- In MACROECONOMIC NEWS, China exports power up while Rishi Sunak aims to extend business support loans
- In TECH NEWS, the WeChat ban hits California-shaped buffers but TikTok moves forward
- In CORONATRENDS, US meat is plentiful, family homes prices in the UK hit new highs and the government looks at gambling reform
- In INDIVIDUAL COMPANY NEWS, HSBC faces dirty money allegations
- AND FINALLY, I bring you Britain’s dullest man 🥱…
So China exports strengthen and Sunak aims to boost businesses…
China’s export machine comes roaring back to life (Financial Times, Thomas Hale, Kathrin Hille, Edward White and Qianer Liu) cites data from Oxford Economics and Haver Analytics which shows that although overall export volumes have actually fallen, China’s share of global exports versus other large exporters have climbed by more than 18% in April and settled to 15.9% in July. Exports in the Asian region have been doing quite well due to lower reported coronavirus infections since the second quarter which has meant that exports of tech (think electronic components, IT and communications products etc.) and medical equipment are among the categories to have put in a strong performance. Interestingly, China’s trade surplus with the US reached its highest level since November 2018!
Sunak to extend business support loans as Covid-19 spread worsens (Financial Times, Daniel Thomas and George Parker) shows that chancellor Rishi Sunak is planning extend UK business support loans in order to get the economy through “a very challenging winter”. He is to extend four loan schemes this week which have already lent £53bn to companies via government guarantees as one way of mitigating expected corporate and employment carnage. Three of the four schemes were due to end this month and the fourth was scheduled to close at the start of November. * SO WHAT? * We are facing difficult times currently as fears increase that we will shortly be experiencing similar problems to France and Spain who have recently seen increases in coronavirus cases. The government is having to make difficult decisions at the moment because even though these extensions may be made, it is by no means guaranteed that the companies who are borrowing the money will survive the pandemic.
The WeChat ban gets delayed but TikTok manages to move forward…
*** NEWS JUST IN – NIKOLA FOUNDER RESIGNS AS CHAIR AMID ALLEGATIONS, SEC PROBE (BLOOMBERG, ED LUDLOW). This just makes things even more interesting IMO. Admission of guilt, perhaps?? ***
In WeChat ban blocked by federal judge in ruling against Trump administration (Wall Street Journal, Sebastian Herrera and Katy Stech Ferek) we see that a Californian federal judge potentially blocked Trump’s recent move to ban usage of the massively popular Chinese WeChat as it upheld the objections by user group WeChat Users Alliance, a non-Tencent affiliated group who rely on the app for business and personal reasons. The ban was meant to go into force at 11.59pm on Sunday night. * SO WHAT? * The Trump administration tried to impose the ban because it argued that the data that Tencent-owned WeChat has on users could potentially be shared with the Chinese government, although Tencent strenuously denies this. This is a temporary reprieve and appeals are likely, that could delay any ban. The app has 19million regular users in the US and over 1.2bn globally. The judge in the case acknowledged government concerns but questioned the lack of evidence to prove it.
China has reasons to like TikTok’s Trump-approved shotgun deal (Wall Street Journal, Liza Lin) shows that Trump has given his approval for a deal that would allow TikTok to partner up with Oracle and Walmart to form a new business called TikTok Global that would service the US and most of the world ex-China. TikTok’s owner ByteDance would own about 80% of the new company – but then some will say that because ByteDance is itself 40% owned by American investors, the company could be described post the deal as being majority American-owned. There was no mention of a transfer of TikTok’s valuable algorithms in a statement released over the weekend. * SO WHAT? * Trump’s approval is a major step forward for all concerned, but the administration still has to sign off on the finer details as per TikTok deal faces questions over security, ownership (Wall Street Journal, John D.McKinnon, Alex Leary and Kate Davidson). The new company plans to create over 25,000 jobs in the US and potentially finance a $5bn online education initiative. So it looks like “job done” as Trump can claim some kind of victory, as can China and ByteDance. IMO this whole posturing episode has really not achieved that much apart from ensure that the US won’t be able to buy anything Chinese with important AI tech and possibly putting a lid on the purchase price that probably would have reached stratospheric levels had an element of danger not been injected into the proceedings.
US meatpackers face difficulties, family home prices rise in the US and the government looks at clamping down on gambling…
Meat was once in short supply amid pandemic. Now, it’s on sale (Wall Street Journal, Jacob Bunge and Jaewon Kang) is an interesting article that highlights falling meat prices at grocery stores in the US as shortages at the height of lockdown (due to factory workers going down with the coronavirus) have now turned into surplus as weakness in exports have resulted in a rise in domestic supply. Gordon Food Service, which is one of America’s biggest distributors to restaurants is now selling some beef cuts for half the price they were a few months ago and Midwest grocery chain B&R stores which had to ration the sale of minced beef at the height of the pandemic is now selling it at a discount. Tyson Foods, which is the largest US meatpacker by sales, says that there is still a backlog of cattle and pigs due to slaughterhouse and processing plant closures. * SO WHAT? * Given the labour-intensive nature of meat processing, you would have thought that any further outbreaks will result in more disruption in the industry. If I was an American consumer, I’d be stocking up on meat and putting it in the freezer! All the more reason to put more resource into meat alternatives, perhaps?
Back in the UK, Family home prices at all-time high as buyers go in search of space (Daily Telegraph, Marianna Hunt) cites the latest figures from Rightmove that show that asking prices of family homes have hit new highs as buyers look for more rooms (and gardens) as increasing numbers work from home. * SO WHAT? * An interesting trend, but Sunak’s stamp duty holiday is surely the overriding driver for this. Also, remember that Rightmove records ASKING prices – not actual sale prices – so it is possible that properties sell for less. We’ll see what the real state of affairs is when that holiday comes to an end…
Then in Downing Street to spearhead reforms, say insiders (The Guardian, Rob Davies) we see that the Department of Digital, Culture, Media and Sport (DCMS) is about to launch a long-awaited review this autumn with additional impetus from the PM who is keen to overhaul the 2005 Gambling Act which liberalised regulation of the industry. * SO WHAT? * This could spell the end for good times in a sector that has benefited hugely in some areas from lockdown (although those with more exposure to sports betting, for instance, have suffered). It’s possible that we could see stake limits and a slowdown in the speed of online casino games, but we’ll have to see what comes out of any review.
INDIVIDUAL COMPANY NEWS
HSBC faces criticisms of dirty money…
HSBC hit by ‘dirty cash’ allegations (The Times, Louisa Clarence-Smith) shows that the UK’s biggest bank has been accused of ignoring the transfer of millions of pounds
of dirty money around the world by a BBC Panorama documentary. Leaked documents, referred to as the “FinCEN files” contain over 2,500 suspicious activity reports filed with the US Department of the Treasury’s Financial Crimes Enforcement Network. This sounds like a serious scandal – and HSBC have been accused of lax controls before.
…in other news…
OK, so it’s still a few months off, but what about this Christmas gift idea for that someone in your life who has everything: ‘Britain’s dullest man’ unveils the International Roundabout Of The Year (The Mirror, Alexander Brock and Joseph Wilkes). Nice 👍 Sounds like a great guy to get stuck in a lift with 😂
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 *
|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)