- 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
- In RETAIL & HIGH STREET NEWS, Intu slides further into trouble, Next shuts its website and Chiquito looks precarious
- In INDIVIDUAL COMPANY NEWS, Tesla prepares to make ventilators and investors buy the wrong “Zoom”
- In OTHER NEWS, I bring you some lockdown haircuts…
MACRO & PROPERTY NEWS
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…
RETAIL & HIGH STREET NEWS
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.
INDIVIDUAL COMPANY NEWS
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 $40bn) – the videoconferencing company that has been benefiting from people working from home. Funnily enough, Zoom Technologies’ share price has shot up tenfold while the rather larger Zoom Video Communications has “only” seen its share price double since the beginning of this year. I might just go and set up a company called “Amazin” or “Teslar”and see where that gets me…
And finally, in other news…
Times are tough at the moment and we are all having to adapt to very strange circumstances. We need to admire the efforts of these people – pioneers of the self-styled lockdown look in People are cutting their own hair during lockdown – and it’s not going well (The Mirror, Paige Holland https://tinyurl.com/vvmbbf5). I laugh now, but this is going to affect virtually all of us soon! Surely we will see the return of the much maligned business-at-the-front-party-at-the-back mullet hairstyle? At least for that you only have to cut the back and the sides 😂…If you want to take part in the trend maybe https://www.mulletonthego.com/ is the place to go…
Some of today’s market, commodity & currency moves (as at 0757hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!
|FTSE 100 *||Dow Jones *||S&P 500 *||Nasdaq**||DAX *||CAC-40 *||Nikkei **||Shanghai **|
|5,771 (+1.46%)||7,798||10,001 (+1.28%)||4,505 (+1.63%)||19,389 (+3.88%)|
|Oil (WTI) p/b||Oil (Brent) p/b||Gold Per t/oz||£/$||€/$||$/¥||£/€||$/₿|
(markets with an * are at yesterday’s close, ** are at today’s close)