Friday 17/07/20

  1. In SOCIAL MEDIA NEWS, Europe rejects US data sharing and Twitter has a nightmare
  2. In CORONAVIRUS “WINNERS” & LOSERS, we see how AstraZeneca, Morgan Stanley, Zoom and Netflix have benefited from and how Pizza Express, Genting and Hays have struggled with the pandemic
  3. In INDIVIDUAL COMPANY NEWS, Airbnb gets back on track, BMW signs a battery contract with Northvolt and Boohoo bosses buy
  4. AND FINALLY, I bring you a toothy fish and a platform vinyard…



So the ECJ rejects a US data sharing deal and Twitter has a nightmare…

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Europe’s top court throws out US data sharing deal (Daily Telegraph, Hannah Boland and James Crisp) heralds a major decision by the European Court of Justice to reject a US data-sharing deal, effectively ending privileged access for US companies to personal data from Europe. The case had originally been instigated by allegations made by ex-CIA contractor Edward Snowden back in 2013 that the US government was poking around in people’s online data. * SO WHAT? * This is going to affect thousands of companies – including Facebook – and will mean that the US and EU will have to renegotiate their data privacy deal. It also makes it more likely that UK-EU negotiations over continued data transfers will get trickier as we approach the Brexit deadline of December 31st.

FBI investigates Twitter hack amid broader concerns

about platform’s security (Wall Street Journal, Robert McMillan and Dustin Volz) shows that the FBI has now launched an investigation into the hacking of Twitter on Wednesday which resulted in accounts of the likes of Elon Musk, Kanye West, Barack Obama and Apple Inc sending out bogus messages asking for bitcoin to be sent to designated accounts. Twitter takes ‘nuclear option’ to disarm hackers (Daily Telegraph, Olivia Rudgard and Margi Murphy) shows that Twitter was forced to prevent all “blue tick” verified users from tweeting as it was unable to contain the attack. * SO WHAT? * One interesting observation made here was that President Trump appeared to remain spam-free while those of prominent liberals such as Barack Obama, Bill Gates, Joe Biden and Warren Buffett DID spew out cryptorubbish – and Twitter itself was, funnily enough, recently lambasted by Trump for labelling his tweets with “fact check” messages as he slagged off mail-in ballots a couple of months back. Whoever did the hack did not use it for generating much money despite the power it wielded (only tens of thousands of dollars), which seems rather unusual. If you put this all together it makes for an interesting conspiracy theory (oooh, Roger Stone had his prison sentence commuted only a week ago – could HE have been the evil mastermind behind it all?!?), but it is interesting isn’t it! On a more serious note, Twitter: verified problem (Financial Times, Lex) points out that recently uncovered plans being made by the company to offer a subscription service may suffer a setback as a result of this hack as potential customers may be less willing to hand over money if they can’t be protected.



AstraZeneca, Morgan Stanley, Zoom and Netflix benefit from the coronavirus while Pizza Express, Genting and Hays suffer…

In the “winners” corner today, Delivering vaccine would be shot in arm for AstraZeneca…and the world (Daily Telegraph, Hannah Uttley) shows that the company has benefited recently from its tie-up with the University of Oxford on a potential coronavirus vaccine – the snappily-named AZD1222. The idea is that the Oxford Uni scientists will develop the drug while AstraZeneca will licence and distribute it on their behalf. Investors lapped up the news that it would supply two billion doses of its jab in September – half of which would be going to low and middle-income countries. The jab triggers an immune response to the virus, but a full report on the Phase I clinical trial is expected to be published in The Lancet on Monday. * SO WHAT? * Although AstraZeneca would not benefit as much as it COULD do if its efforts led to a coronavirus vaccine (it has promised to ensure fair supply of the potential vaccine – and, importantly, AT COST), it could actually benefit longer term by laying the foundations for a response platform for future pandemics and become the “go-to” for governments and the WHO – for which it could charge a nice fee. Interestingly, AstraZeneca is not known for its vaccines – GSK, Sanofi, Merck and Pfizer are all more dominant in this market – but a successful vaccine here may change all that.

Then in Morgan Stanley profits lifted by trading bonanza (Financial Times, Laura Noonan and Robert Armstrong) we see that Morgan Stanley announced record profits on the back of a massive trading boom, much like competitor Goldman Sachs, as its investment bank produced a standout performance. Trading revenues were up by 68% – and that included a 168% increase in fixed income revenues and a 39% uplift in investment banking fees. * SO WHAT? * I think that it would be fair to say that this week’s US bank results have highlighted a sharp contrast between those with less exposure to loans (like Morgan Stanley and Goldman Sachs – who have done well) and those with more (like Bank of America, for instance, who has suffered). Morgan Stanley: winner, winner, chicken dinner (Financial Times, Lex) points out, though, that the debt trading and issuance boom is unlikely to continue – a

sentiment reflected by JP Morgan – but wealth management is likely to push on to make up the slack. 

Formula One strikes Zoom deal in bet on virtual corporate hospitality (Financial Times, Samuel Agini) highlights a really interesting deal that has been struck between Formula One and Zoom, the video meeting platform, to create a virtual substitute for the corporate hospitality business that has evaporated under lockdown. This will be Zoom’s first move into recreating corporate hospitality, but not its first move in sport – as it has already worked with Arsenal and Manchester City. The idea is to try to recreate some of the experience of the Paddock Club, which generated $358m of F1’s $2bn in revenue in 2019. Under normal circumstances, Paddock Club tickets cost $3,800 for two days! The new initiative won’t actually replace the Paddock Club, but there will be benefits like getting virtual access to certain locations, the ability to vote in polls and hear from F1 drivers and management across the weekend. * SO WHAT? * What a great idea! The beauty of this is that it can probably generate an audience now, giving it a greater potential base from which to grow in the future as this is unlikely to be a one-off IMO. It also shows that there may be more growth potential in sports and giving fans access to what they love in a different way to what they get from TV, for instance. It’ll be interesting to see how they price these offerings but I thought that this offering would be eminently scaleable.

Netflix loses star appeal with warning over viewers (The Times, James Dean) shows that although the streamer saw strong growth in subscriber numbers in the second quarter (during lockdown) it is predicting a rather weaker third quarter. The company said that some of the third quarter growth had been brought forward to the second quarter as a result of the lockdown.

Then in the “losers” corner, Pizza Express to close up to 75 restaurants, risking 1,000 jobs (The Guardian, Sarah Butler) shows that the troubled pizza chain is to close up to 75 of its outlets, putting over 1,000 jobs on the line. The chain is currently negotiating a Company Voluntary Agreement (CVA). More than 1,600 UK jobs at risk at casino firm Genting (The Guardian) signals further doom, this time in casinos, and Recruitment group Hays warns profits will almost halve this year (Financial Times, Antonia Cundy) further reflects the current malaise in recruitment more broadly as it cut 1,000 of its own staff. Paul Venables, its chief financial officer, observed that “Without a doubt these have been the toughest trading conditions that we’ve faced in 14 years”.



Airbnb shakes up management, BMW signs a battery deal and Boohoo owners back themselves…

Airbnb shakes up management and revives IPO plans (Financial Times, Dave Lee) shows that the accommodation rental specialist has had a management shake-up and is focusing once more on plans to do an IPO. The company said that guests had booked over 1m nights in one day for the first time since the pandemic hit, but around 50% were for locations less than 300 miles away and were for an average of below $100 a night. * SO WHAT? * Although there’s still a way to go yet, I am sure that Airbnb will be doing all it can to shape itself up for an IPO. I think it will want to do this in order to give itself more currency, but also to potentially offer the investors who injected $2bn into the company when things were looking at their worst a way out.

BMW agrees €2bn battery cell contract with Northvolt (Financial Times, Joe Miller) highlights the latest battery deal struck by BMW as it signed up with Swedish battery cell manufacturer Northvolt to supply its new gen electric models as competition for core parts intensifies. BMW has already spent €10bn on battery cell contracts with China’s CATL and Samsung’s SDI. It will also work with Northvolt to source raw materials such as cobalt and lithium from more ethical sources. * SO WHAT? * All the makers are trying to secure their sources – so the whole market is going to get hotter. I always think that investing in car companies, trying to guess their potential sales – and especially EV sales – is a risky business. Batteries, on the other hand, may be more interesting as they often supply a range of makers and other industries. This is just an opinion, though!

In another bit of interesting news today, Boohoo ahead as bosses fill their boots (Daily Telegraph, LaToya Harding) shows that the chairman and co-founder of Boohoo both bought 7m shares between them in the recent share price collapse. They are either backing themselves to get out of the current issues or trying to reflect confidence to the market!



…in other news…

I thought I’d leave you today with the bizarre and heebie-jeebie-inducing Bizarre fish pictured with eerily human-like teeth caught by angler in Malaysia (The Mirror, Alex Cope) and an idea that I am sure would catch on over here: Japanese train station grows wine grapes on the platform (SoraNews24, Oona McGee). Civilised or what??

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Some of today’s market, commodity & currency moves (as at 0756hrs 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 **
6,251 (-0.67%)26,735 (-0.50%)3,216 (-0.34%)10,474 (-0.73%)12,875 (-0.43%)5,085 (-0.46%)22,681 (-0.35%)3,214 (+0.13%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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