Friday 09/10/20

  1. In CORONATRENDS NEWS, Trump’s re-election chances stumble, Madrid resists curbs, WarnerMedia cuts, UK rail traffic hit lows last seen in the mid-19th century and Ladbroke’s owner raises profit forecasts
  2. In FINANCIALS NEWS, Morgan Stanley buys Eaton Vance, Danske cuts jobs and UK banks ain’t keen on low-deposit mortgages
  3. In INDIVIDUAL COMPANY NEWS, McDonald’s boosts sales, Netflix announces a new UK HQ and EasyJet asks for support
  4. AND FINALLY, I bring you a brilliant dog owner…



So Trump’s health isn’t the only thing that is getting struck down, Madrid rebels, WarnerMedia cuts jobs, UK rail traffic hits historic lows and Ladbroke’s owner raises forecasts…

Donald Trump is risking a Covid election blowout (Financial Times, Edward Luce) highlights the effect that the coronavirus appears to be having on Trump’s chances of re-election. As things stand, in order to do so, he needs to change the focus away from coronavirus because a clear majority of Americans don’t believe what he says about the disease. Joe Biden now has a double-digit lead over Trump in Florida, where a lot of retirees live and his overall national lead is knocking on the door of double digits. Even if these margins narrowed by 50%, Trump would still lose heavily – no US presidential candidate has ever gone into the final month of the election and turned over that kind of deficit. The only thing that he leads Biden on is the economy – but that is not playing ball. * SO WHAT? * Trump appears to be losing legions of aging voters and his deficit with Biden looks insurmountable but this is Trump we are talking about – so anything is possible! 

Talking about defiance, Spanish high court strikes down Madrid coronavirus curbs (Financial Times, Daniel Dombey) shows that the High Court for the Madrid region decided that new government measures restricting access into and out of Madrid, which came into effect on Friday, violated fundamental rights and had no legal basis. * SO WHAT? * Madrid’s infection rate is currently more than double the average of Spain overall and this decision creates even more confusion than there was before. Not only is there confusion and division within the coalition government itself, there is also ongoing tension between national and regional governments. No wonder Germany is identifying Spain as Europe’s most at-risk economy.

Elsewhere, WarnerMedia plans thousands of job cuts in restructuring (Wall Street Journal, Drew Fitzgerald, Joe Flint and Benjamin Mullin) shows that AT&T’s

WarnerMedia intends layoff thousands of its employees in a bid to cut costs by up to 20% as the pandemic continues to hit movie sales, cable subscription and TV ads. This follows similar recent announcements from rivals Walt Disney and Comcast’s NBCUniversal who have also suffered. * SO WHAT? * The entertainment business is taking an absolute pasting from the virus and things do not look like improving any time soon. Although AT&T’s video streaming service HBO Max has done well since its May launch declines at cable networks TNT, TBS, TruTV, CNN and HLN have loomed larger. The pain continues…

Nearer to home, UK rail usage fell during lockdown to lowest level since mid-19th century (The Guardian, Gwyn Topham) cites the latest statistics from the Office of Rail and Road (ORR) shows that passenger journeys on UK railways between April and June this year stood at just 8% of the total for the same time period in 2019 and fares were less than 7% of the levels there were at over the same period. Passenger numbers rose to 43% of normal traffic after the end of lockdown but then the government changed its guidance to encourage more home working once more. * SO WHAT? * The industry is going to have to do things like simplifying fare structures and offering flexible season tickets to attract passengers back – but it may face an increasingly difficult task as they get used to more walking and cycling. In fact, a recent National Travel Attitudes Study showed that 94% of these people said they were likely to continue to walk and cycle. Worrying trends for the rail industry.

Gambling has boomed under lockdown and Ladbrokes owner GVC raises profit forecast after online gambling surge (Daily Telegraph, Oliver Gill) shows that GVA, which owns Ladbrokes and Sportingbet, has lifted its forecasts for the second time after the summer return of sporting events had a positive impact. The company unveiled its 19th consecutive quarter of double-digit online growth as the online betting surge eclipsed the fall in revenue of its UK shops. * SO WHAT? * Good news for GVC at the moment, but there is a danger that its wings could be clipped (along with its rivals) as the surge in betting has not gone unnoticed. I think there is a danger that the government will get involved and spoil the party by imposing restrictions. We’ll just have to wait and see!



Morgan Stanley buys Eaton Vance, Danske cuts staff and UK banks resist BoJo’s overtures…

Morgan Stanley to buy Eaton Vance in $7bn deal (Financial Times, Laura Noonan and Attracta Mooney) highlights a cash and shares deal for Morgan Stanley to buy mid-tier investment manager Eaton Vance that will create one of the world’s biggest asset managers. This will mean that Morgan Stanley Investment Management will pretty much double in size to $1.2tn in assets and give it more firepower to take on the likes of giants like Blackrock and Vanguard. * SO WHAT? * This is a good strategic deal and continues the trend over the last few years of consolidation among mid-sized asset managers. We had Standard Life and Aberdeen in 2017 and then Invesco buying Oppenheimer and Franklin Templeton buying Legg Mason last year. This is all part of the wider strategy at Morgan Stanley to move away from volatile investment banking revenues and towards more stable wealth and asset management revenues.

Meanwhile in Europe, Danske Bank cuts 1,600 jobs to reduce costs (Financial Times, Richard Milne) shows that Denmark’s biggest lender, Danske Bank has announced a 7% headcount reduction following a massive money-laundering scandal and the ongoing impact of negative interest rates. * SO WHAT? * The company is still awaiting news from a US criminal investigation into what went on at its former Estonian branch and has had to pour in a ton of money to beef up compliance to deal with the fallout. Tough times. It also follows recent moves at Sweden’s Handelsbanken and Germany’s Deutsche Bank to cut staff numbers in their own backyards.

In Banks rebuff Johnson’s call for low-deposit mortgages (Financial Times, Nicholas Megaw and Stephen Morris) we see that banks are resisting increasing government pressure to make riskier lending decisions in order to boost home ownership. The difficulty here is that the government want them to offer more 95% mortgages but the lenders themselves are concerned that this is too risky given current economic uncertainty. This is particularly hitting first-time buyers who have to raise huge sums just to get on the ladder. I suspect that they will want more government backing before they will lend more.



McDonald’s boosts sales, Netflix announces a new UK HQ and EasyJet asks for money…

In a quick scoot around some of the other stories doing the rounds today, McDonald’s boosts sales with faster drive-throughs and Travis Scott (Wall Street Journal, Heather Haddon and Micah Maidenberg) shows that US sales have rebounded strongly since the easing of lockdown thanks to the performance from drive-throughs and a promotion by musician Travis Scott. * SO WHAT? * This is good news as the chain has suffered in its domestic market from more competition – especially in the breakfast segment. It has re-jigged the menu and spruced up its marketing but who knows whether the momentum will continue if restrictions tighten again.

Elsewhere, Netflix HQ to build on UK success (The Times, Louisa Clarence-Smith) shows confidence by the streaming giant in the UK as it has decided to treble its office space in London, which will potentially bring some much-needed jobs in the British creative economy. Also, EasyJet posts its first annual loss in 25 years (Daily Telegraph, Oliver Gill) highlights more misery in the airline industry as EasyJet announced horrendous performance in summer trading. It is one of many airlines appealing for government money and I have to say that I just cannot see any other way out – not unless a private equity firm with tons of cash and tons of patience comes along as it will be some time before the whole industry sees any meaningful growth IMO.



…in other news…

Today, I thought I’d bring you the absolutely hilarious Genius pet owner makes dog-sized holes in fence so pooch can watch passers-by (The Mirror, Courtney Pochin). This is just brilliant 😂!

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Some of today’s market, commodity & currency moves (as at hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq*DAX *CAC-40 *Nikkei **Shanghai **
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)