Monday 01/02/21

  1. In VACCINES & BREXIT NEWS, the EU gets criticism for its vaccine kerfuffle, the debate continues over “no jab, no job” and we look at Brexit one month on as well as current shipping problems
  2. In REDDIT TRADING-RELATED NEWS, Melvin loses more than had be thought initially, traders are unlikely to be prosecuted, online platforms gain, hedgers double-down and we look at the actual companies at the centre of all this
  3. In CORONATRENDS NEWS, PE deals feed lawyer revenues and UK betting faces the music while lockdowners upgrade their cars and booze
  4. In IPO NEWS, TikTok rival Kuaishou aims for a decent debut
  5. AND FINALLY, I bring you an apple pie maker and PS5 chaos in Tokyo…

1

VACCINES & BREXIT NEWS

So the EU gets roundly criticised, the “no jab, no job” debate continues and we look at Brexit and shipping…

EU faces global criticism over curbs on vaccine exports (Financial Times, Sam Fleming and Michael Peel) shows that international criticism has rained down on Brussels as it decided to implement measures to restrict vaccine exports. The new rules apply to the UK, Japan, the US, South Korea, Canada, Singapore, Australia, New Zealand and Gulf states as well as Brazil, Mexico, South Africa and Turkey. Fun fact: the EU has ordered enough doses to vaccinate the whole of the bloc twice over! Ursula von der Leyen feels the heat over vaccine exports hiccup (Financial Times, Sam Fleming, Mehreen Khan and Michael Peel) highlights the EU’s embarrassing U-turn made by the EU on Friday last week as it initially decided to restrict exports to Northern Ireland but then backtracked after fury from Dublin, London and Belfast.

I know I’ve been talking about this for a while now but Should Covid vaccines be mandatory at work? (Financial Times, Pilita Clark and Emma Jacobs) takes a look at the practicalities of imposing such a condition. It takes a Saga cruise ship as an example. In this case passengers will not be allowed on board unless they’ve been fully vaccinated. The crew, on the other hand, is a different story because the majority of them are not likely to be able to get the vaccine as they are younger – so they are going to have to spend two weeks in quarantine before the ship leaves port, will only be allowed on if they test negative and will have to be tested every three days. Such difficulties mean that many companies have not yet come forward on their plans regarding the jab (or even what their policies will be regarding customers – because that’s a minefield as well!). * SO WHAT? * There are so many different permutations here – pregnant mothers being advised not to take the vaccine because it has not been tested on them as yet, people who have medical reasons not to take it and those who have a real fear of needles etc. As I said last week, I think it would be most helpful for the government to get involved here to clarify the situation, but I suspect that it is not on top of its list of priorities at the moment. Something will have to be done, though, as confusion and frustration will be rife as lawyers, unions and employers try to find a way through.

Meanwhile, What has changed one month after the UK fully exited the EU? (Financial Times, Peter Foster, Judith Evans and Daniel Thomas) takes a look at how things have changed one month into Brexit. So far, fears of miles of lorry queues into and out of English ports and supermarket food shortages have not come to pass, but there are still plenty of headaches for British business to deal with. Agriculture and fishing has taken a major hit because of vastly increased paperwork and the resultant spoiling of their produce, consumers buying EU goods have experienced delays and extra costs, supermarkets in Northern Ireland had a few delays related to more form-filling for goods imported from Great Britain, SME’s have had to pay more in dealing with the EU and are now wondering what to do and service industries are having to adapt to not being able to travel freely in the bloc and get visas. * SO WHAT? * There is no doubt that costs are being incurred here, but I don’t think the transition was ever going to be smooth. I wonder whether we will see a surge in domestic demand for domestic products as a result – will there be a “Buy British” campaign in the offing?? When you hear about food exports and difficulties of getting food imports, you do wonder whether we need to be buying more of our own produce. Maybe this will be the subject of Jamie Oliver’s next TV show?!?

Then in European retailers face goods shortages as shipping costs soar (Financial Times, George Steer, Jonathan Eley and Valentina Romei) we see that the massive hike in the cost of shipping goods from Asia is leading to shortages and delays of imports across the board. Prices per container from China to Europe have quadrupled in just eight weeks as global shipping has struggled to deal with coronavirus and Brexit. Halfords has had bike delivery problems and The Entertainer has restricted imports due to sky-high prices although it has to be said that it’s the small importers and retailers who are suffering more than the giants which tend to be prioritised by carriers due to their volume. Delays are also affecting supply chains, according to the European Association for Forwarding, Transport, Logistics and Customs Services and the European Shippers’ Council. * SO WHAT? * This needs to get sorted as soon as possible because there’s a risk that consumers could lose patience and stop spending and that any potential demand could be snuffed out. Many businesses have suffered a great deal over the pandemic and the last thing they need is to see any business leak away due to shipping logjams and prohibitive costs.

2

REDDIT TRADING-RELATED NEWS

The Reddit traders’ actions continue to have repercussions…

Last week’s trading frenzy continues to have repercussions as Hedge fund Melvin sustains 53% loss after Reddit onslaught (Financial Times, Ortenca Aliaj and Eric Platt) shows that losses sustained by the hedge fund whose shorts were targeted last week by amateur traders were actually bigger than had been thought originally. GameStop mania: why Reddit traders are unlikely to face prosecution (Financial Times, Kiran Stacey) suggests that it is unlikely that the amateur traders will be prosecuted if they just bought shares whilst recommending them because there is no evidence of misrepresentation and it will be very difficult to prove market manipulation because no-one was deceived. The SEC is investigating the situation but it hardly ever brings manipulation cases – they only accounted for 5% of enforcement actions in 2019-20 – and many believe it is unlikely to punish individual day traders who have no significant individual market power.

GameStop craze is boon for online investment platform (The Times, Ben Martin) highlights Interactive Investor as one of the platforms that benefited from the massive uptick of new customers thanks to the Wallstreetbets craze but then Hedge Funds double down on GameStop (The Times, Tom Howard) shows that hedge funds are continuing to short GameStop (especially ones who’ve only just joined the party) while GameStop and AMC’s stocks are on a tear, but their businesses aren’t (Wall Street Journal) shows that the actual situation on the ground is still dire as electrical goods retailer GameStop continues to suffer from intense online competition and the prospects for cinema operator AMC are still bleak given uncertainty surrounding movie releases and restrictions on customers. * SO WHAT? * I still think that what occurred was effectively market manipulation and I wonder whether this was capital markets “Capitol Hill” moment where social media emerged as the real power broker. More ammo for those wanting to curb the powers of Big Tech IMO…

3

CORONATRENDS NEWS

PE deals power the lawyers and we look at what’s going on in betting, supercars and booze…

In coronatrends news, Kirkland & Ellis revenue set to surge to $5bn on private equity deals (Financial Times, Kate Beioley and Arash Massoudi) shows that the world’s highest-grossing law firm has been raking in the revenues from three of its strongest areas: private equity, restructuring and litigation. Lawyers had expected a major downturn in M&A and private equity deals but they rebounded strongly last year, putting revenues on track for a new annual record. * SO WHAT? * This just goes to show how much money is sloshing around out there in the world of private equity – and I think that 2021 will be another bumper year as they continue to search for the next big investment.

Elsewhere, UK betting faces bigger threats than losing its sports shirts (The Guardian, Rob Davies) shows that the government review on gambling is starting to bite as warnings have been surfacing about betting firm logos being banned from Premier League football shirts and other sportspeople. * SO WHAT? * Gambling has seen a big upswing under lockdown once events started to return and the government is looking at ways of limiting the damage it can cause to individuals. I am sure that there will be more measures introduced as time passes as legislation in this area is long overdue IMO as it has not taken into account the mushrooming of online betting.

Other interesting trends under lockdown include UK’s wealthy still driven to splash out on supercars (The Guardian, Rupert Neate), as the DVLA said that there was a 12% increase in the registration of top-end vehicles versus the previous year and, further afield, Covid-19 lockdowns spur shift to high-end liquor (Wall Street Journal, Saabira Chaudhuri) shows that Americans are buying more expensive whiskey, tequila and other spirits as people spend less (or nothing) on live events and travel, among other things. The Distilled Spirits Council of the United States trade body said that US distillers’ revenues shot up by 7.7% last year – the fastest growth and highest sales for 40 years!

4

IPO NEWS

Kuaishou targets a good IPO…

Kuaishou IPO boosts biggest rival to China’s TikTok (Financial Times, Ryan McMorrow) shows that this week’s upcoming IPO of TikTok’s biggest rival is likely to be a good one as it continues to rise in popularity. It has embraced livestreaming, virtual gift-giving and advertising, where there is still clearly a huge amount of upside if rival Douyin (which is owned by TikTok owner ByteDance) is anything to

go by. * SO WHAT? * Although it has faced problems trying to expand abroad and its domestic market wings may be clipped by a Chinese government crackdown on tech, it looks like there is some real upside to be had here if the company is allowed to do its thing. Money from an IPO will definitely be handy in that regard!

5

...AND FINALLY...

…in other news…

In these tough times, apple pie can sometimes be the answer. If you feel this way, and have a gas hob, then this could be for you: Make apple pies on the stovetop with new cooking gadget from Japan (SoraNews24, Oona McGee). Or you could just marvel at the non-socially-distanced crush for PS5s in PS5 chaos at Akihabara as customers rush to grab new consoles (SoraNews24, Oona McGee). Wow 😱!

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Some of today’s market, commodity & currency moves (as at 0732hrs 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 **
6,407 (-1.82%)29,982.62 (-2.03%)3,714.24 (-1.93%)13,070.7 (-2.00%)13,433 (-1.71%)5,399 (-2.02%)28,102 (+1.59%)3,505 (+0.64%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
$52.64$55.58$1,864.921.373581.21275104.711.1326633,670.22

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