- In MARKETS, MACRO & CRYPTO/CURRENCY NEWS, markets rise on vaccine hopes, Brexit talks continue – as does stockpiling chaos – while sterling and Bitcoin continue to strengthen
- In CONSUMER/RETAIL NEWS, Sunak extends furlough, consumers are powered by a vaccine-inspired confidence boost, Watches of Switzerland sees higher profits, Mulberry tanks as Ashley walks away and Upper Crust has high hopes
- In CORONAVIRUS-RELATED NEWS, Moderna closes in on rollout, FedEx benefits from online shopping and Amazon talks to the Post Office
- In INDIVIDUAL COMPANY NEWS, Google faces yet another lawsuit
- AND FINALLY, I bring you some parenting observations…
MACROECONOMIC & CURRENCY NEWS
So Brexit talks continue while sterling and bitcoin continue to strengthen…
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So Markets at record highs amid rising optimism of a pandemic recovery (The Guardian, Richard Partington and Graeme Wearden) shows that global stock markets have continued to trend higher on continued newsflow on vaccines because everyone is hoping that they will get us back to normality and boost economies. Not only that, there are heightened hopes of a decent economic stimulus in the US and a Brexit breakthrough although Brexit trade talks buffeted by EU Covid relief state row (Financial Times, George Parker, Jim Brunsden and Sam Fleming) strikes a decidedly shaky tone as sticking points of a level playing field for trading (basically, is EU state aid going to give European companies an unfair advantage) and fishing rights remain sticky. All the while, Brexit stockpiling triggers cross-Channel freight crunch (Financial Times, Victor Mallet and Peter Foster) shows that the goods are all piling up while the negotiations continue on both sides of the channel.
Meanwhile, in currencies, Sterling rise reflects Brexit optimism (The Times, Callum Jones) shows that Sterling breached the $1.36 level yesterday as hopes continued to rise of a way through the current impasse as “The Two Micks” (my terminology), Michel Barnier and Michael Gove, made positive noises about progress.
What was perhaps even more impressive, though, was ‘Smart’ demand drives bitcoin still higher (The Times, Callum Jones) highlighting Bitcoin reaching another high yesterday as it breached the $23,000 level. Incredible! And, as usual, there isn’t any particularly insightful reason as to why this is apart from it’s getting closer to the mainstream (which is what I said yesterday). One guy, CIO at Guggenheim Partners Scott Minerd (who is probably Bitcoin-ed up to the eyeballs 🤭), said this week that he thinks that Bitcoin could be worth about $400,000. This is all about Bitcoin supply being capped at 21million, meaning that it has some scarcity value.
IPO & M&A NEWS
Sunak extends furlough, vaccines fuel consumer hope, Watches of Switzerland posts decent profits, Mulberry suffers the Ashley brush-off and Upper Crust has high hopes…
Sunak extends furlough to April as firms get loan help (Daily Telegraph, Tim Wallace) will be a source of relief to many workers as the chancellor said he would extend the Coronavirus Job Retention Scheme for another month as well as government loan guarantees for companies. Meanwhile the Bank of England will offer more cheap funds to back SME loans. This will definitely help sentiment at least and Vaccine gives confidence boost as consumers see revival ahead (The Times, Gurpreet Narwan) cites the GFK’s consumer confidence index which shows that households are becoming more positive about the outlook. * SO WHAT? * This is all good, although the foundations of this optimism are far from solid – but at least we are going in the right direction. It will be even better as we see more vaccine candidates coming to market but rollout will no doubt prove to be tricky, especially for those vaccines that require more than one shot.
In retail, Watches of Switzerland increases revenue and profits forecast again (The Guardian, Zoe Wood) shows that the UK’s biggest seller of Rolex and Omega watches is doing so well that it had to increase its profit forecast again! WoS also owns the Goldsmiths and Mappin & Webb brands and it turns out that sales were up by 8% in the seven weeks to December despite only being open less than half that time! Online sales doubled and sales in US stores increased by 23%. Average spend is about £6,000. Mind you, Apollo exits Watches of Switzerland board (Daily Telegraph, Hannah Uttley) may make some investors a bit nervous as two Apollo executives (private equity firm Apollo is the company’s biggest shareholder with a 28% stake) have stepped down with immediate effect with no plans to replace.
* SO WHAT? * It’s interesting to see how well WoS has done despite the lack of international travellers who have traditionally made up a lot of their sales. The management changes could be interpreted as being a shift of strategy – i.e. that they are paving a way to exit the company, but then again, given that the share price has risen by 42% since the start of the year you could hardly blame them.
Elsewhere, Mulberry shares tumble after Mike Ashley declines to make offer (The Guardian, Sarah Butler) is a bit of a shocker for Mulberry as serial dealmaker Mike Ashley decided against making an offer for the company that he’d built a 37% stake in. Having taken his stake to over 29.9%, he was obliged by Takeover Panel rules (often referred to as the “put up or shut up” rules) to make an offer for the whole company or stand back for six months. It seems that he has decided to do the latter and concentrate on Debenhams and Arcadia’s assets for the time being. Mulberry’s share price fell by almost 11% on the news. * SO WHAT? * A bit unexpected, I guess, but Ashley has got a lot on his plate at the moment. Also, and I know this sounds cynical, if he waits for six months he may be able to buy Mulberry much more cheaply if current sluggish sales trends are anything to go by.
Then in Upper Crust owner pins hopes on spring lift-off for travellers (The Times, Ashley Armstrong and Martin Strydom) we see that SSP, the owner of Upper Crust and Ritazza (you know, those places that you used to see at train stations back in the day when we used to commute!) reported disastrous results for the year but held out hope for a major rebound next year as vaccine rollout gets people back to commuting again. Given that around 95% of its revenues come from airport and railway station outlets, vaccine rollout cannot come soon enough. * SO WHAT? * Let’s hope that’s right for all our sakes. Commuter numbers are unlikely to return to pre-Covid levels, but they will surely be way better than they are now! They are like WH Smith in that they are so highly geared to commuting and international travel and, as such, stand to be among those gaining the most from a swift vaccine-led recovery.
Moderna Covid vaccine set to receive US approval (Financial Times, Kiran Stacey and Hannah Kuchler) shows more good news on the vaccine front as Moderna’s vaccine got FDA emergency approval last night following a recommendation by a panel of outside experts. This will help the Trump administration to meet its objective of producing enough doses to vaccinate 20m people by the end of the year! Impressive. Moderna’s drug has an efficacy rate of 94.1% but is only being authorised for the over-18s.
Some companies are doing particularly well under lockdown as online sales continue to soar, as per FedEx results show scale of online shopping boom (Financial Times, Alistair Gray), which highlights the company’s
stellar earnings release that heralded its highest quarterly sales on record! Demand for parcel delivery has shot through the roof, as you can imagine, and this has enabled the company to charge premium rates of over $1 per package. * SO WHAT? * FedEx has been one of the biggest corporate winners over lockdown and it doesn’t look like slowing down any time soon (well, not until after Christmas anyway!).
Talking of parcels and the like, Amazon opens parcel talks with the Post Office (Daily Telegraph, Oliver Gill) shows that both Amazon and Hermes are in talks with the Post Office to deal with parcels after the latter has been freed of the shackles of dealing exclusively with Royal Mail. The Post Office and Royal Mail split in 2013 when Royal Mail was privatised and floated but the Post Office is now being allowed to handle items from companies other than the Royal Mail. * SO WHAT? * You would imagine that there could be one heck of an upside for the Post Office when they decide to sign deals with these giants of delivery!
INDIVIDUAL COMPANY NEWS
Google faces yet another lawsuit…
Following hot on the heels of what I said yesterday about Google being dragged to the courts regarding alleged ad-rigging, More states hit Google over alleged monopoly conduct (Wall Street Journal, Ryan Tracy) shows that Google is now facing another lawsuit involving 38 states
which allege monopolistic behaviour in the internet search market. * SO WHAT? * The pressure continues to build on Big Tech. Although 2020 will have been a bumper year for them, I think that 2021 is shaping up to be the year that their expensive corporate lawyers really earn their corn as regulators worldwide line up to have a pop for anticompetitive behaviour.
…in other news…
Those of you reading this who are parents will probably smile wryly at the following – but for those of you who aren’t, you’ve got all this to come (maybe) 😁: Exhausted parents’ apologetic note ahead of sleep training has neighbour in tears (The Mirror, Paige Holland) shows just why sleep deprivation is used as torture and then there are some real gems in 18 hilariously brutal notes that parents have actually left for their kids (The Mirror, Kemi Ojogbede). My particular favourite is #14 about the washing machine 😂
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/b||Oil (Brent) p/b||Gold Per t/oz||£/$||€/$||$/¥||£/€||$/₿|
(markets with an * are at yesterday’s close, ** are at today’s close)