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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

“Winners” and losers continue to emerge…

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

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

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

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

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

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

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

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

Zoom gets slapped…

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

WeWork sulks and Asos raises money…

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And finally, in other news…

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

1. In MARKETS & OIL NEWS, share prices fall on Trump’s warning, BP cuts capex and shale group Whiting goes under while oil tankers benefit
2. In TOBACCO NEWS, BAT claims progress on a vaccine while the FTC sues Altria over its Juul investment
3. In CAR NEWS, parts maker Continental sees profit margins disappear while Auto Trader suffers from secondhand
4. In MISCELLANEOUS NEWS, Nestlé buys a pet food maker, Uber Eats moves into grocery delivery, Zoom hits hurdles and Monopoly sales are up!
5. In OTHER NEWS, I bring you some Harry Potter news and “Club Quarantine”…

So markets slide, oil producers suffer but oil tankers do very nicely…

Markets fall again on Trump warning (The Times, Callum Jones) highlights market weakness after Trump warned that Americans faced a “very, very painful two weeks” and that deaths could number between 100,000 and 240,000. Separately, US jobs boom comes to abrupt halt (The Times, Robert Miller) cites the latest stats from the ADP National Employment Report which show that private sector employment in the US fell in March for the first time since September 2017. * SO WHAT? * I don’t think anyone will be surprised at the weak employment figures – but they are an early sign that non-farm payrolls (which is an employment measure that everyone watches very closely) will also be weak. As I say, no surprise – but this just puts a number on it. With regard to markets, I expect continued volatility as share prices shoot upwards or lurch downwards depending on what world leaders happen to say on any given day. Until we all get a handle on the magnitude and duration of the economic shock, how quickly businesses and individuals can get the handouts promised to them and what the restart post-coronavirus might look like, the markets will continue to whipsaw. This will present some rare opportunities to short-term investors as they will be able to churn their positions more frequently than normal – which will then add to the volatility…

Weak oil prices continue to bite deeply for some as BP cuts production and spending amid ‘brutal environment’ (The Times, Emily Gosden) shows that the company plans on cutting its spending by at least $3bn this year and will be

cutting production to rein in costs in response to the anaemic oil price. Shale group Whiting files for Chapter 11 (Financial Times, Joe Rennison, Derek Brower and James Fontanella-Khan) reflects the demise of US oil and gas group Whiting Petroleum as it filed for bankruptcy protection – the first big independent shale producer casualty of the coronavirus and weak oil price double-whammy. * SO WHAT? * The weak oil price is likely to kill off more companies in the oil and gas sectors – Chesapeake Energy, California Resources and Gulfport Energy are looking particularly vulnerable at the moment given their sizeable debts. There will be more to come unless something dramatic happens…

On the other hand, Oil tankers: the incredible hulks (Financial Times, Lex) shows that oil tankers are benefiting from the low oil price because global oil storage is almost full. Given this current situation, tankers have become another place to store oil while it’s cheap in the expectation that prices will go up. Many oil traders have been chartering tankers to store inventory, which has meant that supertankers (which carry 2m barrels) now cost $240,000 per day. This price represents a 600% increase over last month, according to broker Clarksons Platou. * SO WHAT? * Funnily enough, share prices of oil tanker companies like Belgium’s Euronav, Bermuda’s Frontline and America’s DHT have all weathered the market drops fairly well. Given that it is highly unlikely that more vessels will be made (because potential buyers will want to wait until the world economies settles down and because tightening environmental laws mean that new ones will have to use alternative sources of power, presumably meaning they will cost more) existing tankers should continue to experience frenzied demand.

British American Tobacco works on a vaccine and Altria gets sued…

BAT joins race to develop Covid-19 vaccine (Financial Times, Patricia Nilsson and Clive Cookson) heralds an interesting development in the fight against the coronavirus as the tobacco giant’s US biotech subsidiary, Kentucky BioProcessing, is currently growing a potential antigen in genetically engineered tobacco plants! BAT said that it was hoping to produce up to 3m doses per week from June for clinical testing. The company’s head of scientific research, David O’Reilly, said that “vaccine development is challenging and complex work, but we believe we have made a significant breakthrough with our tobacco plant technology”. Wow! If its current efforts prove to be successful, instead of killing us with its cigarettes, BAT may cure us with its vaccine! How ironic would that be?!? The company is currently looking at partnerships with the likes of the FDA and the UK’s Department of Health and Social Care and said that the project would be carried out

on a not-for-profit basis. Interestingly enough, Kentucky BioProcessing developed ZMapp – an Ebola vaccine – in 2014, so the company has form. It was subsequently bought by tobacco company Reynolds American, which was itself bought by BAT in 2017. * SO WHAT? * Yet another company throws its hat into the ring in the race to find a cure. The more the merrier!

In US sues to unwind Altria’s $12.8billion investment in Juul (Wall Street Journal, Jennifer Maloney and John D. McKinnon) we see that the Federal Trade Commission (FTC) is suing Altria over its $12.8bn investment in e-cigarette supremo Juul Labs, saying that it breached federal antitrust laws. Altria bought a 35% stake in Juul in December 2018 having, a fortnight previously, closed down its own e-cigarette business. * SO WHAT? * As you will probably be aware, Juul is facing all sorts of difficulties at the moment given that e-cigarettes have become subject to huge criticism in the last couple of years for mysterious lung complaints, dodgy advertising practices and getting younger users hooked. This will be a pain for Altria as its Juul acquisition has already cost it a potential deal to merge once more with Philip Morris International.

Continental sees profit margins dashed and Auto Trader suffers from a dead secondhand market…

Continental auto profit margins fall to zero (Financial Times, Joe Miller) highlights difficulties at of the world’s biggest car parts makers as it said that the profit margins at its auto division will fall to zero – and that many smaller suppliers would potentially go bust. The company supplies most major manufacturers, but said that it was having to cope with massive changes and disruptions to much of its business. * SO WHAT? * The auto industry was already in crisis before the coronavirus and now its very survival is hanging in the balance. I suspect it will depend greatly on how quickly affected companies can get access to the various rescue loans that are being promised by governments at this time.

Auto Trader raises cash as second-hand sales slump (Daily Telegraph, Alan Tovey) shows that car dealing website Auto Trader has launched a fund-raising for £200m as the lockdown cuts the secondhand car market stone dead. The company is doing this via a placing of 46.5m new shares with institutional investors and the proceeds will be used to boost liquidity and take pressure off their debt requirements. Measures taken so far by the company to shore up its business include allowing customers to advertise their vehicles for free during April, cutting discretionary spending, furloughing staff  and cutting senior executive pay. * SO WHAT? * I hate to say this, but if more people become unemployed due to the coronavirus, there will be a HUGE number of secondhand cars coming onto the market. People will be handing back cars they bought on PCP but can’t afford the payments any more and those who are out of work and want to raise some cash will also (presumably) be selling their cars as well – meaning that there will be a massive supply and not many buyers. I do not see the secondhand market picking up any time soon.

Nestlé makes an acquisition, Uber Eats gets into grocery delivery, Zoom faces continued criticism over security and Monopoly sales rise sharply…

In a quick scoot around some of the other interesting headlines today, Upmarket dog’s dinner a £100m snack for Nestlé (The Times, Ashley Armstrong) highlights Nestlé’s acquisition of upmarket pet food company Lily’s Kitchen for around £100m. The brand is currently sold in around 6,000 shops in 30 countries and will presumably slot in alongside Nestlé’s Purina brand, which makes things like Felix cat food.

Uber Eats accelerates push into grocery deliveries (Financial Times, Tim Bradshaw) signals a change in pace and direction for Uber Eats as it has signed agreements with various retailers, including France’s Carrefour, to deliver groceries as it ups its efforts to offset declines in its ride-hailing business. Traditional supermarkets have been struggling with the massive deluge of online orders, and although Uber Eats won’t be there for your full weekly shop it does aim to be able to deliver a more limited range of essentials within 30 minutes or thereabouts. Impressive!

Elsewhere, Booming interest in Zoom cocktail hours comes with a corporate hangover (Wall Street Journal, Aaron Tilley) highlights continued woes for Zoom as ongoing data security and privacy concerns dog the company that is struggling with its “overnight” success.

On a lighter note, Monopoly a hot property as board game sales roll on (Daily Telegraph, Alan Tovey) shows that sales of boardgames – especially Monopoly – have been sky-rocketing. According to the latest data from data company NPD, sales of games and puzzles in the UK more than doubled their market share and spending on them increased by 50% versus a year ago. Dobble (which is one of my favourites), Uno, Scrabble and Cluedo sales have all risen – as have sales of arts and crafts products and Lego. * SO WHAT? * This is all good stuff, but I would say they need to enjoy it while it lasts. In quarters and years to come, sales comparables are going to be very difficult because I think this spike will prove to be a one-off.

And finally, in other news…

In today’s “alternative stories”, there’s good news for Harry Potter fans in J.K. Rowling launches Harry Potter At Home to spread a little magic during lockdown (The Mirror, Courtney Pochin https://tinyurl.com/rdgnupo) and I think that the parents in Parents convert garage into ‘Club Quarantine’ for their son’s 21st birthday bash (The Mirror, Paige Holland https://tinyurl.com/ukdu88h) are absolute legends!

1. In MACRO & MARKETS NEWS, China shows signs of life, five countries look vulnerable and markets tank over the quarter
2. In FINANCIALS & FINANCE NEWS, the ECB presses banks on cutting bonuses, insurers close loopholes, Grant Thornton gives its employees a tough choice, dealmaking suffers but the cash-rich circle for bargains
3. In INDIVIDUAL COMPANY NEWS, Zoom faces criticism, Carnival aims to raise money and the Xerox/HP deal is abandoned
4. In OTHER NEWS, I bring you boss potato and a daughter’s honest picture…

So China sees some positives, other countries remain vulnerable and the FTSE has a nightmare quarter…

China’s factories stage unexpected recovery (The Times, Philip Aldrick) highlights an uptick in factory activity as the official purchasing managers’ index published by the National Bureau of Statistics of China indicated growth in the manufacturing sector after a shocker in February. Although activity is still way short of normal levels, it would seem that the easing of movement restrictions is helping. Green shoots of recovery in China give cause for optimism (Daily Telegraph, Lizzy Burden) embraces the positive in manufacturing but also warns that there could be a chance of a second wave of infections as newly-mobile migrant workers and students emerge from lockdown.  * SO WHAT? * Given that China was the first country to get the coronavirus, this will give some hope to others around the world who are now in the midst of the current crisis. It does look like things will get worse before they get better but there is light at the end of the tunnel.

The five countries facing the biggest financial crunch due to this contagion (Daily Telegraph, Tim Wallace) cites the

conclusions of a weekly report written by JPMorgan economists which tracks the metrics of 40 countries, including GDP growth. Countries where forecast GDP growth has fallen the furthest include Mexico (because it is heavily reliant on a weakening US, which is at the epicentre of the outbreak currently), South Africa (because of its lockdown and potentially tough recovery), New Zealand (due to the lockdown and fall in food exports), Thailand (due to its proximity to China and reliance on the now-battered tourism industry) and Spain (as the lockdown has severely hampered its services industry and tourism has suffered from global travel restrictions). Clearly, these are economists’ best guesses and are difficult to get right in the midst of a pandemic – but they are still worth tracking.

FTSE 100 posts largest quarterly fall since Black Monday aftermath (The Guardian, Richard Partington) just tells us what we probably all expected anyway, but this benchmark has fallen by 25% in the first quarter – its biggest quarterly fall since Black Monday in 1987. What a state of affairs considering we started the year on new highs! European stock markets have also hit record lows and Futures fall after S&P suffers worst quarter since 2008 (Wall Street Journal, FrancesYoon) only confirms similar gloom stateside.

Banks face pressure, insurers close loopholes, Grant Thornton employees face tricky choices, dealmaking slows and vultures circle troubled businesses…

ECB financial supervisor urges banks to cut back on bonuses (Financial Times, Martin Arnold) shows that the chair of European Central Bank’s supervisory board, Andrea Enria,  has warned that unless banks cut their bonus payouts to employees he will get involved. This action to preserve capital followed on from Friday’s order from the ECB to freeze dividend payments and share buybacks for all 177 banks under its control until at least October. Banks scrap dividends and bonuses under pressure from regulator (The Times, Katherine Griffiths, Patrick Hosking and Ben Martin) shows that Barclays, Lloyds, Royal Bank of Scotland, HSBC and Standard Chartered officially stated that they would scrap dividends and cash bonuses after being pressured to do so by the Prudential Regulation Authority. * SO WHAT? * This is all about conserving cash for the moment and I suspect that banks actually WANTED to do this but needed the big bad regulators to threaten so they could go to disgruntled shareholders and say “I REALLY wanted to pay you, honest, but the regulator says that I can’t”, so they can shift the blame.

In other developments, UK insurers tighten terms to explicitly exclude coronavirus (Financial Times, Oliver Ralph) shows that insurers are desperately closing loopholes and rejigging policies to make sure that coronavirus claims will be excluded. Lots of insurance policies are up for renewal on April 1st and so insurers have been racing to make sure they won’t have to make coronavirus payouts in future. * SO WHAT? * On a business basis, you can see why insurers are doing this, but on a human and moral basis I would say what a bunch of *******s. There’s a risk that customers won’t bother to take out insurance if they think insurers won’t pay out, but I doubt the majority will have the balls to “strike” like this. The Association of British Insurers’ director-general Huw Evans said that providing broader coverage for future outbreaks would require “significant state partnership”, which basically means they won’t cover unless they are largely underwritten by the government.

Grant Thornton asks workers to cut hours by 40pc or take sabbaticals (Daily Telegraph, Michael O’Dwyer) highlights tricky times for the accountancy firm as employees have been asked to either cut their hours by 40% or go on a three-month sabbatical on 30% of their normal salary. Staff who don’t volunteer for this could be furloughed with the government paying 80% of their wages up to £2,500 per month. Demand for outside consultants has collapsed as companies have cut all non-essential spending. * SO WHAT? * This is a worrying sign as Grant Thornton is a major accountancy firm, albeit not one of the “Big Four” – but if IT is having problems, there will be many others who will be getting it worse. Others may use this as an example and take similar actions.

Dealmaking grinds to a halt on coronavirus impact (Financial Times, James Fontanella-Khan and Arash Massoudi) highlights another consequence of the coronavirus outbreak as the amount of deal activity has fallen off a cliff according to the latest figures. Many expect this to continue as companies who were thinking about making acquisitions have put things on hold as the outbreak unfolds. The pace of deals had already begun to slow in the US before the coronavirus really kicked in and the volume of European deals only rose because of a few anomalies. Vultures are circling over world in turmoil (The Times, Simon Duke, James Dean and Ben Martin) shows that some private equity firms and hedge funds are sniffing around for businesses to buy into at bargain basement prices. Pershing Square, an American hedge fund, has already made a $2.6bn profit from a $27m bet on the coronavirus causing a market meltdown and immediately reinvested the money in cheap stocks. Others will no doubt follow and investors who are cash rich stand to benefit enormously by the number of businesses that will be on offer. * SO WHAT? * Corporate financiers will talk a good game about a sharp recovery in the M&A market when the dust settles post the coronavirus, but I’m not so sure because so much damage will have been done by then. I would have thought that most companies will be concentrating on getting their core businesses to fire up rather than take on others and it will only be the limited number of cash-rich companies that will actually be able to benefit. I would say that the same applies to private equity firms and that many of them will have enough on their hands making sure the businesses they currently own are OK before they go on a shopping spree. Again, cash-rich funds stand to gain the most if they can buy good companies on the cheap – and they will be able to magnify their financial firepower by borrowing even more money at universally cheap interest rates.

Zoom faces security issues, Carnival tries to survive and Xerox abandons its hostile takeover bid…

I already mentioned the other day that Zoom was facing some security concerns but Privacy concerns grow over Zoom videoconferencing platform (Financial Times, Hannah Murphy) puts a cloud over the videoconferencing company’s burgeoning popularity as questions mount over data security and privacy. The New York state attorney-general, Letitia James, has raised official concerns with Zoom over whether it is able to cope with the huge rise in traffic on its app and protect user data. Worryingly for Zoom, Workers could sue over personal privacy if they have to use Zoom (Daily Telegraph, Margi Murphy) suggests potentially painful legal consequences if the company can’t get this right. * SO WHAT? * Zoom is obviously fighting its corner, but I think it will have to act very quickly indeed to quell any concerns and it will have to spend money on a positive PR campaign as soon as

possible because there are other alternatives out there who could win at their expense. Although users have taken them on very quickly, I don’t think they’ve been using Zoom for long enough to engender much loyalty – especially if they are using free accounts.

Carnival cruises seeks $6bn funding amid coronavirus fallout (The Guardian, Gwyn Topham) shows how the world’s biggest cruise operator is doing what it can to survive – by raising $6bn  from a combination of bonds, convertible bonds and shares. * SO WHAT? * Good luck to it as it faces a massive uphill battle. Consumers’ desire for cruises will have undoubtedly been dented by scenes of ships stranded at ports worldwide as the holidaymakers within slowly succumb to the virus, and cruise companies are particularly exposed to the over-70s, who are the most vulnerable to it. These are the most difficult of times for cruise ships…

And perhaps somewhat unsurprisingly, Xerox is ending hostile takeover bid for HP (Wall Street Journal, Cara Lombardo). Buying a company that is three times its size was always a big ask for Xerox, but current uncertainties were just the nail in the coffin for this particular deal.

And finally, in other news…

I thought I’d highlight a couple of amusing stories today. Boss accidentally turns herself into potato during video meeting – and can’t undo it (The Mirror, Courtney Pochin https://tinyurl.com/rnyyjpu) shows how quickly your status can take a pummelling and Mum mortified after daughter’s drawing of her goes ‘into a bit too much detail’ (The Mirror, Paige Holland https://tinyurl.com/tb5wmm5) is just brilliant.

1. In CORONAVIRUS FIGHTBACK NEWS, global pharma companies vow to work together, US firms win approval for rapid tests, J&J moves to human vaccine trials, British engineers get together to produce ventilators and the UK works on contact tracing
2. In RETAIL/HIGH STREET NEWS, US retail gets decimated, Macy’s and Gap employees get furloughed and gun stores are deemed “essential” while Hammerson suffers, M&S produces food boxes, Ted Baker gets a new CEO and Carluccio’s goes under
3. In GLUT & SHORTAGE NEWS, oil falls further, consoles sell out and the world faces a potential shortage of medical gloves
4. In OTHER NEWS, I bring you the goats taking over Llandudno…

So global pharm works together, production of virus tests, a vaccine and ventilators advance and the UK tries to replicate contact tracing…

Global pharma groups promise co-operation on coronavirus (Financial Times, Camilla Hodgson) highlights an important coming together of all members of the International Federation of Pharmaceutical Manufacturers and Associations – which includes the likes of Roche, Sanofi Pasteur and Johnson & Johnson – as they promised to share resources and clinical trial data among themselves and governments to grow testing capacity and come up with treatments. The idea is that when a vaccine or treatment is developed, the members will pool capacity to enable production to be stepped up rapidly. In Medical companies win approval for rapid coronavirus tests (Wall Street Journal, Brianna Abbott and Micah Maidenberg) we see that Abbott Laboratories got FDA authorisation last Friday to distribute the test for use in doctors’ surgeries and urgent care clinics among other places from this week. The test can detect the virus in five minutes and return negative results in 13 minutes. Meanwhile, Johnson & Johnson to begin human trials of Covid-19 vaccine by September (Wall Street Journal, Matt Grossman) highlights a statement from the company yesterday that it had made progress on an anti-Covid-19 vaccine with a view to being ready for release in early 2021. * SO WHAT? * This is all great to hear, but treatments and vaccines all take time to develop and get to market no matter how desperate the need. Let’s hope for continued progress! At least everyone will be working together.

Big names of UK engineering in push to make 30,000 ventilators (Financial Times, Michael Pooler, Laura Hughes, Sarah Neville and Peggy Hollinger) shows that VentilatorChallengeUK, a consortium of aerospace,

automotive and other engineering companies (such as Airbus, Ford and McClaren), has just received an order from the UK government to make 10,000 ventilators based on an existing design. This follows another order for 10,000 devices from the designed-from-scratch Dyson device, which is still awaiting regulatory approval. The NHS currently has around 8,000 ventilators and ministers say this is likely to double in the next few weeks, but the target is to have 30,000.

Race is on to replicate virus contact tracing app (Daily Telegraph, Hasan Chowdhury) highlights efforts by countries such as the UK and Germany to replicate the success that Singapore has had with the TraceTogether app, which tracks people that might be infected with the coronavirus. It was launched on March 20th, was developed by 40 engineers from the government in collaboration with the health ministry and has been downloaded over 800,000 times. It uses Bluetooth on mobile phones to give out signals to others within a 2m radius, but keeps IDs anonymous. If an individual who has the app subsequently tests positive for the coronavirus, the data can be downloaded so contact tracing teams can contact others who may be at risk. The use of Bluetooth means that there’s no geolocation involved, personal data is not stored or designated to a user and it is to be deleted once the outbreak peters out. The tech has now been made open source and the UK is now in talks about using it, although there are existing apps out there. * SO WHAT? * This sounds like a great idea and although there will always be privacy concerns on something like this, I suspect that current priorities will probably override the concerns people would have under more normal circumstances. If people can be convinced that this data won’t be held long term, I’m sure that there will be widespread adoption. An existing app from King’s College London, called ZOE, has already received over 1.5m downloads – so maybe something “official” from the government will be even more  widely used.

We take a look at what’s going on in retail in the US and the current state of the UK high street…

US retailers teeter on the brink as 630,000 outlets close (Financial Times, Alistair Gray) shows that many US retailers will still struggle despite the recent $2.2tn US stimulus bill as the National Retail Federation forecasts that $430bn in industry revenues could be lost over the next quarter with no guarantee as to who will reopen once the current situation dies down. Retail workers at Victoria’s Secret owner L Brands are to be furloughed without pay and Macy’s will start to furlough most of its staff this week while companies such as Nordstrom are postponing dividend payouts and companies including Best Buy, TJX and Kohl’s are trying to get money from credit lines. * SO WHAT? * Current circumstances are difficult for all (unless you are Amazon or a supermarket) but companies that were already struggling before the pandemic hit, such as department stores (especially Neiman Marcus and JC Penney) and mall-based clothing chains (such as Ascena and J Crew), will be particularly vulnerable. The struggle continues…

Gun stores ruled essential businesses during coronavirus shutdowns (Wall Street Journal, Zusha Elinson) shows that Americans will still have the right to buy a gun and shoot each other in these difficult times as the federal government is saying that gun stores, gun makers and shooting ranges are “critical businesses” that should not be shut down during the pandemic. Gun sales have shot up (I couldn’t resist that!) during the coronavirus outbreak, presumably because people want to protect their supplies of pasta and toilet paper. * SO WHAT? * “Critical business”?? Really?? Well I guess if everyone else is packing, you need to protect yourself and your pasta with an even bigger gun. This just goes to show how powerful the gun lobby is in America – even in times like this! 

Back in the UK, Hammerson shop rent takings down two thirds due to crisis (The Guardian, Julia Kollewe) is further evidence of crisis among UK retailers as one of the country’s biggest shopping centre owners announced a massive hole in its rent takings. Hammerson owns the Bullring in Birmingham and Brent Cross in London (among other properties) and has been, unsurprisingly, inundated with requests for rent deferrals, cuts and waivers.

Meanwhile, M&S to sell food boxes online (Daily Telegraph, Laura Onita) heralds another development in grocery retail as M&S will start to deliver £30 packages containing 20 items and give priority to customers over 70, with a limit of one box per customer and a £3.99 charge for contact-free delivery. However, Food imports tested by outbreak as border controls and labour shortage bite (Daily Telegraph, Laura Onita) suggests that there may be fruit and veg shortages to come as lack of manual labour to pick the produce and transport restrictions in getting it here may get tricky as time goes on. This is especially significant for us as Britain imports way more fruit and veg than it exports. * SO WHAT? * As time goes on, this could mean that we all start to eat more in season, but it could also accelerate the demand for produce from vertical food farms which grow crops under LEDs in controlled conditions – and Jones Food in Scunthorpe is Europe’s biggest example.

In other high street developments, Finance chief to lead Ted Baker’s fightback (The Times, Callum Jones) highlights the appointment of the troubled fashion retailer’s new CEO – it’s Rachel Osborne, who was appointed the company’s CEO only three months ago and who was the one who spotted the massive hole in its accounts, which prompted the departure of its then-CEO and chairman. This will plug the management vacuum to some extent (they are still looking for a chairman), but whether it will be enough to make up for the company’s shortcomings remains to be seen. Still, she is highly regarded. Then Coronavirus pushes Carluccio’s and BrightHouse to collapse (Financial Times, Alice Hancock) heralds the failure of yet more businesses, putting 4,500 jobs at risk. Both companies had been struggling before the coronavirus hit anyway.

Weak oil prices continue and there are shortages of consoles and medical gloves…

Oil rig closures rising as prices hit 18-year lows (The Guardian, Jillian Ambrose) highlights the ongoing mass-closures of oil rigs as oil prices continue to weaken since Saudi Arabia decided to flood the market. Storage space for the black stuff is running out at a rapid rate as oil prices hit new lows. Saudis gambling on game of oil-price chicken (The Guardian, Larry Elliott) does a good job of summarising the story so far and concludes that in order for the price to rise from here, the Saudis need to limit their production and consumers need to start spending again. Unfortunately, neither look likely in the short term.

The coronavirus outbreak has resulted in a shortage of many things as demand has increased exponentially for

some goods that production can’t keep up with. Consoles selling out causes games fans’ frustrations to rise (Daily Telegraph, James Cook) highlights shortages of consoles such as Nintendo’s Switch (sales of which quadrupled in the week of March 16th – and it is now sold out in Amazon, Game and ShopTo) and the PS4, which is probably at the more “annoying end of the scale” (but great for Sony as the PS4 is getting an unexpected boost in sales towards the end of its life before the introduction of the PS5) whereas Medical gloves/Malaysia: the next shortage (Financial Times, Lex) suggests something rather more serious. Apparently, around two-thirds of the world’s supply of medical gloves is made in Malaysia and it is struggling with a recent influx of global orders. Malaysia is in lockdown for at least one month and the factories that are open are running at less than 50% capacity. There is an order backlog of four months. * SO WHAT? * This provides yet more evidence of why, when this crisis recedes, it will be so important for governments, health services and industries to place orders with a broader picture in mind rather than just focusing on cost.

And finally, in other news…

Streets up and down the country are deserted as more people heed government advice to stay at home. Some Welsh goats decided to take advantage of this situation in Herd of goats take over deserted Welsh streets as locals obey coronavirus lockdown rules (The Sun, Andy Jehring https://tinyurl.com/tek9zoc). Nothing like a day out/night out on the town, eh?? I envy them at the moment!

1. In MACRO NEWS, the US extends social distancing, China’s masks get rejected, Venezuela faces catastrophe and South Africa employs extreme measures
2. In CORONAVIRUS “WINNERS” AND LOSERS, we see who is doing well and which companies and industries are vulnerable
3. In MISCELLANEOUS NEWS, VW maintains that the ID.3 launch is on track and businesses accelerate automation plans
4. In OTHER NEWS, I show you how to get your Greggs fix at home and introduce you to balcony bingo…

So the US gets more cautious and China peddles inferior product while Venezuela and South Africa faces major problems…

White House extends social-distancing guidelines until end of April (Wall Street Journal, Rebecca Baullhaus, Andrew Restuccia and Jennifer Calfas) shows that Trump’s recent assessment of how soon the US could start a return to normality has been pushed out somewhat as the guidelines now say that Americans should be social distancing until at least the end of April.

Meanwhile, although China appears to be making gradual progress towards normality, Countries reject China pandemic product batches (Financial Times, Michael Peel, Mehreen Khan, Daniel Dombey and Laura Pitel) sounds a very worrying note in that the Netherlands, Spain and Turkey have all rejected Chinese-made coronavirus testing kits and protective equipment as substandard. The faults included masks failing to fit the mouth properly and poor filters – and were unfortunately found AFTER they had been distributed to hospitals. * SO WHAT? * This is a terrible state of affairs. Given the shortage of equipment everywhere, it must be heartbreaking to have to send this stuff back. I must say that I have been quite positive about China returning back to normality but this is a very worrying development. We are all in the midst of this crisis and I think that governments and healthcare providers are going to have to have a major rethink on the massive reliance they have on certain suppliers. There will have to be much more emphasis on having a proper balance between quality and price and an appreciation of the wider picture. Of course, there will be some who say that this product rejection is politically motivated and an unfounded attack on China’s generosity – but really?? People are dying and healthcare workers are desperate for this equipment. They have no agenda apart from saving people – and so the quality of the gear supplied must be REALLY bad for them to reject it, no? Let’s hope that this is just an exception – but it needs to get sorted out quickly as many countries face peak coronavirus shortly…

Elsewhere, Venezuela faces threat of coronavirus catastrophe (Financial Times, Gideon Long) heralds an alarming state of affairs as health workers in the country faces a massive shortage of masks. When you consider that many earn $5-$6 per month and the cheapest mask you can buy is $1 (which lasts for one day) or a “proper” one for $7-$8, you can see how desperate thing are getting. Venezuela is already suffering from US sanctions and the weak oil price (pretty much its only legal source of revenue) and its healthcare system is just being overwhelmed. There is a severe lack of clean water, gloves, soap, surgical masks and gowns. President Nicolás Maduro begged the IMF last week for a $5bn loan but it turned him down because it said it was unclear as to who was running the country (Juan Guaidó is recognised by many as being the true leader, but he is not officially in power). Chances of a military coup and/or civil unrest is rising. * SO WHAT? * There is a potentially catastrophic situation in progress here because you have a healthcare system in a state of collapse, a global epidemic, weak oil prices and political upheaval (the US is actually increasing pressure to get rid of Maduro, despite calls to relent for the sake of the Venezuelan people). The thing is, everyone is just trying to do their best to save their own citizens, so I think there’s just a smaller amount of goodwill around to be extended elsewhere – and unfortunately, it’s the people who will suffer.

Then in South Africa uses water cannon and rubber bullets to enforce lockdown (Financial Times, Joseph Cotterill) we see that police officers have been using force against some of the country’s poorest people who have been struggling to live under social distancing rules in the 21-day lockdown ordered last week by president Ramaphosa. This lockdown has begun with very tight restrictions from the off, with a ban on booze and cigarette sales and exercise outside the home. However, police have been launching water cannon and firing rubber bullets at people queuing outside food shops to enforce distancing, even though shopping is a permitted activity. A South African police spokesperson said that “The regulations are not there to punish people but to protect our people against the deadly Covid-19 virus”. It sounds like the police minister, Bheki Cele, is implying that this is only the start when he said “Wait until you see more force”.

We take a look at more “winners” and losers this week…

Home sales of beer reach ‘Christmas levels of turnover’ as pubs close (Daily Telegraph, Hannah Uttley) shows that independent beer subscription and delivery firms have been experiencing an “unprecedented” ramping up of demand following the recent closure of pubs and restaurants. One such service, BeerBods, saw new subscribers surge by 350% over the last week versus the same time period last year. They also offer online tasting sessions, participation in which has also shot up tenfold! Beerbods’ parent firm, Beer Hawk, has seen sales triple and demand for its PerfectDraft machines which enable beer fans to enjoy pub-quality beer have also shot up. Jen Ferguson, co-owner of an independent beer and wine retailer in south-east London said that “We’re calling this month s*** Christmas, because we’ve seen Christmas levels of turnover but for all the wrong reasons”. * SO WHAT? * Although no-one will really be rejoicing at the outbreak of this pandemic, it’s good to see that even independents are managing to get through the crisis along with the likes of Majestic and Oddbins etc.

Then The coronavirus X-factor for restaurants: drive-through (Wall Street Journal, Heather Haddon) shows that drive-throughs could help some fast-food outlets limp through the outbreak. McDonald’s, Burger King (owned by Restaurant Brands International) and KFC (owned by Yum Brands) make up 70% of drive-through sales and some companies are re-jigging their operations to take into account what is probably one of the safest options to get fast food right now. Wendy’s drive-through business now accounts for about 90% of its US sales, versus around two-thirds pre-coronavirus. * SO WHAT? * This sounds great for the ones who already have the capability, but is obviously not an option for others.

Who is listening to your video conference call (Daily Telegraph, James Cook) shows that although Zoom has experienced unprecedented demand as more and more people start to work from home, some experts are now saying that there could be security risks. In fact, the risks are so severe that Ministry of Defence staff have been told

to cease use of Zoom pending an investigation. Until now, hacks have been restricted to “Zoombombing” where strangers have joined chats and/or broadcast pornography to all participants. However, it is worth being wary of using such software – especially if it is free.

In terms of negative impact, though, Lockdown set to kill off thousands of pubs, restaurants and shops (The Guardian, Joanna Partridge and Rob Davies) suggests that the Carluccio’s and Chiquito shutdowns are a portent of things to come as other restaurants and shops look increasingly fragile. Monsoon Accessorize said yesterday it was looking at options and Small pharmacies facing closure as drug prices rise (The Times, Callum Jones) shows that many smaller chemists face the prospect of going under if they don’t get government support.

Elsewhere in the economy, Building industry risks going to the wall as cranes fall idle (Daily Telegraph, Tom Rees) highlights a growing problem as over 1,000 construction projects, together worth around £25bn, have already been delayed by the virus, with London firms being particularly badly affected. * SO WHAT? * Construction is a sector that survives on extremely thin margins and relies on a plethora of SMEs and self-employed workers to keep going. The risk is that failure at larger firms could have catastrophic implications for those lower down the chain. Kier and Costain are of particular concern at the moment and will no doubt be the latest to join the queue of industries asking for a government handout.

Car loan sector fears prospect of loan defaults (The Times, Robert Lea) highlights the precariousness of the £110bn motor finance sector as increasing reliance over the years on the likes of personal contract purchases (PCP) looks like it’s about to come home to roost. Companies are rushing to offer payment holidays or contract extensions, but the real problem will be if there is a marked increase in people returning their cars, which will basically kill off resale values. * SO WHAT? * Car finance is the second biggest lending market after mortgages and over 90% of all new cars sold in the UK are on some kind of financing. PCP has been seeing a huge upswing in take-up over the last few years (around 80% of finance is via this method where you typically pay around 10% of the value of the car up front, then payments over around three years followed by a “balloon payment” or handing-back-of-the-keys at the end) and a plunging secondhand market could prove to be very painful for all concerned.

VW keeps its ID.3 target intact and automation plans accelerate…

VW still aiming for ID.3 electric car rollout by August (Financial Times, Joe Miller) says that Volkswagen is still aiming to deliver its mass-market electric car, the ID.3, in August despite all the coronavirus-related factory shutdowns. * SO WHAT? * VW is the world’s biggest car manufacturer and will, under current regulations, face massive fines if it doesn’t sell enough battery-powered vehicles in 2020 – and clearly time is running out. The company is facing production delays that could be made worse by suppliers going bust and customers postponing car purchases but the good news is that all but two of its 33 Chinese factories are now back online. Still, it will be very tight.

Bosses speed up automation as virus keeps workers home (The Guardian) cites a survey by accountancy firm EY which shows that 41% of respondents to a survey are accelerating their plans to automate their businesses once the current crisis is over. Amazon’s roll out of its cashierless tech to other retailers and the switch-over to self-ordering kiosks at many fast food restaurants are just two examples of the advancement of automation, even before this virus started to hit. * SO WHAT? * Whether companies will have the money to invest in this kind of thing straight away is a moot point. However, you would have thought that automation will have gone up the list of priorities for companies trying to future-proof themselves. Surely the likes of Amazon and Ocado, who already have advanced automation systems that they can provide to third parties, will benefit the most in future as barriers to entry will be extremely high.

And finally, in other news…

With our high streets pretty much shut down, some people are yearning for the good old days of a few weeks ago. Woman’s recipe for Greggs-inspired bakes you can make at home for just 37p (The Mirror, Paige Holland https://tinyurl.com/ukf74qo) gives you ideas for comfort food, but People around the world are playing bingo with neighbors from their balconies (Insider, Monica Humphries https://tinyurl.com/t7kc9kt) shows how people are trying to entertain themselves away from their screens! This is actually pretty brilliant.

1. In MACRO & PROPERTY NEWS, US job losses shoot up (as do the number of coronavirus cases), Russia raids deposits, Japan gets the fear, Rishi unveils  a package for the self-employed and the UK housing market grinds to a halt
2. In RETAIL & HIGH STREET NEWS, Intu slides further into trouble, Next shuts its website and Chiquito looks precarious
3. In INDIVIDUAL COMPANY NEWS, Tesla prepares to make ventilators and investors buy the wrong “Zoom”
4. In OTHER NEWS, I bring you some lockdown haircuts…

So US unemployment spikes – as does the number of coronavirus cases, Russia uses deposits to fund the effort, Japan faces a big rise in cases, Rishi comes up with the goods and UK housing shuts down…

3.3m Americans out of work in record plunge (The Times, James Dean) highlights the massive jump in American joblessness following the outbreak, according to the latest figures, with benefits claims rising from 281,000 to 3.3m in a week. The real figure is actually likely to be higher as many “gig” workers don’t qualify for unemployment benefits – and it’s likely to get worse as US coronavirus cases surpass those of China, Italy (Wall Street Journal, Talal Ansari, Jennifer Calfas and Chun Han Wong) unfortunately points to a worsening situation.

I said yesterday that Russian president Putin had finally started to take the outbreak seriously, but according to Russia to tax bank deposits to fund coronavirus package (Financial Times, Henry Foy), he’s going to finance the fightback against the virus by taxing the interest on deposits worth over $12,900 (Rbs1m). This isn’t just a tax on the rich – it will affect millions of Russians who have scrimped and saved in order to supplement threadbare state pensions. He said that only 1% of depositors will be affected by this, but according to data from the country’s Deposit Insurance Agency, 55.3% of all Russian bank deposits are worth more than this threshold amount! This isn’t going to help his popularity…

Tokyo at risk of ‘explosive spike’ in coronavirus cases (Financial Times, Leo Lewis and Kana Inagaki) highlights a worrying development as the capital’s governor, Yuriko Koike, warned that the world’s biggest city could be facing an “explosive spike” in new cases – in a statement made only 24 hours after the Olympics were officially cancelled. She appealed for residents to work from home and stop going out in the evenings as well as suggesting that universities should delay the start of the school year in April. Supermarket shelves emptied virtually straight away. * SO WHAT? * I hate to say it, but this sounds ominous. It looks very much to me like authorities have been keen to downplay the impact of the virus for the sake of the Olympic Games because the timing of the warning just looks like more than just coincidence. People in Tokyo are

INCREDIBLY tightly packed and lax “control” until now surely can’t have been good for the spread. I really hope that I’m wrong. The good thing is, though, that Japanese tend to respect authority and are used to doing things en masse – so the government and authorities need to do the right thing now that the Olympics thing has been removed and give the people the right information so they can act accordingly.

Back in the UK, Rishi Sunak unveils rescue package for self-employed workers (Financial Times, George Parker, Jim Pickard and Chris Giles) announced a much-anticipated package to help up to 3.8m self-employed workers affected by the coronavirus, although those making profits of over £50,000 will not get much. The new scheme will pay out a cash grant worth 80% of average monthly trading profit over the last three years with a £2,500 limit and it is thought that this will benefit 95% of people who get most of their income from self-employment. Unfortunately, the plan may not actually be up and running until early June. * SO WHAT? * This is a very tricky area, but at least the government has come up with something that people can work with. The delay to payout won’t be popular, however, as there is already a delay of five weeks to get universal credit. Even more reason for everyone to work together to make sure we beat this virus so things can at least start working towards normality.

Government suspends the housing market (Daily Telegraph, Adam Williams) shows that the UK housing market was shut down last night by the government after financial institutions said they couldn’t cope. Ministers are urging people who haven’t already reached the exchange of contracts stage to abandon and are saying that no-one should move unless absolutely necessary. Mortgage lenders agreed last night to extend all house purchase loan offers by three months in order to help borrowers complete. Some lenders have already suspended all new mortgage applications until the crisis eases. * SO WHAT? * What a nightmare for all concerned. Real estate agencies must be tearing their hair out as it seemed that things were turning a corner after a tricky 2019 with all the Brexit uncertainty – and now they get this! I would have thought that people with a lot of money in the bank will potentially be able to buy properties for MASSIVE discounts if they can put cash down now. Any lottery winners will be able to make a killing by buying blocks of flats at firesale prices from cash-strapped developers…

Intu’s problems worsen, Next shuts its website and Chiquito looks terminal…

We all know that retail and the high street has been looking very wobbly even before this coronavirus hit, but Intu warns of debt breaches retail rents collapse (The Guardian, Julia Kollewe) shows that the embattled retail landlord said it would breach its debt commitments unless it can get waivers from its lenders following the complete drying up of rents. The owner of Manchester’s Trafford Centre and Essex’s Lakeside said it was only paid 29% of rents due this month, versus the usual figure of 77%. * SO WHAT? * Intu was already in tons of trouble before the outbreak as the falling value of its property portfolio made its massive debt pile situation even worse. It had to abandon a refinancing – and then the coronavirus happened! Intu will clearly be seeking aid from the

government’s £330bn coronavirus support package, but I think it will need a miracle to get out of this given that its situation was already bad. The tough times continue…

The gloom continues in Next shuts website as fashion forces sales wipeout (The Guardian, Zoe Wood) as the company decided to stop taking online orders “until further notice”. River Island and Net-A-Porter also announced closures of their websites yesterday. In another psychological blow, M&S’s investment rating was cut by ratings agencies Moody’s and S&P to junk status – which will effectively make M&S’s debts more expensive to service. Just what it needs, eh?? Mind you, at least it is still open…

Jobs fear as Chiquito is given notice (The Times, Dominic Walsh) shows that the Mexican restaurant could be the first restaurant casualty of the coronavirus as its owner, The Restaurant Group, filed a notice to appoint administrators. TRG decided that Chiquito and Food & Fuel (another one of its brands) would achieve “negative earnings” this year and decided to take decisive action. 1,500 jobs could be at risk.

Musk retools for ventilators, Apple’s mixed bag and investors buy the wrong Zoom 😂…

In slightly more uplifting news, Musk fires up gigafactory to make medical equipment (Daily Telegraph, Hasan Choudbury) shows that Tesla’s boss is making preparations to reopen his New York gigafactory – that was only closed last week – to help with ventilator production. It seems that Musk has changed his previously sceptical tone on the coronavirus.

SEC steps in after investors buy up the wrong Zoom (Financial Times, Hannah Murphy) shows that the US Securities and Exchange Commission is willing to step in to help stupid people as it suspended shares of a small Chinese tech company, Zoom Technologies (market cap of around $30m), because investors seemed to be confusing it with Zoom Video Communications (market cap of around $40bn) – the videoconferencing company that has been benefiting from people working from home. Funnily enough, Zoom Technologies’ share price has shot up tenfold while the rather larger Zoom Video Communications has “only” seen its share price double since the beginning of this year. I might just go and set up a company called “Amazin” or “Teslar”and see where that gets me…

And finally, in other news…

Times are tough at the moment and we are all having to adapt to very strange circumstances. We need to admire the efforts of these people – pioneers of the self-styled lockdown look in People are cutting their own hair during lockdown – and it’s not going well (The Mirror, Paige Holland https://tinyurl.com/vvmbbf5). I laugh now, but this is going to affect virtually all of us soon! Surely we will see the return of the much maligned business-at-the-front-party-at-the-back mullet hairstyle? At least for that you only have to cut the back and the sides 😂…If you want to take part in the trend maybe https://www.mulletonthego.com/ is the place to go…

1. In MACRO & OIL NEWS, Trump, Vlad, BoJo and Rishi react while shale producers take a beating and oil (possibly) heads for $10 a barrel
2. In RETAILER & HIGH STREET NEWS, Target sees higher sales, UK supermarkets are still overwhelmed, high street chains refuse to pay rent, ‘spoons does a U-turn on staff pay and off-licences get “essential” status
3. In MISCELLANEOUS NEWS, we look at how the pasta supply chain works, Dyson and Airbus look set to make ventilators and a 5G iPhone launch is likely to be delayed
4. In OTHER NEWS, I bring you more ideas to tide you through lockdown…

So Trump stimulates, Putin concedes, BoJo faces pressure and Sunak prepares while US shalers wobble and oil heads down…

Senate passes massive stimulus package as coronavirus takes toll (Wall Street Journal, Joshua Jamerson, Andrew Duehren and Natalie Andrews) highlights a massive economic stimulus package designed to give American families and businesses some protection against the coronavirus. The bill is now going to the House of Representatives for a vote tomorrow. If this goes through, the new law will dole out money far and wide either as direct payments or loans to individuals and businesses. The legislation will provide one-off cheques of $1,200 to individuals who earn up to $75,000 and $150,000 to married couples with an additional $500 per child and are scaled down for those who earn more. This is all in addition to the recent expansion in unemployment benefits. * SO WHAT? * This sounds good but may already be priced in by the markets as they seemed to pause for breath. Will the old adage “buy the mystery, sell the history” apply here as the anticipation of a stimulus package (so far) proves to have more effect than the actual package itself?

Vladimir Putin postpones vote on extending his rule (Financial Times, Henry Foy) heralds a rare climbdown by the Russian president who has decided to postpone a nationwide vote that would have enabled him to extend his rule by 12 years! After much pressure to postpone the April 22nd vote following his previously defiant stance that the coronavirus was “under control” he made a nationwide address yesterday to state his U-turn. This came just hours after news that the number of cases in Russia shot up by a third. * SO WHAT? * In essence, Putin has made a load of constitutional changes recently as part of a massive shake-up to revitalise the economy. One of the key (from his point of view) parts of the changes was legislation that would reset his terms in office to zero, thus enabling him to get around term limits under the current constitution. He stopped short of imposing a full lockdown, instead asking for a “long weekend” from this Saturday 28th March to Sunday 5th April which essentially asked people not to go to work next week. He has announced measures to boost the country’s economy which has suffered particularly badly from falling oil prices that will be funded by increased taxes on the rich and shadow economy.

Meanwhile, in the UK, Boris Johnson under pressure to accelerate coronavirus testing (Financial Times, Clive

Cookson and Laura Hughes) highlights the increased calls for more testing in order to facilitate efforts to contain the outbreak. At the moment, the government is aiming to get to 25,000 tests per day (but this won’t be reached until late April), eventually going to 250,000 a day. The government has ordered 3.5m antibody tests and is in the process of ordering “millions more”. These tests would be available to the public via Amazon, Boots and other pharmacies and will look like a pregnancy test. Testers will need to prick their finger to get a drop of blood that will be analysed to look for two types of immune response to the virus. On the money front, Rishi Sunak set to unveil coronavirus support for self-employed (Financial Times, George Parker and Jim Pickard) highlights the chancellor’s imminent pronouncement on what the self-employed can expect in terms of support from the government that is expected later today. It sounds like it will be complicated and will take time to implement but will be aimed at the more vulnerable end of the scale rather than at the multimillionaires.

In oil, US shale bust wrecks wrecks hopes for energy independence (Financial Times, Derek Brower) shows that the US shale revolution has been brought to a juddering halt, putting American self-sufficiency out of reach (at least for the time being). US oil output currently stands at a 13m barrel a day high, but this is likely to fall considerably in the second half of the year as oil prices that were already weakening cratered after the Saudis decided to pump out as much as they can. Occidental, Apache, Diamondback Energy, Continental Resources, ConocoPhillips, Concho Resources, Pioneed Natural Resources, Parsley Energy and Cimarex are among the shale producers who are cutting back drastically on spending. Supermajor Chevron joined this group on Tuesday, saying that it would slash its capex in Permian shale by $2bn this year. * SO WHAT? * Clearly, this affects the shalers, but many support businesses that have grown around supplying them over the last three years will also be hit. Senior director of BCG’s Center for Energy Impact, Jamie Webster, made an excellent soundbite when he said “Shale thrives at $100 a barrel, survives at $50 and dies at $25”. Guess where we are now??

Oil price may fall to $10 a barrel as world runs out of storage space (The Guardian, Jillian Ambrose) cites a report by energy consultancy Rystad Energy which says that the oil price could be heading towards $10 a barrel because storage space is running out. This means that oil producers will need to cut oil prices further to sell their oil as producers just keep pumping out more of it. The downward pressure on prices could get even worse next month when the current production quota agreement between Opec and Russia lapses and it becomes a free-for-all.

Supermarkets continue to see stronger sales, UK high street chains refuse to pay rent, Wetherspoons softens its stance and offies get “essential” status…

Coronavirus boosts Target’s sales but squeezes profits (Wall Street Journal, Sarah Nassauer) shows that US supermarket Target is benefitting from stellar sales of food and household goods but its profits may fall short of expectations because sales of higher margin products like apparel aren’t doing so well, plus staffing and cleaning costs are rising. Supermarkets buckle as demand from shoppers soars (Financial Times, Antonia Cundy and Jonathan Eley) highlights the problems our supermarkets are having as they have admitted that they can’t cope with the overwhelming increase in demand for online food shopping. Andrew Opie, head of food and sustainability at the British Retail Consortium, pointed out that although retailers are continuing with their efforts to increase capacity, online sales only account for 7% of total food sales – meaning that we will still have to go shopping in person for the foreseeable future! Although stock levels are slowly getting back to normal, it’s taking time because they have been absolutely decimated. However, things could get worse as more workers call in sick. The question is, will the new hires be able to take up the slack??

Meanwhile, on the high street, UK high street chains refuse to pay rent (Financial Times, Jonathan Eley) shows that Primark, Burger King, Tonkotsu, Yo! Sushi, Carluccio’s, Debenhams and New Look are among those either

refusing to pay rent, or taking up/asking for rent holidays in order to be able to pay their staff and conserve cash. This comes after the government announced a three-month moratorium against eviction for non-payment of rent earlier this week. * SO WHAT? * Landlords will be particularly concerned about Primark not paying rents because it has been seen to be a particularly attractive tenant as it is financially solid, sells high volumes and brings decent footfall to high streets and shopping malls. The headache for retail landlords continues to worsen…

Elsewhere, Wetherspoon chief in U-turn on staff salaries (Daily Telegraph, Hannah Utley) shows that controversial CEO Tim Martin has now decided to pay staff after a massive public backlash, although he maintains that suppliers won’t be paid until the government rescue package kicks in and Off-licences given ‘essential’ status as orders flood in to online wine merchants (Daily Telegraph, Hannah Utley) shows that booze sellers are allowed to stay open. Interestingly, Majestic had to take its website offline on Tuesday as it struggled to keep up with demand. The company had to close its stores to allow staff to fulfil online orders and said that they will take around two weeks to arrive rather than the usual two or three days. Naked wines also had to stop all new orders last week while Oddbins and Laithwaite’s have also suspended online orders. * SO WHAT? * It doesn’t sound to me like stocks are running low particularly – it’s more of a case that, much like grocers have found, the sudden uptick in online orders coupled with more staff calling in sick and stretched delivery networks has caught everyone off guard. It will be interesting to see whether this surge of interest in online booze buying is just a coronavirus thing or whether it will continue to boost such sales further down the line.

We look at the pasta supply chain, Dyson making ventilators and a potential delay for a 5G iPhone…

Pasta supply chain gives producers food for thought (Financial Times, Emiko Terazono and Judith Evans) is a REALLY interesting article which shows why you can’t buy any ****ing pasta at the supermarket!!! Fun fact: pasta sales shot up by 168% in the week to March 14th versus the same period a year before! In terms of the pasta we buy over here, we get Canadian wheat, Barilla and De Cecco (among others) process it in Italy, it’s then transported by trucks through Europe and then UK wholesalers, like Princes, distribute it to supermarkets. Wheat production is actually OK, Italian factories are at full capacity, but border controls etc. could slow transportation and government stockpiling in different countries may also have an effect on supply. In our case, one particular bottleneck is the Channel crossing given the demand on shipping. * SO WHAT? * Interesting, no? You really should read the full article if you can, though. Given that 90% of our food is from the UK and Europe, it is unlikely that we will run out, it’s just the variety that may suffer.

Dyson and Airbus expect green light to start making ventilators (The Guardian, Rob Davies) heralds a plan by the government to get a consortium of manufacturers, led by Airbus, to start making 30,000 ventilators from next week to help the NHS fight Covid-19. Members of the consortium will be working together to hit production targets. Encouraging news!

Apple could delay launch of new 5G iPhone (Daily Telegraph, Margi Murphy and Hannah Boland) would normally be big news, but given everything else that’s going on, it’s hardly surprising. It had been scheduled for launch in September but it looks like that will be put back for a few months. * SO WHAT? * Given the disruption to supply chains, this is not a surprise. I believe that Apple’s release of a decent 5G phone will have a halo effect and turbo boost demand for 5G phones generally and a delay may also not be a bad thing from a geographical coverage perspective. It may also give developers more time to generate more content that will benefit from 5G.

And finally, in other news…

I thought you I’d bring you a couple of ideas for alternative things to do during the lockdown. FIFA and Fortnite players can earn extra cash during lockdown by teaching others to play (The Mirror, Courtney Pochin https://tinyurl.com/r9xfltp) could nourish your bank account 💰, whereas You can adopt a lonely grandparent to keep them company during self-isolation (The Mirror, Paige Holland https://tinyurl.com/toslwdb) will nourish your soul 😇.

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…