Monday 08/06/20

  1. In MACRO & OIL NEWS, Europe debates the recovery plan, Brazil faces tough times, UK pubs and restaurants are to open and US shalers start turning the taps on
  2. In NEWS ON “WINNERS” AND LOSERS, local shops, mattress companies, Airbnb and Onfido get a boost while landlords face worsening rent payments
  3. In INDIVIDUAL COMPANY NEWS, IKEA rejoices at the prospect of store openings, Airbus tries it on and AstraZeneca fires up excitement
  4. AND FINALLY, I bring you tiger-ripped jeans and one lady’s impressive shed…



So Europe debates, Brazil gets controversial, UK restaurants and pubs see light at the end of the tunnel and US shalers emerge…

Following on from Europe’s recent talk of coronavirus bailout, Europe’s capitals take aim at €750bn recovery plan (Financial Times, Mehreen Khan) says that the plan is not going to target the right geographic areas to help because the European Commission is looking at using a number of “outdated” economic measures to calculate who gets what from the Recovery and Resilience Fund. At the moment, the EC wants it to allocate funds based on a country’s GDP, its GDP per capita and its average unemployment rate between 2015 and 2019. As things stand, Italy, Spain, Poland and Greece look likely to benefit most whereas countries like Belgium will benefit the least. Countries including the Netherlands, Denmark, Austria, Belgium, Ireland, Lithuania and Hungary are criticising the use of these measures because they don’t take the pandemic into account. The debate will continue to rage on…

“Totalitarian” government halts release of virus figures and wipes data (The Guardian, Dom Phillips) shows one way of tackling the coronavirus – just get rid of the evidence! Local media has been told that President Jair Bolsonaro ordered the cessation of the release of Covid-19 statistics on cases and deaths and wiped a whole load of data from the health ministry’s official site. This resulted in outrage from the medical profession and wider society as many argue that accurate management of the outbreak can only be based on accurate statistics. * SO WHAT? * Bolsonaro’s latest move is controversial to say the least and I would have thought that stunts like this will make investors think twice about putting money into a country with such an unpredicatable regime (actually, according to The fate of both Brazil and Bolsonaro rests on one man (Daily Telegraph, Tom Rees), foreign investors have been

taking record amounts of capital out of Brazilian stocks and bonds since February, according to Institute of International Finance data). Brazil’s economy had been moving in the right direction before the coronavirus hit thanks to finance minister Paulo Guedes. However, it’s not a given that he will remain in office at a time where splits in the government are appearing all over the place due to Bolsonaro’s reaction to the coronavirus AND bearing in mind the president’s penchant for sacking ministers and replacing them with his mates/high ranking military bods.

There’s some sort of good news in Ministers target June 22 for reopening of England’s pubs and restaurants (Financial Times, George Parker) as these establishments will be able to officially reopen and serve customers outdoors a bit earlier than when everyone else in the hospitality sector is due to open for business on July 4th. More details on this are due out tomorrow. The reason why I say “sort of” good news is because the number of customers these places will be able to take in will be severely limited, meaning that they probably won’t be economically viable. I guess it depends on the establishment but I wonder what the benefits will be of opening now with restrictions versus waiting to open up a bit later.

US shale companies are turning the oil taps back on (Wall Street Journal, Rebecca Elliott) highlights some signs of life in the American shale industry as Parsley Energy and WPX Energy are among those starting to turn their wells back on as the oil price starts to reach the €40 a barrel level. Although overall production levels are likely to be down for the year, shalers are likely to trickle back into the market if oil prices can be sustained at current levels or higher. Having said that, they are still not at the level yet where new projects will be brought out of mothballs.



Local shops, mattress sellers, Airbnb and Onfido benefit from the outbreak but landlords continue to paint a gloomy picture…

It is always good to see some companies doing well in all this and Local shops turn corner amid outbreak (The Times, Ashley Armstrong) shows that grocers and corner shops are enjoying a kind of revival as people have been rediscovering them initially through necessity, but now value the human contact they provide. According to a report from Kantar, the market research company, independent shops and co-operatives now have a 20% share of the British food market. Then Online mattress market wakes up (The Times, Ashley Armstrong) shows that Simba has seen its online sales shoot up by 220% during May – its best month since launch – while Frankfurt-based rival Emma saw a 150% boost in orders last month! Although Eve has been in all sorts of trouble and US rival Casper is retreating from Europe, it seems that the bed-in-a-box concept has unexpectedly benefited from the pandemic. This sounds good, but the problem with mattresses is that you don’t tend to buy them very often – so we’ll have to wait to see whether this is a blip or a trend.

I have said in the past that I think Airbnb will benefit a great deal when lockdown is lifted, and Tourists keen on staycations fuel Airbnb bookings boost (Daily Telegraph, James Titcomb) shows that this is turning out to be true

as bookings are rising strongly. Some believe that tourists looking to travel to less far-flung places and away from city centres will help Airbnb recover faster than the hotel industry, which is more reliant on city centre locations. I would also argue that staying at an Airbnb would be more relaxing (and therefore more appealing) because there would be less social distancing malarkey to worry about.

I thought that Onfido’s identity system may end the need for passwords (Daily Telegraph, Michael Cogley) was worth mentioning in this “winners” section because it is currently in discussions with the government to develop immunity passports as the company makes “portable identity” systems. Onfido says that its system could act as an accepted proof of ID and could spell the end for passwords. All it involves is taking a photo of an official document and a selfie. The company says that the IDs have the potential to be used when renting cars, checking into hotels and potentially to vote. It’s still early stages but the company raised $100m in its most recent funding round.

On the flipside, Landlords expect rent collection carnage (Daily Telegraph, Laura Onita, Rachel Millard and Lucy Burton) cites predictions from the British Property Federation which say that, at most, 15% of the rent owed by businesses in their June 24th quarterly rent bill will be paid, leaving landlords with hefty shortfalls. Although the latest data from Springboard says that footfall is starting to increase, it is from an extremely low base. * SO WHAT? * If things are bad for retailers, it’s arguably going to be worse for landlords. One of the big ones, Intu, already has administrators circling for if banks refuse to give them a standstill on debt payments.



IKEA looks forward to a return, Airbus suggests the impossible and AstraZeneca has a flirt (apparently)…

IKEA can’t reopen stores fast enough after flubbing online orders (Wall Street Journal, Inti Pacheco) shows that the furniture retailer is really looking forward to opening its stores as its slow transition to e-commerce has proved to be a drag on its performance. What should have been a bumper time for a company selling flat-packed desks etc. to facilitate home working has actually led to a lot of customer frustration as there were delays in receiving orders and “click & collect” proved to be nigh on impossible to organise. It seems that the company has a lot of work to do here to bring its online shopping standards up to a decent level.

When I first saw Airbus seeks scheme to axe old jets in bid for more sales (Daily Telegraph, Alan Tovey) I thought that they were having a laugh. Given the absolute carnage going

on in the airline industry at the moment, can you imagine any airline being OK with being forced to buy new planes while there are virtually no passengers?? Anyway, the European plane maker has approached the Department for Business, Energy and Industrial Strategy (Beis) to implement a scrappage scheme that would incentivise carriers to buy newer “cleaner” jets to replace dirtier old ones. * SO WHAT? * I can understand this desire by Airbus to do this, but really? Even if they do manage to get something out of it, who is going to buy now?? Unfortunately, I think that the plane-making industry is just going to have to get smaller before it can rise again.

Then there was some excitement as Covid-19 vaccine: AstraZeneca has ‘approached Gilead over possible merger’ (The Guardian) heralded a potential coming together of companies at the forefront of coronavirus treatments in what would be the biggest ever healthcare merger. However, AstraZeneca ‘drops interest’ in company behind coronavirus drug (The Times, Alex Ralph) says sources close to the company believe that it ain’t going to happen (apparently). Everyone loves a rumour, don’t they! As you were…



…in other news…

Many businesses have had to “pivot” in order to survive the effects of the coronavirus but I think that it would be fair to say that this idea is among the more novel I have seen so far: Sapporo Zoo sells “lion-ripped jeans,” “beaver-gnawed coasters” and more to stay open amid COVID (SoraNews24, Scott Wilson Nice 👍. There are also some people out there who have used their time at home during this outbreak to do things they are never normally able to get around to. Well this woman used her time very well: Woman builds £60 greenhouse worthy of a George Clark shed of the year nomination (The Mirror, Paige Holland Wow!

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Some of today’s market, commodity & currency moves (as at 0738hrs 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 **
6,484 (+2.25%)9,81412,848 (+3.36%)5,190 (+3.76%)23,178 (+1.38%)2,938 (+0.24%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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