Friday 24/07/20

  1. In CONSUMER & CONSUMER GOODS NEWS, UK spending stalls but some are trading and bidding at auctions. We also look at Unilever’s triumph and BoJo’s war on fast food
  2. In TECH NEWS, the EU gets tough on Google/Fitbit, Intel’s profits rise and Twitter adds users
  3. In INDIVIDUAL COMPANY NEWS, Tesla gears up for a hiring boom, Dyson announces job cuts and Paris announces e-scooter licences
  4. AND FINALLY, I bring you a pointless yet fascinating world record…



So we look at consumer spending, how Unilever has benefited under lockdown and how BoJo will be clamping down on fast food ads…

Latest spending data shows pause in UK economic recovery (Financial Times, Chris Giles) cites unofficial data which shows that the economic recovery which started in April has paused for breath and could even have faltered in July. Figures from the Bank of England as well as card and payments data gathered by Fable Data show that spending slowed down in the middle of July versus the start. This would suggest that the opening of the hospitality sector on July 4th had a negligible effect on spending as households remained cautious. Although spending on air tickets and food and drink outside the home increased, spending on groceries and in hardware and garden centres decreased. * SO WHAT? * This pours cold water on recent comment that we are in the midst of a V-shaped (i.e. sudden) recovery – at least for the moment. Concerns about health, a second wave and job security seem to be overriding the desire to spend for now.

That said, there are pockets of spending such as those identified in Small investors take to high-risk punts amid UK lockdown (The Guardian, Kalyeena Makortoff), where the likes of online investment firms such as IG Group and AJ Bell are seeing a major uptick in new customers on their trading platforms and What soaring auction prices say about the Covid-19 economy (Financial Times, Gillian Tett), which shows that there are some pockets of spending on luxury goods. Although luxury names such as Richemont and Chanel have reported weakness, the prices of boats, exclusive rural properties and fine wines are all seeing strong sales. Interestingly, art is seeing a massive surge in interest online. Last month, Sotheby’s held a digital-only, live-stream auction for top end art and it sold $234.9m worth of postwar and modern pieces – right at the top end of their expected price range! It had previously been extremely reluctant to go digital like this, but clearly

there was demand for it. Christie’s did it this month and also found the same thing. * SO WHAT? * It will be interesting to see whether these trends continue because I do think that there is a certain amount of the “boredom” factor at work here – as many online gambling companies have found recently. Those with spare money hanging around have had limited spending outlets, but I guess that if the experiences they have had have been enjoyable, at least some of them will return.

Unilever rises to top of FTSE after cleaning up on Covid hygiene (The Times, Ashley Armstrong) shows that Unilever has now become the most valuable company on the FTSE 100 after it issued a very strong trading update yesterday. Demand for bleach, soap and hand sanitiser offset a fall in demand for some other products. The company also said it was going to sell most of its tea assets, including PG Tips, Lipton, Brooke Bond etc. and there appear to be a large number of potential private equity buyers lining up to buy. * SO WHAT? * Unilever makes those things that you need to live your life – and under lockdown, we’ve used more of them! Strong interest in their tea sale would imply that they’ll be able to extract a decent price, so the immediate future looks alright for this stalwart.

Then in Johnson rushes to put UK junk food advertising on a diet (Financial Times, Alex Barker, George Parker, Judith Evans and Sarah Neville) we see that Boris Johnson is preparing to unveil a raft of measures to limit how unhealthy foods are sold in the UK. Plans are expected to be announced as early as next week and will ban online advertising of unhealthy foods, a pre-9pm watershed on TV ads and a clampdown on in-store promotions (I wonder whether this will cover those ridiculous offers you get in WH Smith where you randomly get offered the chance to buy a chocolate bar the size of your head for a pound?!? 😂). * SO WHAT? * This will obviously make things trickier for the fast food industry, but it will also make it even tougher for broadcasters such as ITV and Channel 4 to make money from advertising – something that is already becoming more difficult. The fact is, though, that previous government initiatives to address the obesity problem have not worked, so I guess that a new initiative is needed.



The EU gets tough on Google/Fitbit, Intel sees higher profits and Twitter adds users…

EU demands major concessions from Google over Fitbit deal (Financial Times, Javier Espinoza) shows that the EU is demanding major concessions from Google in order to approve the company’s $2.1bn acquisition of Fitbit. Many consumer groups and regulators have had doubts about the tie-up due to Google’s potential access to Fitbit’s health data. The EU regulators want Google to promise that it won’t use the information to enhance its search capabilities and that it will grant equal access to third parties. If Google refuses to comply with the new requests, it is likely that the EU regulators will take much longer to conduct their investigation. * SO WHAT? * Data, who has access to it and how it’s used is a thorny issue at the moment – but I think that people’s health data is particularly contentious because of its highly personal nature. I think that this type of data should have particularly stringent measures attached as its misuse could have all kinds of nasty consequences. We’ll just have to see what happens here, but it’s possible that Google will be willing to string this out given that EU regulators just recently got kicked in the teeth by the court decision to throw out their Apple tax judgment.

Intel reports profit surge but warns of further delays on advanced chips (Wall Street Journal, Asa Fitch) highlights

Intel’s strong earnings for the second quarter which have been supported by the whole working-from-home phenomenon that caused a spike in demand for computing power. It also talked about the outlook for the third quarter (weaker than current market expectations) and gave guidance for the full year. On the other hand, the company said that there were more delays on its new chips which are now running at about 12 months behind internal targets. * SO WHAT? * It’s good, in a way, to see that the company is confident enough to map out its forecasts for the rest of the year, but its future growth will no doubt take a bit of a dent after Apple shifts away from using Intel chips and starts making them in-house. Rival AMD continues to make ground in the mass-production of advanced chips.

Advertising dip fails to stop rise in Twitter users (Daily Telegraph, Hannah Boland) shows that Twitter had record growth in user numbers in the latest quarter but saw sales figures decline on advertisers cutting budgets. The company said that it grew user numbers by a healthy 34% year-on-year, the largest such increase since it started reporting this number four years ago. One of the possible reasons why it saw a rise in user numbers was because people used it to keep up-to-date with the coronavirus. * SO WHAT? * Advertising spend fell by almost 25%, which is a very big deal for Twitter because this is where it gets 80% of its revenues from. It will be hoping that this is a temporary phenomenon and says that it expects a “gradual, moderate recovery” even after that recent hacking of high profile accounts.



Tesla aims for a hiring boom, Dyson announces job losses and Paris signs of e-scooter licences…

In other interesting news today, Tesla prepares for hiring boom as Elon Musk targets manufacturing expansion (Wall Street Journal, Tim Higgins) highlights the implications of the company’s announcement on Wednesday of a new factory outside Austin, Texas. It is one of the few new major car production facilities to be built in the US and is happening at a time where most of its “traditional” rivals are battling with falling sales. The factory is set to start production next year and will employ at least 5,000 workers to build the Cybertruck and other vehicles. A bit of rare good news for an industry in crisis!

Meanwhile, Dyson to cut 900 jobs worldwide as firm blames Covid-19 (The Guardian, Rob Davies) heralds some

bad news for mainly UK employees, blaming changes in consumer behaviour. The cuts of 600 represent about 15% of the company’s 4,000 employees and this will anger many of them, considering that founder James Dyson is now the richest man in Britain. The remaining 300 will be from oversees.

On a more fun note, Three companies win e-scooter licences in Paris (Financial Times, Leila Abboud) heralds the granting of licences to Lime (American), Tier Mobility (German) and Dott (French) in Europe’s biggest market for the devices. Each of them have been given a two-year licence and each of them will be able to operate 5,000 electric scooters within the city. Paris will also create 2,500 designated parking areas for scooters in order to address concerns of them just being abandoned everywhere. * SO WHAT? * Given that everyone is paranoid about public transport at the moment for commuting, I suspect that other cities – including London – will be watching what happens in Paris with interest.



…in other news…

Some people just like doing pointless things. Take the fella in this endeavour for example: Martial artist breaks Guinness record with 322 punches in one minute (UPI, Ben Hooper). He is barely moving the pad, but his arm speed is impressive! But why?!? Ah well, something to do during lockdown I guess. I don’t think he’d stand much chance against this 54 year-old geezer, for instance 😂.

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Some of today’s market, commodity & currency moves (as at 0742hrs 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 **
6,211 (+0.07%)26,652 (-1.31%)3,236 (-1.23%)10,461 (-2.29%)13,103 (-0.01%)5,034 (-0.07%)22,749 (-0.59%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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