cruises faces more problems and Merlin awaits China green-light…

In a quick scoot around some of the other news stories today, Health officials block several Princess Cruises ships (Wall Street Journal, Erin Ailworth and Costas Paris) shows that the US Centers for Disease Control and Prevention ordered the Regal Princess to stay off the coast

of Florida and issued a no-sail order for the Royal Princess in Los Angeles while staff and passengers from the Grand Princess will dock in Oakland – only to be quarantined. All the ships are owned by Carnival Cruises. This will be devastating for Carnival and the cruise industry in general IMO. I think it will take years for them to recover from this.

Meanwhile, Merlin waits for the magic word in China (The Times, Dominic Walsh) shows that Merlin Entertainment is expecting to be given the green light to open some of its attractions in China which have been closed as a result of the coronavirus. * SO WHAT? * China has become one of Merlin’s key markets and so any return to normality will obviously be welcomed.

And finally, in other news…

Today, I thought I’d leave you with something that might help you in How to stop your smart home spying on you (The Guardian, Davey Winder https://tinyurl.com/stsl6yd). Given the amount of smart devices we tend to have knocking around, this makes for interesting reading…

1. In MACRO & OIL NEWS, BoJo outlines a response while Opec considers production cuts
2. In RETAIL/LEISURE NEWS, Costco benefits from panic buying, Gap gets a new CEO and cinemas suffer
3. In INDIVIDUAL COMPANY NEWS, we see a Flybe post mortem, Continental’s warning and ITV’s ad revenue prospects
4. In OTHER NEWS, I bring you an invention you never knew you needed and an unusual book…

So BoJo outlines his plans and Opec considers cuts…

Boris Johnson plans UK economic response to coronavirus (Financial Times, George Parker, Laura Hughes and Chris Giles) highlights BoJo’s latest moves on the coronavirus as he held private talks at Downing Street with Bank of England Governor Mark Carney and his chancellor, Rishi Sunak. No comment was made after the meeting as it seems that the government is continuing with a low-key approach to avert mass panic. As things stand, UK Finance – which represents the financial services sector – said its members would support those who had lost money due to the outbreak via things like increasing overdrafts or repayment relief on loans. The Bank of England added that it was ready to cut interest rates ahead of its next scheduled meeting on March 26th (the current rate stands at 0.75%). * SO WHAT? * Clearly this is a live situation, so things are liable to change. What is interesting,

though, is that this gives BoJo a great excuse to set aside the fiscal rules in his election manifesto regarding day-to-day spending to give himself more financial wiggle room – he wanted to do this anyway, but now he can blame the coronavirus! 

In Opec poised to slash oil output as coronavirus cuts demand (The Guardian, Jillian Ambrose) we see that the cartel is looking to cut oil production by 1.5m barrels a day (equivalent to 3.6% of global oil supplies) from next month in order to arrest the current price slide. These plans will be discussed with the Opec+ group of oil producting countries, led by Russia, in a meeting today as their cooperation will be needed to make sure that the production cuts stick. * SO WHAT? * It does seem to me like they are faffing around somewhat and imposing cuts in a few weeks’ time sounds like they are just tinkering with the edges while the damage is being done right now. Still, if China production continues to ramp up towards something approaching normality then surely there will be a notable surge in demand. Will it be enough though?

Costco benefits from panic, Gap gets a new CEO, cinemas suffer and Domino’s withdraws…

Costco rides coronavirus-fueled panic buying (Wall Street Journal, Sarah Nassauer and Kimberly Chin) highlights strong sales in February (especially in the final week!) as customers stocked up on everyday goods in response to the outbreak. Toilet paper, peanut butter and bottled water were among the products that flew off the shelves and now #CostcoPanicBuying has started trending on Twitter. Things have got so frenetic that the retailer is putting purchase limits on some items, but the number of customers has been increasing daily. * SO WHAT? * Panic is clearly spreading – and this is in a country (the US) with a pretty low incidence of the coronavirus. I don’t know what it’s like where you are, but there are reports around where I live (Guildford) that places like Sainsbury’s are running low on things like toilet roll and certain food items. My wife went out the other day to try and find hand sanitiser for my increasingly paranoid eldest son to take to school and as she found one, everyone around her descended to take all the rest of them! It seems like we will all have to sharpen our elbows a bit more when we go shopping now (especially when we find ourselves in the toilet roll and pasta aisles!)…

Gap chooses insider to take over as CEO (Wall Street Journal, Micah Maidenberg) highlights the latest development for the troubled apparel retailer. Sonia Syngal, the head of its Old Navy brand, is to take up the reins as CEO and a board member was appointed  as chairman. * SO WHAT? * Syngal is inheriting a right old mess, but at least she doesn’t have to deal with splitting the company into two – a plan that was abandoned in January. Gap’s share price has fallen by over 50% in the last year, so clearly she has her work cut out. Mind you, Old Navy flourished under her leadership, so maybe she can breath life back into this tired brand.

2019 was always going to be a tough year to beat for cinemas given the sheer number of successful blockbusters – but Cinema stocks tumble after news of Bond delay batters operators (Daily Telegraph, Ed Clowes) shows that share prices of cinema operators took a pasting on the news that the latest Bond film, No Time to Die, would be delayed by a number of months. Cineworld saw its share price drop by as much as 24% at one point while Everyman saw its price close 15% down. The fear is that a number of films could follow suit putting further pressure on the cinema chains. * SO WHAT? * Cinemas are clearly in a tricky spot here, but the doom also spread to companies such as The Restaurant Group, which owns restaurant brands such as Chiquito, Frankie & Benny’s and Garfunkels, that are often close by. TRG’s share price fell by 11% and, across The Pond, AMC Entertainment, Imax and Cinemark Holdings were all weaker. FWIW, I really think that footfall has the propensity to bounce back here – but only once the coronavirus outbreak calms down.

We look at Flybe’s wreckage, Continental’s warning and ITV’s woes…

A catalogue of problems that led to the grounding of Flybe (Daily Telegraph, Oliver Gill) is a really good article that goes into detail about the downfall of Flybe which was, until yesterday, Europe’s biggest regional carrier. Basically, the carrier had been in all sorts of problems for a while and the coronavirus just made things a thousand times worse in a very short time frame. Flybe/state aid: UK sets good precedent as coronavirus bites (Financial Times, Lex) describes Flybe as “a subscale company with a weak business plan”. I would add that, although BoJo is coming in for criticism for potentially reneging on his promise to level-up the regions by not bailing out Flybe, I wonder whether he actually got a “get-out-of-jail-free” card here in that the company was always going to be risky and, long term, maybe flying isn’t the way forward for regional travel in a broader bid to be environmentally-friendly.

Continental warns of miserable year for car industry (Financial Times, Joe Miller) highlights the car part giant’s warning of a nightmare year for the global auto industry. It was always going to be bad, but the coronavirus is just making it much worse. In its forecasts, it said that total sales in the passenger car market would fall by up to 5% in 2020, the third year of contraction in a row and its longest

losing streak since the financial crisis. 20,000 jobs are at risk worldwide at the company and things are looking particularly bleak given that the company has major exposure to China. * SO WHAT? * We’re getting used to hearing this sort of thing from the auto manufacturers, so it is hardly surprising to hear that one of the world’s biggest car parts suppliers is predicting a terrible year. I expect more of this sort of newsflow to follow. On another note, it’d be interesting to hear how things are progressing for Tesla in China in the wake of the coronavirus. It will surely be bad – I just wonder HOW bad…

ITV shares hit by travel firms’ ad spending cut (The Times, Simon Duke) highlights yet another casualty of the coronavirus as the broadcaster’s share price fell to eight-year lows after it said that ad budgets were being slashed by airlines and travel companies. Mind you, apart from that, ITV actually announced stronger-than-expected annual results – although they weren’t enough to stop the coronavirus-powered tide of investor pessimism. Interestingly, its Britbox online streaming service partnership with the BBC seems to be doing pretty well since it launched in November. Britbox US now has over 1 million subscribers and is scheduled to be rolled out in Australia this year. * SO WHAT? * Ad budgets are usually one of the first things to get cut in the event of an economic downturn as they are seen to be an unnecessary luxury. However, I think that this is more of a one-off event and ad revenues will come back strongly when the outbreak subsides. There will probably be more pain in the meantime, however.

And finally, in other news…

In times like these, it’s good to know that people are continuing to invent pointless things. Take Japan’s drinkable potato chip system is here, and it made us feel like a fish (SoraNews24, Casey Baseel https://tinyurl.com/rujvjt3), for instance. I say, open the crisp bag very slightly, crunch up the contents carefully and then pour them into your mouth. Simples. And it doesn’t involve any extra plastics…and then there’s the quite frankly hilarious Mum brands kids’ book explaining reproduction ‘child-friendly kama sutra’ (The Mirror, Luke Matthews https://tinyurl.com/tyrovvf). Superb illustrations!

1. In CORONAVIRUS NEWS, China makes steps towards normality and we see an array of winners and losers
2. In FINANCIALS-RELATED NEWS, Alibaba buys into Klarna while Facebook changes plans for Libra
3. In INDIVIDUAL COMPANY NEWS, GM makes a battery breakthrough, Flybe nosedives, Intu is in big trouble and John Lewis pays a token staff bonus
4. In OTHER NEWS, I bring you some spooky ice homes…

So China shows some signs of returning to normality while coronavirus winners and losers abound…

Pollution is not something that people would normally celebrate as a good thing, however Pollution levels in China climb as economy regains pace (Daily Telegraph, Tom Rees and Alan Tovey) suggests that things may be heading towards normal as satellite data from the Centre for Research on Energy and Clean Air shows that levels of nitrogen oxide in China’s atmosphere has shot up by almost 50% since the middle of February. This would imply that more factories are coming back online and that air travel and traffic are returning, although pollution levels are still down by 20% versus last year. * SO WHAT? * It may well sound a bit random for economists to use data like this to get a steer on the Chinese economy, but the thing is that there is general scepticism on the accuracy of official data. Clearly there is an increased likelihood of data being fudged at the moment because China wants to give everyone the impression that everything’s back to normal and so the temptation to gloss over less optimistic data will be very strong. Having said that, the China Passenger Car Association unveiled horrendous February car sales figures – down 80% – after showing some early signs of recovery going into the end of last year/beginning of this year – so it’s still grim out there.

The coronavirus is obviously taking a serious human toll, but if we put that aside for a moment, I wanted to take a look at which businesses and industries are losing out – but also which ones stand to gain. Coronavirus is devastating the conference circuit (Wall Street Journal, Collin Eaton, Rebecca Elliott and Elizabeth Findell) shows how festivals and other events are being cancelled all over the world as over 440 trade shows and exhibitions (and rising) have been cancelled or postponed, according German expo trading magazine m+a, causing massive losses not only for the venues, but also airlines, hotels and any other related businesses. Unsurprisingly, Coronavirus leaves cruise industry with cancelled trips

and half-empty ships (Wall Street Journal, Costas Paris and Dave Sebastian) shows that the outbreak has killed demand, just when things were looking up. Some industry executives expect the likes of Carnival, Royal Caribbean and Norwegian Cruise Line to lose over $550m in Asia alone as demand has just dried up. On the other hand, Higher gold prices push up profits at Polymetal (The Times, Emily Gosden) shows that gold prices, pushed up by investors seeking a “safe haven” is already benefiting the precious metal mining company and Picking tech winners from the coronavirus outbreak (Daily Telegraph, Robin Pagnamenta) highlights other areas which stand to benefit from current circumstances. Given the enforced isolation of many at this time, video gaming is an area that is likely to do well as it is an activity that does not require travel or human contact. Global mobile game downloads were up by a whopping 39% in February (they were particularly strong in China) and Apple’s App Store in China saw a 62% hike in game downloads alone as games like Brain Out and Honour of Kings proving to be particularly popular. Companies such as Activision Blizzard (Call of Duty, Overwatch etc.), Ubisoft (Assassin’s Creed etc.) and Tencent (Honour of Kings etc.) have been outperforming recently and video streaming services such as Netflix, Disney+ and HBO Max should also benefit for the same reasons. With more people working from home, Zoom Video has seen its share price rocket from $76.30 on January 31st to $117.47 yesterday. Cloud service providers like Microsoft, Google and Slack also stand to benefit and it is also likely that supermarket home deliveries will increase. Another possibility is that people couped up indoors may want to exercise without the prospect of infection – which could help companies such as Peloton Interactive. * SO WHAT? * The human cost is obviously terrible but, putting that aside, when things like this happen winners and losers always emerge. In my former life as a stockbroker, major events always prompted loads of questions from clients about how to quantify the impact on individual companies, industries and geographies as they were always keen about damage limitation – with an eye to moving money into areas that would emerge unscathed or enhanced in order to mitigate any potential losses they may be facing.

Alibaba buys into Klarna and Facebook reels in its plans for Libra…

Alibaba pays now to buy stake in Klarna (The Times, Ashley Armstrong) heralds an important development (and endorsement!) for Klarna, the “buy now, pay later” business, which now works with over 200,000 retailers in 17 countries and has over 85 million customers worldwide. The company said that Ant Financial Services Group had bought a minority stake (in this case, less than 1%) as part of a strengthening relationship between the two. Klarna offers shoppers two options – “pay later” where customers have to settle their bills in full after 30 days (good for those who are likely to return their clothes) and “pay in three” where you pay a third at the point of purchase, a third after 30 days and the final third 30 days after that. It makes most of its money from the fee it charges retailers to

provide this service. Klarna unveiled its first ever annual loss last week. * SO WHAT? * I think this is great for Klarna and may well hearten investors as having such a big player on board could prove to be very useful – especially if things get tricky. On the other hand, Ant Financial has only taken a tiny stake, so it’s not really that big a deal at this stage although maybe it will be in future – this is certainly a situation worth watching.

Facebook eases back plans for digital currency (The Times, Tom Knowles) shows that Facebook is potentially pulling back its plans for Libra and is thinking of offering digital versions of existing currencies instead. After massive backlash and criticisms from politicians and central bankers alike since it announced its intentions last June, it seems that Facebook is now considering making Libra a payments network that can use a variety of currencies whilst not completely ruling out the digital currency just yet. * SO WHAT? * It’s all talk now, but it’s interesting to hear that Facebook is at least considering other options. Given the massive resistance it encountered, it is hardly surprising…

GM makes a battery breakthrough, Flybe hits the dirt, Intu is in a bad place and John Lewis staff get a token bonus…

GM to boost electric car investment after battery breakthrough (Financial Times, Peter Campbell and Claire Bushey) is a very exciting-sounding headline, don’t you think? The company said that it would be boosting spending on electric and autonomous vehicles to $20bn by 2025 following a breakthrough with its battery technology that will not only give its vehicles longer range, but they will be quicker to charge and cheaper to make. Hoorah! Interestingly, the first vehicle to use this tech will be an electric GMC Hummer (!) which is due for release later this year. * SO WHAT? * Wow – if this works, it could be a game-changer! This will no doubt up the pressure on the other carmakers to innovate faster…

In Flybe collapses after last-ditch talks with government fail (Financial Times, Tanya Powley and Jim Pickard) we see that the UK airline has now gone into administration as talks with the government to get a £100m loan fell apart. It has been looking dodgy for quite some time now, but the precipitous drop in demand in the wake of the coronavirus was clearly the final nail in the coffin. All flights were immediately cancelled. * SO WHAT? * Flybe had already flirted with falling into administration last year, but it was

rescued by a consortium called Connect Airways and limped along for another year. Flybe has been responsible for 40% of all UK domestic flights and carries over 9m passengers per year and its collapse puts into question the future of many regional flying routes. Presumably, some of the railway operators will now benefit from this somehow.

The gloom continues in Struggling shopping centre owner abandons £1bn cash call (The Guardian, Mark Sweney) as troubled retail property landlord Intu, which owns the Trafford Centre in Manchester and Lakeside in Essex, has decided not to ask investors for £1.3bn in an emergency funding round after all. It’s not clear how the company will be able to finance its massive £4.5bn in debt and it could start to breach bank covenants in July. * SO WHAT? * Intu’s share price fell by 40% on the news in trading yesterday and I struggle to see how anyone could find them attractive at the moment. I would have thought that some kind of break-up is looking more likely – but who is going to want to buy its assets at such a difficult time in the economic cycle? The company will announce its 2019 results next Thursday and I expect they will make for uncomfortable reading…

Then Token bonus of 2pc at John Lewis (Daily Telegraph, Hannah Uttley) shows that John Lewis and Waitrose staff didn’t get doughnuted on the bonus (a City slang term for getting ZERO bonus – the shape of a doughnut), but they did get a very small 2% – its lowest level since 1953. The new chairman announced this at the company’s results presentation. Times are likely to get tougher still.

And finally, in other news…

There are slim pickings for “alternative stories” today, so I thought I’d leave you with the amazing scenes in New York homes encased in ice after freezing temperatures and strong winds (Sky News, Isobel Frodsham https://tinyurl.com/rv23wvx). Spooky!

1. In MACRO, MARKETS & CORONAVIRUS NEWS, the Fed makes a big cut – but markets take fright – and the coronavirus continues to wreak havoc on Iran, aviation, shipping and US shale oil producers
2. In UK HIGH STREET NEWS, calls for a business rate overhaul increase and Greggs is on a roll
3. In INDIVIDUAL COMPANY NEWS, Thermo Fisher buys Qiagen for $11.5bn, Foxconn aims for full China production and plant-based food manufacturers cut prices
4. In OTHER NEWS, I show you what to do in the OMG-I-left-a-tissue-in-the-laundry nightmare and 12 amazing houses…

So the Fed makes a big cut as the coronavirus fallout continues…

Federal Reserve cuts rates a half-percentage point in face of coronavirus (Financial Times, Brendan Greeley, Colby Smith and Chris Giles) reflects a unanimous decision by the Federal Open Market Committee (this is the US central bank’s equivalent of the Bank of England’s Monetary Policy Committee) to cut interest rates by 0.5% to range of 1-1.25% following a meeting by the G7 finance ministers and central bank governors to use “all appropriate policy tools” to get the global economy back on track. This is the Fed’s first emergency cut since the financial crisis. However, Wall Street plunges again as Fed’s rate cut fails to calm fears over coronavirus (Daily Telegraph, Tim Wallace) suggests that investors are now worried that the central bank is more concerned than it is letting on, hence the subsequent sell-off in the market. * SO WHAT? * It’s interesting to see that Trump is continuing to put pressure on the Fed to cut even deeper, but the irony of this is that he’s been banging on about interest rate cuts for ages (it’s a quick way of boosting the stock markets because it makes them look more attractive versus leaving money in the bank – it’s a bit more complicated than that, but this is the general gist). If Jay Powell had listened to him and done it before instead of leaving rates unchanged or taken them higher, he may not have had the leeway now to cut the interest interest rates as much as he has.

Fallout from the coronavirus continues in Coronavirus shatters trust in Iran’s leaders after cases surge (Financial Times, Namjeh Bozorgmehr) highlights the ongoing debacle in Iran as the number of cases has shot up from two to over 2,300 in the space of two weeks, prompting distrust over the regime’s handling of the outbreak. Even Iran’s supreme leader has had to intervene to stop people stop people going to the holy city of Qom to lick the gold

-plated lattice windows of the holy tomb in the belief that it will cure infections 🤢 and he has also called for Friday prayers in Iran’s major cities to be cancelled for the first time since the revolution in 1979.

In Airlines face merger after bookings go into freefall (The Times, Callum Jones) we see that the chief of one of the world’s biggest carriers, Air France-KLM, believes that the dramatic fall in bookings following the coronavirus outbreak will increase pressure on airlines to consolidate. So far share prices in airlines have cratered badly – low-cost carrier Norwegian, has fallen by 43%, Ryanair 25%, EasyJet 24%, Air France-KLM 22% and British Airways owner IAG by 21%. * SO WHAT? * I would have thought that bookings will pick up spectacularly when the all-clear is sounded (surely being in enforced confinement for ages+loads of cheap holiday offers = a surge in holiday bookings, although I guess it depends whether you got sick pay or not), but no-one knows what the gap is going to be between now and then. In the meantime, airlines need to get their heads down and dig in.

Elsewhere, Shipping broker issues profit warning (The Times, Callum Jones, Alex Ralph and Ben Martin) shows that leading shipping broker Braemar Shipping Services has highlighted that its earnings will take a hit due to the coronavirus as global trade takes a bashing and Cash-strapped US shale producers pray for Opec aid (Financial Times, Derek Brower) shows that US shale producers are hoping that Opec decides to implement production cuts in its meeting in Vienna this week that will boost oil prices. * SO WHAT? * On the one hand, Opec producers may enjoy watching their US competition squirm and then go out of business (their break-even points in terms of oil price are much lower than the equivalent level for US shale producers, because the production costs are much higher for the latter), but then the last time they tightened their belts to squeeze out the Americans, two years of pain for ALL producers followed. We’ll just have to see how that pans out.

Calls for business rate overhaul increase and Greggs continues to move forward…

Call for shake-up of business rates in Budget (Daily Telegraph, Laura Onita) shows that the pressure is increasing from businesses as nine groups – including the Association of Convenience Stores, British Chambers of Commerce, British Property Federation and Federation of Small Businesses – are making a concerted push for the chancellor to change the rules in next week’s Budget as they argue that the current regime is out-dated and puts undue pressure on firms that are already struggling. * SO WHAT? * This has been going on for years, but I would

have thought that the business groups are more confident about getting what they want this time around because of a new young chancellor with the first Budget of a new government and the fact that the number of business failures on the high street have continued to pile up, which supports their arguments.

Greggs profits still on a roll with a boom in its vegan snacks (The Guardian, Julia Kollewe and Zoe Wood) highlights strong results for 2019, but added that recent weather and flooding has slowed sales momentum. The flooding in south Wales resulted in a temporary closure of its bakery and distribution centre in Treforest, where it makes its vegan doughnuts, and 40 of its stores in the country. Other than that, things looked pretty good with a 27% rise in pre-tax profits but you would have thought that the coronavirus is going to have a negative effect at least for the first quarter.

Thermo Fisher makes a big acquisition, Foxconn aims for normality and meatless cuts prices…

In a quick scoot around other news, Thermo Fisher to buy diagnostics group Qiagen in $11.5bn deal (Financial Times, Myles McCormick) shows evidence of the US scientific equipment maker’s efforts to broaden its disease-testing capabilities in the very topical acquisition of Dutch diagnostics group Qiagen, which is developing kits to test for Covid-19. It has previously made kits to test for SARS and swine flu. * SO WHAT? * Thermo Fisher’s interest in Qiagen goes back to before the coronavirus outbreak but you would have thought that current events would have made a deal even more compelling. This will steady the ship for Qiagen after a tricky 2019 where it lost its long-term chief exec and suffered weaker China sales and gives Thermo Fisher more R&D firepower and access to additional healthcare areas.

Then in Foxconn to resume full production in China by end

of month (Financial Times, Kathrin Hille and Sue-Lin Wong) we see that things are getting back to normal at the world’s biggest contract electronics manufacturer as staff levels are now at over 50% of what they normally are at this time of year. * SO WHAT? * This will be particularly important for Apple, who uses Foxconn to assemble its phones, but it may also have further repercussions in that other manufacturing facilities may use this as a precedent. This may, in turn, snowball and production could come back on line more quickly than anticipated – although of course things could go into reverse once more if the coronavirus starts to spread again.

And finally, Plant-based meat makers compete on price (Wall Street Journal, Jacob Bunge and Heather Haddon) shows that Impossible Foods has cut wholesale prices for its products by 15%. * SO WHAT? * This is unsurprising given the number of “new” entrants to meatless – including Neslé, Smithfield Foods, Cargill and Sysco – who are all fighting with each other to get the biggest slice of the action. The likes of Impossible Foods and Beyond Meat have made impressive inroads so far regarding distribution, but with more entrants to this area, they need to be more conscious of price to ensure they stay at the top of their game and don’t let bigger rivals overtake them.

And finally, in other news…

As you know, I always have the readers of Watson’s Daily’s interests at heart, so when I saw this I thought I had to share it with you: Japanese Twitter has its sanity saved with lifehack to deal with tissues left in your laundry (SoraNews24, Casey Baseel https://tinyurl.com/uu7s2fe). I haven’t tried it myself, but if it works this is phenomenal! Then how about having a look at some of the amazing places in 12 wilderness homes designed to survive every challenge (Lovemoney, Jen Grimble https://tinyurl.com/veaofxx). Wow!

1. In MARKETS, MACRO & OIL NEWS, markets recover, the UK’s digital services tax could be ditched, weaker oil prices could hit Putin
2. In CORONAVIRUS NEWS, the OECD warns on global growth, airlines face continued turbulence and Finablr counts the cost
3. In INDIVIDUAL COMPANY NEWS, Gilead buys Forty Seven and Waymo raises outside cash
4. In OTHER NEWS, I bring you an interesting piece of furniture for the committed…

So markets recover on hope, the proposed UK services tax could be used in bargaining and weaker oil prices make Putin’s spending plans trickier…

Record rise in shares on rate hopes (The Times, Philip Aldrick) shows that the major US stock markets all had big rises on hopes that governments around the world will unleash big stimulus packages to counter the damage caused by the coronavirus outbreak. G7 finance ministers and central bank governors are due to hold a conference call today to talk about a co-ordinated response. It will be led by Steven Mnuchin, the US Treasury Secretary, and Jerome Powell, head of the Federal Reserve. The International Monetary Fund and World Bank added that they will be doing everything they can to help the situation. * SO WHAT? * It’s good that they are all doing this, but we are still in an ongoing situation. Still, it’s better than NOT doing anything!

UK considers retreat over US technology giant tax (Daily Telegraph, Tom Rees) says that the UK could potentially back down over a proposed digital tax on tech giants in order to boost chances of a free trade deal with the US. The 2% tax on revenues was expected to take effect in April as part of a push to raise tax take from tech giants who have, until now, been shuffling profits around the world to

minimise their tax payments. Former chancellor Sajid Javid locked horns with US Treasury secretary Steven Mnuchin at Davos in January over the imposition of a tax which, from the American point of view, would “unfairly” target American companies. At the time, Javid said that the UK would press on alone despite the OECD looking at a broader approach and France caving in to US demands. * SO WHAT? * The digital services tax was clearly a negotiation ploy and now Javid has gone, the government has the perfect excuse for reaching a trade agreement with the Americans. Whether such a deal will make up for the potential trade we will lose with Europe, however, is a moot point.

In Falling oil prices threaten to derail Putin’s spending promises (Financial Times, Max Seddon) we see that Russian  president Vladimir Putin’s recent spending promises are looking increasingly vulnerable to falling oil prices. Brent crude is now hovering around $50 a barrel versus Russia’s break-even price of $42, so his main source of cash isn’t looking too healthy. * SO WHAT? * Putin made promises in January to allocate $60bn to infrastructure and social spending as part of a major overhaul that could yet allow him to remain in power despite his falling approval ratings. He needed to raid the national wealth fund to finance about 25% of his plans, but oil price weakness will restrict cash inflows and weaken the rouble, making it harder for Russia to build up more reserves. The finance ministry is talking a good game, but things will definitely be tight.

The OECD warns on global growth, airlines face further turbulence and Finablr counts the cost…

OECD warns coronavirus could halve global growth (Financial Times, Chris Giles, Martin Arnold and Brendan Greely) just highlights what pretty much everyone already knows – that the coronavirus going to affect global economic growth prospects. This forecast predicts a global recession, prompting action from central banks and governments around the world to co-ordinate their efforts to limit the damage.

Airline industry braced for major threat from virus turmoil (The Guardian, Gwyn Topham) outlines the current state of play in the industry as British Airways and Ryanair announced more flight cuts yesterday. Airlines face tough “use it or lose it” rules on airport take-off and landing slots which mean if they don’t use their allocation at least 80% of the time, they lose them – so their trade body, the International Air Transport Association (IATA) is trying to get these rules suspended. Given the huge loss in passenger numbers, airlines are now trying to encourage staff to take leave. * SO WHAT? * Things are getting pretty serious for the airlines and their share prices have been

decimated – especially over the last week or so. It took the industry five years to get back to profitability following the terror attacks in 2001, but IATA is hoping that the repercussions of the coronavirus won’t be quite so bad. Given all the panic going on at the moment, the risk is most definitely on the upside because no-one is expecting any! If warmer spring weather helps to reduce the virus’ prevalence, bookings could potentially shoot through the roof in a kind of holiday relief rally…

Finablr warns coronavirus and cyber attacks to squeeze profits (Financial Times, Nicholas Megaw) shows that the London-listed payments company has warned that its profits will be dented by the double-whammy of the coronavirus (fewer transactions overall) and a New Year’s Eve cyber attack (criminals blocked its systems and demanded money for tools to unblock them). This affected Finablr’s Travelex forex business at the beginning of this year and left the company without access to all of its financial reporting tools for some of January, meaning that its full-year results for 2019 won’t be out until mid-April. * SO WHAT? * The Abu Dhabi-based company listed on the London stock exchange in May 2018, since which time the share price has fallen by over 60% 😱. Its troubles have been magnified by association with its founder, Indian billionaire BR Shetty, who also founded NMC Health, which is under investigation by UK regulators regarding its ownership structure and finances.

Gilead buys cancer therapy specialist for $4.9bn and Waymo gets outside funding…

Gilead buys cancer therapy specialist Forty Seven in $4.9bn deal (Financial Times, Ortenca Aliaj and Eric Platt) heralds the latest deal in the drugs sector as Gilead has agreed to buy Forty Seven for $4.9bn in cash giving it access, among other things, to Forty Seven’s magrolimab – which helps the body’s own immune system to fight a number of different cancers including leukaemia. The price represents an eye-watering 96% premium to Forty Seven’s closing share price before news of talks were leaked last Thursday. * SO WHAT? * Biotech and pharmaceuticals

companies are doing a lot of deals these days to boost their cancer treatment capabilities – Bristol Myers-Squibb bought Celgene for $93bn last January, Pfizer bought Array BioPharma for $11bn in June while rivals Eli Lilly and GlaxoSmithKline have also invested in this area over the last 18 months.

Waymo raises $2.25billion after courting outside investors for first time (Wall Street Journal, Tim Higgins) highlights a landmark in the history of Alphabet’s driverless car venture as it adds outside expertise to Waymo’s board. The new investment will go towards deploying Waymo’s fifth-generation suite of sensors and its goods delivery service, Waymo Via. * SO WHAT? * This is a decent slug of money and I think it’s a good thing for the company to get some outside help. Still, I remain sceptical about the short-term viability of driverless. That said, Waymo is at the cutting edge.

And finally, in other news…

If you’re a gamer, you are going to love this, but if you aren’t, you are going to wonder what the world is coming to in Japan goes beyond gaming desks with the gaming bed (SoraNews24, Casey Baseel https://tinyurl.com/vpays3s). I think that there is a reason that this is a single bed and not a double…

1. In CORONAVIRUS NEWS, Italy unveils a stimulus, businesses head for a credit crunch and drugmakers warn about impact
2. In CONSUMER/RETAIL NEWS, food prices look set to rise and Waitrose employees to get their lowest bonus in 67 years
3. In INDIVIDUAL COMPANY NEWS, VW unveils electric dreams and Elliott Management pressures Twitter
4. In OTHER NEWS, I bring you a mini mountain climber…

So Italy unveils a stimulus while businesses brace themselves for impact…

Cash injection to combat virus in Italy (The Times, Philip Aldrick) highlights Italy’s latest reaction to the spread of the coronavirus as it announced that it would make a €3.6bn injection into the economy in addition to a €900m fund for the hardest-hit regions. This package would be the equivalent of 0.2% of GDP and includes the introduction of tax credits for companies that report a 25% fall in revenues as well extra money for the healthcare system. Northern Italy, the country’s main growth driver, has been worst hit in the outbreak and recession in the already struggling country looks inevitable. The government also plans to apply to Brussels for permission to increase the budget deficit this year for extra cover.

Coronavirus threatens corporate credit crunch (Daily Telegraph, Ambrose Evans-Pritchard) cites a warning by ratings agency Standard & Poor’s that a growing number of companies with high debt levels will face restrictions in access to credit. Healthcare and car manufacturers are looking particularly vulnerable, but certain individual companies that look at risk include Samsonite, Vale, Western Digital, BlackRock TCP Capital, Alcelor Mittal and Marks & Spencer. China is still feeling the pinch as Hainan

Airlines was pretty much taken over by the government over the weekend with $75bn of debt, independent oil refiner Tianhong Chemical went bankrupt last week and the country’s manufacturing PMI survey hit a new record low in February. Despite state orders to reopen factories, output is half normal levels as two-thirds of China’s 300m migrant workers still haven’t been able to return to work. * SO WHAT? * At the moment, it seems that the Federal Reserve and the ECB aren’t yet thinking of putting emergency measures into place but they are facing the increasingly uncomfortable prospect that even if they do, they could run out of ammo and then the markets crater even further.

Big drugmakers warn about coronavirus impact on business (The Wall Street Journal, Jared S.Hopkins) shows that the likes of AstraZeneca, Merck and Pfizer are among those who are starting to warn that supplies for certain drugs could run out – something that their Indian counterparts are well aware of. In anticipation of this, they have been looking at alternative sources for ingredients and supplies. * SO WHAT? * The reality is that supply chains are so complicated these days that it is very difficult to ascertain exactly the proportion of ingredients that originate in China, but pharmaceuticals companies are staying understandably cagey in terms of their exposure and stock levels. It sounds to me like they are softening us up for shortages but are at pains not to cause any mass panic at this stage.

Food prices look set to rise and Waitrose staff get a record low bonus…

Food price rise fear after rain washes out UK crops (Daily Telegraph, Alan Tovey) highlights the consequences of the recent storms in the UK as prolonged downpours have washed out entire crops. The Agriculture and Horticulture Development Board (AHDB) says that time is running out for farmers to save the harvest with spring planting and if the weather doesn’t improve, they will have to import more grain which will push food prices higher. Supermarkets, for their part, say they are relaxed about it as they have access to different suppliers and are ready to absorb higher costs

in order to minimise the impact on the customer. * SO WHAT? * It’s all getting pretty dramatic isn’t it! Higher food prices because of flooding, bottlenecks for car manufacturers, drug makers and tech companies and the increasing prospect of “enforced” working from home etc. could all hit consumer spending (especially if people aren’t getting paid for quarantining themselves following a business trip/holiday). At least petrol prices are going down!

Waitrose staff to get lowest bonus in 67 years as profits fall (The Guardian, Sarah Butler) heralds the prospect of the staff getting their lowest bonus for decades – if they even get one at all – as the John Lewis Partnership is expected to unveil a fall in annual profits for the third year in a row. New chairwoman Sharon White has already warned staff to expect “difficult decisions about stores and about jobs”. Tough times ahead – but they are not alone!

VW outlines plans for electric dreams and Twitter comes under pressure…

VW chief defies sceptics with ambitious electric car plan (Financial Times, Joe Miller and Peter Campbell) highlights VW’s plans to spend €33bn – yes, that’s €33bn – on producing 26m emission-free vehicles over the next nine years to leave Tesla as a shrinking dot in its rear-view mirror. What is even more eye-catching, though, is the company’s plan to ensure that the cars are profitable from the off – and its launch of a small SUV next year is to be the first car of this new generation based on VW’s purpose-built modular electric skateboard. * SO WHAT? * This is a very punchy forecast and puts rivals such as Toyota and GM in the shade. Given that McKinsey estimates a mid-sized EV costs about $12,000 more to make than a petrol or diesel equivalent, the forecasts look very aggressive.

However, this massive shift to EVs may well nudge investors towards giving the company a valuation more akin to Tesla than a boring old car manufacturer – but I think this will take time (if they can ever achieve it).

Elliott pushes for big changes at Twitter after taking $1bn stake (Financial Times, Sujeet Indap, Ortenca Aliaj and Hannah Murphy) heralds the latest moves by activist hedge fund Elliott Management to try and pressure the company to remove chief exec Jack Dorsey as its stake in Twitter has risen to over $1bn. They don’t like the fact that he is a CEO at both Twitter and Square as they think he is too distracted to concentrate on Twitter. * SO WHAT? * Given that the company saw its share price fall by 20% in October and that it is continuing to lose momentum in converting users into advertising revenue, you would think that a new chief exec could invigorate things. I’d say that the first thing they should do to boost the share price is to lift its self-imposed ban on political advertising. Admirable sentiment, but they are losing out big time…

And finally, in other news…

It’s sometimes a good thing to get kids starting on things early. This kid sounds pretty energetic: ‘That was easy peasy!’: Six-year-old adventurer’s reaction after she becomes the youngest Briton ever to reach the 17,500ft Everest Base Camp (Daily Mail, Max Aitchison https://tinyurl.com/t7hdohj) 😱. My kids whinge before a dog walk 😂 but I find that a subtle combination of threats (no iPad) and incentives (cake at the shop halfway through the walk) gets them through…

1. In CORONAVIRUS NEWS, markets drop, the coronavirus fallout continues and China gives firms an “easy” way out
2. In RETAIL NEWS, online retailer Zalando wants more lux, Homebase exits its CVA early and Amazon’s cashierless shop gets fooled
3. In INDIVIDUAL COMPANY NEWS, DoorDash files for an IPO, BAT is smokin’ and Beyond Meat plans a marketing push
4. In OTHER NEWS, I bring you some classic car chases…

So markets drop and the fallout continues…

Markets dive as virus spreads (The Times, Callum Jones, Tom Howard and James Dean) highlights more stock market weakness as the S&P500, Nasdaq and Dow Jones have now all fallen by 10% or more from their peak, which takes them into “correction” territory. Not only that, they also had their biggest one-day points fall ever.

The spread of the coronavirus continues to have consequences such as Japan shuts all schools to combat coronavirus (Financial Times, Robin Harding and Kana Inagaki) which says that all schools in Japan will shut from Monday as Japan switches from a policy of trying to keep the virus out to one of containment, Motor show visitors told to keep a distance (Daily Telegraph, Alan Tovey) suggests that next week’s Geneva Motor show is looking a bit iffy although it’s still supposed to be going ahead as things stand, albeit with potentially far fewer than the usual 500,000 visitors and 10,000 journalists. Airlines freeze hiring and investment as virus damps profit hopes (Financial Times, Tanya Powley and David Keohane) highlights Lufthansa’s hiring freeze and KLM’s statement that it will delay investment in IT and real estate among other cuts and Global brands fear economic consequences of coronavirus (Daily Telegraph, Louis Ashworth, Hannah Uttley, Chris Johnston and Alan Tovey) looks at a string of global companies struggling to cope with the ongoing outbreak including Reckitt Benckiser (sales of Dettol and Lysol have shot up, but supply chain disruption means that they may not be able to continue to meet demand), Standard Chartered (potential earnings miss), ABInBev (profits hit as beer sales plummeted over Chinese New Year) and John Menzies (the aviation services business which does things like baggage handling, is suffering from fewer flights).

Coronavirus/tech stocks: issue warning (Financial Times, Lex) looks at the impact of the virus on tech stocks where factory shutdowns have strangled production (HP and Apple are among those to have stated these problems). Microsoft is also suffering from slowing PC demand and supply issues impacting software sales but its growing cloud business should help it through versus others who rely solely on hardware sales. Coronavirus disruption at Samsung could threaten S Korea economy (Financial Times, Song Jung-a and Edward White) highlights just how important Samsung is to Asia’s fourth largest economy as exports account for 45% of South Korea’s GDP, with computer chips (which Samsung makes a lot of) representing about 20% of all outbound shipments. It also makes up about 25% of the value of the country’s entire Kospi index – so coronavirus problems for Samsung could hit the country hard.

China issues record number of force majeure certificates (Financial Times, Sun Yu and Xinning Liu) shows how the China Council for the Promotion of International Trade (CCPIT) has been handing out record numbers of force majeure certificates to steelworks, electronics companies, car makers and parts suppliers (among others) since the beginning of this month that will exempt its exporters from fulfilling contractual agreements with overseas customers. In other words, it’s doling out certificates to stop Chinese companies from getting sued. * SO WHAT? * Yes, this may make overseas companies think twice about doing business with Chinese companies and give them even more reasons to go elsewhere, but TBH, I can’t really see that happening in the short-to-medium term because China is just too important in their supply chains. They will whinge (quite rightly) but ultimately I expect that they’ll just have to chalk it up to experience. Foreign lawyers say that these certificates aren’t decisive (they would say that, wouldn’t they!), but good luck in getting anything.

Zalando wants to go more up-market, Homebase manages to exit its CVA early and Amazon’s new cashierless supermarket gets pranked…

Online fashion retailer Zalando pushes into luxury clothing sector (Financial Times, Tobias Buck) shows that Zalando, Europe’s biggest online fashion retailer, is aiming to push further into the luxury segment with plans to double the product available from makers such as Moschino and Alberta Ferreti by 2023. Co-chief exec David Schneider, said that “Premium has been our fastest-growing category in the past months, and we see a huge potential to build on that”. The company’s full-year revenues shot up by 20% and its active users increased from 26.4m to 31m year-on-year. At the same time as announcing a move into luxury, the company also said that it planned to sell secondhand goods on the platform in order to become a fashion one-stop-shop. * SO WHAT? * This is great, IMO – a retailer doing well and continuing to evolve by broadening its appeal and adding interesting new product. So far there has been no negative impact from the coronavirus but the company is monitoring the situation.

Homebase to exit CVA early after returning to profit (Financial Times, Jonathan Eley) shows encouraging signs for the troubled DIY retailer as it said that it would end its CVA 18 months ahead of schedule as it had managed to renegotiate most of its leases and made progress in terms of profitability. Britain’s #2 DIY retailer used the CVA in 2018 in the immediate aftermath of its disastrous time under the ownership of Australian group Wesfarmers. The number of stores prior to the CVA was 241 – but that has since shrunk to 164. * SO WHAT? * It is very rare to have a company exiting a CVA early as many of them end up refinancing or the companies just collapse anyway. Resructuring specialist Hilco bought Homebase for £1 in 2018 and clearly it has done very well. It bought Bathstore out of administration last year as well as Dwell, the furniture retailer, and plans to rollout these brands in its outlets. Nice one, Homebase/Hilco!

In Shopper fools Amazon store’s cashierless system (Daily Telegraph, Hannah Boland) we see that a reporter managed to fool Amazon’s first cashierless supermarket (which I mentioned the other day) by going into the store’s toilets, changing clothes and then carrying his rucksack in a different way. Customers are normally picked up by cameras and scanners, but this guy managed to get past them. No doubt they will be looking to close this loophole!

DoorDash aims for an IPO, BAT increases cigarette prices and Beyond Meat targets a marketing push…

In a quick scoot around some of the other news today, DoorDash files confidently for an IPO (Wall Street Journal, Corrie Driesbusch and Preetika Rana) shows that US food delivery provider DoorDash has filed for an IPO, which means that the loss-making San Francisco startup could get a listing in late spring. * SO WHAT? * This is pretty

punchy given plunging stock markets at the moment and increasing scepticism among investors about loss-making startups. Still, they are clearly hoping for more stable market conditions in a few months’ time, so we’ll see whether they are right to take the gamble!

Elsewhere, BAT raises prices and lights up revenues (The Times, Alex Ralph) put e-cigarette difficulties aside to report a 5.7% increase in annual revenue despite falling cigarette volumes and Beyond Meat plans to tout heathfulness of its burgers (Wall Street Journal, Jacob Bunge) signals the intention by meatless supremo Beyond Meat to up its efforts on marketing to combat criticism that its products are over-processed. It certainly needs to do this!

And finally, in other news…

As a reader of Watson’s Daily, I suspect that you are probably an adrenaline junky. That being the case, I thought I’d keep the adrenaline party going by bringing you this: The 15 Greatest Movie Car Chases (Mental Floss, Matthew Jackson https://tinyurl.com/toeraoe). There are some classics in there!

1. In CORONAVIRUS NEWS, global economies shudder, Trump’s denial could gift Sanders and the Tokyo Olympics hangs in the balance
2. In RETAIL/HIGH STREET-RELATED NEWS, Hermès sees light, Walmart looks to offload Asda, Ted Baker axes staff, McColl’s cuts shops and Wagamama’s owners look to the US
3. In FINANCIALS NEWS, Lloyds, Virgin Money and Direct Line cut jobs, Metro Bank’s woes continue and Klarna posts its first loss
4. In OTHER NEWS, I bring you an amusing reporter and some brilliant trivia games…

So coronavirus fallout continues as the Tokyo Olympics now looks vulnerable…

Brace yourselves, people – there is a LOT to talk about today!

Virus batters global economy amid fears that the worst is yet to come (Daily Telegraph, Georgina Hayes and Tom Rees) does a decent roundup of the current state of play as markets take a pasting. Luxury brand retailers with big China exposure are suffering as half of the luxury goods stores in China have closed and the other half have reported a 90% drop in footfall. Outside China, the prospect of a global pandemic could shatter the retail sector – a Retail Economics survey showed that around 20% of consumers said they’d avoid restaurants, entertainment venues and shopping malls if the outbreak worsened. Factory shutdowns in China will soon result in shortages of product on the British high street over the next few weeks as supplies dwindle, leaving less to buy in the shops. A report by analysts at UBS said that Dunelm, H&M and Card Factory could be particularly hard hit. The car industry is facing a major parts shortage and Moody’s predicts that car sales, which are already weak, will fall 2.5% globally this year. Airlines are also feeling the pain with huge numbers of flight cancellations. Long haul flight cancellations to China will hit many of the major carriers, including British Airways and Air France-KLM and short-hauler specialists EasyJet and Ryanair will be counting the cost of Italian exposure (19% of Ryanair flights go to Italy versus 12% of easyJet’s) and fewer holidaymakers. Countries such as Thailand, Malaysia and Singapore who rely heavily on tourism (especially from China) could lose up to $6bn, according to GlobalData and French finance minister Bruno Le Maire recently admitted that tourist numbers have already fallen 30-40% lower than expectations. Coronavirus: US travel groups forecast hit from outbreak – as it happened (Financial Times, Alice Woodhouse, Mamta Badkar, Matthew Rocco, Peter Wells, Adam Samson, Philip Georgiadis, Myles McCormick, Naomi Rovnick) details company projections via a live update. Marriott International says that it is expecting revenues to take a monthly hit of $25m due to weak travel demand in Asia, Microsoft announced it would fall short of revenue targets for its Windows and Surface business and Booking Holdings (which owns sites including Kayak and Priceline.com) said it has experienced a “significant and negative impact” on its business this quarter. The list goes on…US companies in China warn 2020 revenue could halve if coronavirus persists (Wall Street Journal, Julie Wernau) cites a survey conducted between Feb 17th and 20th by the American Chamber of Commerce in China (aka “AmCham”) which shows that 20% of respondents said that revenues from China would fall by over 50% if the epidemic continues beyond the end of August.

While we’re on the subject of America, if you are of a nervous disposition you should definitely not read Trump faces a ‘Chernobyl moment’ after slashing pandemic defences (Daily Telegraph, Ambrose Evans-Pritchard) because it shows how the President has cut US pandemic defences considerably. His administration has cut funding for the Centers for Disease Control (CDC) by 9% – and has proposed this month to cut it by another 16%. He also got

rid of the US Complex Crises Fund and cut the budget of the National Institutes of Health by 20% in 2018 and 27% last year. As things stand, there have been only 57 cases of infection – which sounds very low until you consider that only 426 people have been tested for the coronavirus! Only 3% of public health labs even have working test kits. Trump’s response has been to say that the virus is “very much under control”, that a vaccine is close and that “the stock market is starting to look very good”. On the other hand, Nomura says that global macro hedge funds have changed strategies since the outbreak, into trades that “prepare for a global recession”. Trump’s economics chief Larry Kudlow says that containment has been “pretty close to airtight” and the head of Homeland Security, Chad Wolf, told the Senate Committee that the mortality rate of Covid-19 is about the same as normal winter ‘flu (he’s talking 💩 because the latter’s mortality rate is about 0.1% versus Covid-19’s death rate of anything between 0.8% and 4% depending on whether you’re in Wuhan and how old you are). * SO WHAT? * If the CDC is right (that America’s on the verge of an epidemic) and Trump is wrong, the resulting drama and deaths will decimate Trump’s credibility and hand Bernie Sanders victory in the race to the White House. And if THAT happened, the US will be in for a world of hurt as he will slap big taxes on the rich, close down parts of the oil and gas industry and increase the role of the US government in everything. It could all get pretty dramatic.

Elsewhere, European companies face coronavirus hit to supply chains (Financial Times, Joe Miller, Martin Arnold and Miles Johnson) gives us more evidence of what we already know as factory shutdowns for Fiat Chrysler (and its subsidiaries), Renault, BMW and Peugeot are imminent, Why Iran’s coronavirus outbreak is dangerous for the Middle East (Financial Times, Namjeh Bozorgmehr, Chloe Cornish and Simeon Kerr) highlights how the largest number of coronavirus deaths outside of China is causing major concerns not only in Iran, but in neighbouring countries that have dodgy health systems and poor government control. Coronavirus threatens cancellation of Tokyo Olympics (Financial Times, Murad Ahmed, Oliver Ralph and Leo Lewis) shows growing concerns over the sporting showpiece, with the prospect of a final decision by the end of May. Economists and analysts in Tokyo have been swamped with requests from clients to calculate the financial impact of a postponement or cancellation of the Olympic Games. Coronavirus/concerts: show-stopping number (Financial Times, Lex) talks about the devastating effect that the coronavirus is having on the live music industry as concerts are cancelled and venues are shut down – promoters in China have so far cancelled 20,000 concerts. Live Nation Entertainment, the world’s biggest concert promoter, is facing tough times ahead and its share price has fallen by almost 20% in the last week after doubling over the last two years.

ANECDOTALLY, I have tried to think back to the SARS outbreak in 2002/3 and what the panic was like then versus now. It is obviously a while back, but I still have a box of facemasks somewhere that the company I was working for then gave all of its employees and my wife recalls being given medicines/access to medicines by her company. There was certainly a lot of tension in the air at the time, but it did die down eventually. However, my gut feel at the moment is that this sounds like it’s becoming more widespread, although seemingly less dangerous. Be careful out there!

Hermès sees light, Walmart considers an Asda offload, Ted Baker cuts staff, McColl’s cuts shops and Wagamama’s owner aims for “risk-free” US expansion…

Contrary to the overall picture, Hermès flies in with message of hope (The Times, Callum Jones) said yesterday that it was hopeful of a return to normal trading after it has reopened almost all of its 43 shops in China. Shoppers in China normally account for around a third of its customers – but even though its shops are opening, footfall is way lower than normal.

In Walmart set to check out in Asda sale (The Times, Ashley Armstrong) we see that Asda’s American parent is in talks with private equity firms about selling a majority stake in the supermarket a year after its failed merger with Sainsbury’s. It did, however, say in a statement that it was also considering an IPO as an exit strategy on a longer term basis. * SO WHAT? * Asda is the UK’s third biggest supermarket behind Tesco and Sainsbury’s, but surely now is not the right time for an IPO. I think that Walmart is desperate to get rid and the prospect of buying into an also-ran operator in a highly competitive market surely can’t be an attractive one. I hate to say it, but I think that whoever buys it will only be able to get money out of it by

cutting outlets and staff, making a few changes here and there and then selling it on again. Sounds like something for private equity to me…

Ted Baker axing 102 staff, mostly at HQ (Daily Telegraph) heralds more strife at the troubled fashion retailer as it tries to cut costs. Critics say that the company isn’t going far enough in its efforts to get back on track, but I am sure that there will be more to come. McColl’s scraps dividend and aims to shut 120 shops (The Times, Ashley Armstrong) highlights a massive £98.6m loss as the company announced it would be scrapping its dividend and shutting 120 shops a year to bring it down from the current store estate of 1,550 to 1,100. The retailer owns McColl’s and Martin’s newsagents.

Wagamama has expansion on the menu to halt US losses (The Times, Dominic Walsh) shows that Wagamama’s parent, The Restaurant Group, has decided to continue with its US expansion with Conversion Venture Capital and two American restauranteurs. The idea is that they will open around 30 to 40 restaurants over the next five or six years. TRG will have a 20% stake in the venture with an option to buy out the rest in 2026. * SO WHAT? * This sounds like a reasonable way forward in that it reduces the risk on TRG but at the same time gives it some skin in the game. The company is having a tough time at the moment as the casual dining sector continues to suffer, so I guess this is a reasonable compromise between exiting the US business completely and taking 100% of the risks involved in major expansion.

Lloyds Bank, Virgin Money and Direct Line announce job cuts, Metro Bank is still on the ropes and Klarna posts its first loss…

The carnage continues for employees of high street banks as Lloyds, Virgin Money and Direct Line to cut 2,000 jobs (The Guardian, Kalyeena Makortoff) shows that Lloyds is cutting 780 roles, Virgin Money (which owns Clydesdale and Yorkshire Bank) is cutting 800 and Direct Line will be running down one of its two sites completely by 2022. * SO WHAT? * It just goes to show that the continued slowdown in footfall is meaning that companies are having to make brutal decisions. It won’t stop there, unfortunately.

Talking of which, Metro Bank scales back expansion plans after £131m loss (The Guardian, Kalyeena Makortoff) shows that Metro Bank is continuing to frustrate investors as its share price fell by 19% to a record low of 155p in trading yesterday. Amazing to think, then, that it was trading at over £40 just two years ago! * SO WHAT? * Metro Bank has been going down the toilet since the

revelation last year that it mis-classified its loanbook. Senior execs (including the founder) have had to leave and it has only just installed new CEO Dan Frumkin, who will no doubt be looking for ways to stem the losses. At the moment he says that he is not planning any job cuts or branch closures (he is, however, halving the number of new branch rollouts for the next five years) but I bet you he will be doing this within a year from now. Given what’s going on at his competitors, you can only bury your head in the sand so far.

Klarna no longer in the pink after first loss (The Times, Ashley Armstrong) highlights the announcement yesterday of a loss as the Swedish online payments “buy now, pay later” supremo has hit a bump in the road. It put the loss down to the cost of expansion and higher default rates. Klarna was Europe’s most valuable fintech until this week, when Revolut overtook it at its latest funding round. * SO WHAT? * Klarna has been very successful thus far, but I feel that it is one of those companies that does really well in an economic up-cycle when things are going quite well. However, if things start to go wrong their default rates will surely go through the roof and it could be in for a massive reality check.

And finally, in other news…

Sometimes, when you’ve done something embarrassing, you’ve just got to style it out. The guy in this story did a good job IMO: Reporter accidentally turns on Facebook face filters during weather broadcast (The Mirror, Luke Matthews https://tinyurl.com/qnlqb4v). Quality 👍. I know it’s a bit early for Christmas, but how about the stocking-filler (or just general gift) ideas in 10 Must-Have Trivia Games for Any Interest (Mental Floss, Hannah McDonald https://tinyurl.com/rgxtpgt). Partaaaaaay!

1. In CORONAVIRUS NEWS, markets continue to fall, Italy and UK warn on effect on budgets, China’s data is questioned as the race for a vaccine continues and spice prices go up
2. In RETAIL NEWS, Amazon opens a supermarket, Home Depot does OK, UK retailers show lower sales but higher optimism and Tesco cuts in-store bakery jobs
3. In INDIVIDUAL COMPANY NEWS, Expedia cuts 12% of its workforce and Disney’s boss resigns suddenly
4. In OTHER NEWS, I bring you the lasagne-in-a-pizza and nuts that aren’t…

So markets weaken, Italy and UK warn on budget impact, China’s data is questioned, the race for a vaccine continues and spice prices rise…

Virus fears send stocks down again (The Times, Callum Jones, James Dean and Tom Howard) highlights further weakness in world stock markets as the coronavirus has now spread (officially) to 34 countries. According to the World Health Organisation, 80,000 people have been infected and 2,700 have died so far. Italy warns EU on budget targets as coronavirus cases rise (Financial Times, Miles Johnson, Myles McCormick and Daniel Dombey) shows that Italy is managing down expectations as its industrialised northern regions are suffering from coronavirus impact whilst the economy is already on the verge of recession and Weak economy and coronavirus threaten UK spending pledges (Financial Times, Chris Giles and George Parker) shows that new Chancellor Rishi Sunak may have to rein in some of the government’s biggest Budget decisions until the autumn given the likely negative impact of the coronavirus on the economy. The Budget will go ahead as planned on March 11th, but officials are talking about a “trilogy” of statements this year.

Meanwhile, China fall in coronavirus cases undermined by questionable data (Financial Times, Yuan Yang, Nian Liu and Tom Mitchell) highlights scepticism surrounding the recent apparent fall in the number of new coronavirus cases outside of Hubei, the province from which the virus originated. The problem is that the numbers have fluctuated wildly depending on how individuals are diagnosed and the authorities seemed to have flipped between different methods, causing a mix of confusion, panic and now scepticism. Still, the hunt for a vaccine continues. Drug firms rush to find vaccine but don’t expect to profit by it (The Times, Alex Ralph) highlights the ongoing efforts by big pharmaceuticals companies to find a vaccine but also that they aren’t expecting to make tons of money from it. Although short term investors are pushing up share prices of biotech companies and mask/glove-makers, they maintain that they are NOT going

to make any money from finding a cure. Still, I guess that the companies will win brownie points that they may well use further down the line…

Why coronavirus is driving up the price of spice (Financial Times, Emiko Terazono) is a really interesting article which highlights that wholesale prices of garlic, ginger and chilli have gone up by 17% since the start of December because of labour shortages in farms and distribution. * SO WHAT? * China accounts for about 80% of the global garlic export market, 47% of the ginger market and 20% of the chilli market, according to figures published by research firm Mintec. Even where production is returning to normal, there have been container ship shortages and higher freight costs. Bad news for stir fry fans (and I include myself in this)!

*** RANT ALERT *** Just thought I’d warn you that I’m about to have a mini-rant. I don’t know how many of you pay attention to this, but do you look at the table at the bottom of Watson’s Daily? It’s got all the market levels, currencies etc. Anyway, three things – firstly, the oil price is getting mullered at the moment. SURELY Opec are going to have to cut production levels to stop a downward spiral in price. Secondly, have you noticed how suspiciously well the Shanghai stock market has been performing while other markets have been all over the place during this coronavirus outbreak? The Chinese must be throwing LOADS of cash at the market to prop it up. When/if they stop buying, the market level is going to get a massive dose of reality. OK, so China has loads of money to be able to do this, but the market must feel like a money pit at the moment…and THIRDLY, what’s going on with Bitcoin?? It has supposedly turned into a “safe haven” asset like gold (yes, weird I know given it has no intrinsic value) and yet, gold continues to strengthen while Bitcoin shows more volatility. I’ve said it before and I’ll say it again, I have NEVER seen a convincing explanation as to why Bitcoin moves. All that cr*p about “oh, big buyers in China” or some such rubbish that traders use by way of “explanation” is just hot air. I’ve worked with these people and I know the sort of answers they give when they haven’t got a clue/can’t be ars3d 😂. You can explain other currency moves on political/economic impact but Bitcoin is just bizarre! Rant over 😁. I feel better now…

Amazon opens a supermarket, Home Depot does OK, there’s good and bad for UK retailers and Tesco announces job cuts…

Amazon opens cashierless supermarket in latest push to sell food (Wall Street Journal, Sebastian Herrera and Aaron Tilley) heralds a new chapter for cashierless shops as Amazon.com just used the technology from its “Go” stores in a new larger format of a supermarket! Amazon Go Grocery opened in Seattle yesterday and uses a combination of cameras, shelf sensors and software to ensure shoppers pay for what they take away! Accounts are normally charged via a smartphone app when you leave the store. Amazon has opened a number of “Go” convenience stores since 2018, but this latest store is five times bigger than the format in its existing 25 stores. The company will be using this a a way to showcase the technology to potential partners. * SO WHAT? * Sounds pretty amazing, right? It’s interesting to see that they are apparently open to other traditional retailer rivals using their tech (for a fee, obviously), but then there will be some who will be scared of working with a massive rival – plus there are bound to be loads of issues about data privacy etc. I do wonder with this sort of thing whether it really is viable long term when you pitch installation/ongoing maintenance costs (and surely at least some losses from shoplifters!) versus just doing things the old-fashioned way.

Home Depot’s quarterly profit rises (Wall Street Journal, Dave Sebastian) shows that the US home improvement

chain did well in the latest quarter but may suffer coronavirus impact as it sources 30% of its products from overseas, mainly from China. * SO WHAT? * Given that it is a large home improvement store, Home Depot is often seen as an indicator of economic confidence. Either people are moving house more often or they are spending money anyway on upgrading their existing homes. Either way they are spending money – and that’s what the economy needs!

In the UK, there’s a mixed picture for retailers as Mixed bag for high street sales (The Times, Gurpreet Narwan) says that retail sales growth in February fell short of expectations according to the latest figures from the CBI but then Retailers to unleash investment spending spree (Daily Telegraph, Tim Wallace) concentrates on a different aspect of the same report that says that more retailers are planning to invest than cut back. The swing in investment in investment intentions was the biggest since records began in 1983 and would suggest that a feelgood factor may be returning.

Unfortunately, the feelgood factor is likely to be in short supply in Tesco puts 1,800 jobs at risk as it scales down in-store bakeries (The Guardian, Joanna Partridge) as the supermarket says that it is having to make the cuts because of changing consumer tastes. They are buying more wraps, bagels and flatbreads in preference to the humble traditional loaf and Tesco wants to adapt. This comes only a year after the supermarket said it would close fresh food counters in about 90 of its stores and cut head office roles. * SO WHAT? * Although Tesco blames the move on changing consumer tastes, it’s probably more likely that the company just wants to cut costs and protect margins in the face of the German discounters who are constantly snapping at their heels!

Expedia cuts 12% of its workforce and Disney loses its CEO suddenly…

Expedia cuts 3,000 jobs in major restructuring (Financial Times, Alice Hancock) highlights major changes at the online travel agency following the departures of its chief exec and CFO in December. 500 of the jobs being cut will be at its Seattle HQ. Chairman Barry Diller said that “We are stopping doing dumb things and starting doing what we think are good things”. * SO WHAT? * Expedia compares unfavourably to rival Booking.com and is also suffering from the recent entry of Google into the online travel sector. Tough times. 

In Disney CEO Bob Iger steps aside; Bob Chapek named new head (Wall Street Journal, R.T Wilson, Joe Flint and Ben Fritz) we see that longtime CEO Bob Iger announced the surprise decision to step away from being Disney’s CEO and promote its head of parks and resorts to the top job. Iger will stay on as deputy chairman until the end of next year. Iger presided over a transformative period in Disney’s history and has been highly regarded. Under his tenure, Disney’s share price has increased six-fold, its annual net income has more than quadrupled and its annual revenue has more than doubled. Not bad!

And finally, in other news…

Many of you will know by now that I am intrigued by unusual food. Well how about this beauty: Hungry Horse pubs are selling a lasagne inside a pizza – and it looks epic (The Mirror, Courtney Pochin https://tinyurl.com/rtpf7pe). WHAT???????????? It sounds pretty tragic to me. Apparently, they are catering to that massive cohort of diners who can’t quite decide on whether they want pizza or lasagne 😂. We’ve all been there (not). Staying on the food theme, I thought this was interesting: 10 ‘Nuts’ That Aren’t Actually Nuts (Mental Floss, Mark Mancini https://tinyurl.com/vqabh5a). Well I never!