Monday 23/03/20

  1. In NEWS ON UNUSUAL MEASURES, India goes into lockdown, the IOC considers postponing the Olympics, American jails release prisoners and debate rages about potential financial market closures
  2. In NEWS ON CORONA-SUFFERERS, some predict a deep UK recession, WeWork looks vulnerable and councils take a commercial property hit
  3. In NEWS ON CORONA-“WINNERS”, independent shops get a massive boost and luxury yachts ride a wave of demand
  4. In OTHER NEWS, I bring you news on the tooth fairy and where thousand island dressing comes from…



So India goes into lockdown, the Olympics looks doubtful, prisoners get set free and the prospect of financial markets closure doesn’t go away…

India goes into lockdown as coronavirus spreads (Financial Times, Stephanie Findlay and Amy Kazmin) shows that India is putting large areas of the country into lockdown until the end of this month at least, in ongoing efforts to control the spread of the coronavirus. The lockdown was made official last night after Indians observed a “people’s curfew” request by PM Modi to stay at home for one day. Inter-city and long-distance trains have been suspended, along with the Delhi Metro. The restrictions will vary slightly between states but have been brought in because some experts believe that India has underestimated the rate of infection due to lack of testing versus other countries. India is the world’s second most populous country and had tested 20,000 people as of yesterday. Compare this to the 160,000 tests in Germany per week and South Korea, which is carrying out 15,000 tests per day – and you can see that there is more to do.

In International Olympic Committee in talks to postpone Tokyo games (Financial Times, Leo Lewis, Kana Inagaki and Murad Ahmed) we see that there are cracks beginning to form in Japan’s resolve to hold the games as originally planned. Japan’s PM Abe has conceded that delays were likely and followed comments by the IOC that the games could be postponed for up to two years. The IOC said it will come to a final decision within four weeks. * SO WHAT? * The coronavirus situation in Japan has actually improved recently to the extent that it started discussions on Friday to open schools again (it was one of the first to close them), although some said that this would risk an “explosive” increase in infections. However, the situation in other countries is rather different and many are complaining that the IOC’s feet-dragging is causing uncertainty and that the varying quarantine measures around the world would result in an uneven playing field. The drama continues…

Jails release prisoners, fearing coronavirus outbreak (Wall Street Journal, Zusha Elinson and Deanna Paul) highlights a rather dramatic development in America as local governments have started to release thousands of inmates to prevent a coronavirus outbreak in its crowded prisons. The ones being released are low-level, elderly and/or sick and there is now a complete ban on visitors. Given that there are often two or three prisoners to a cell, you can understand concern not only for the prisoners, but also the staff themselves.

Then in Reporting ban triggers fears of market closure (The Times, Miles Costello) we see that the City regulator, the Financial Conduct Authority, sent a letter to regulated companies over the weekend ordering Britain’s top list companies to stop publishing their annual results for at least the next two weeks in order to maintain “open and orderly markets”. This is the first time the FCA has issued a blanket ban on reporting. * SO WHAT? * Observers have extrapolated this action to mean that financial market closures must be close at hand and Markets remained open during wartime (The Times, Miles Costello) shows that although market closures are extremely rare, they have happened. The London Stock Exchange shut down in the early stages of WWI, once again for a few days in WWII after air raids and then most recently in 1987 following major storms which damaged the transport network to the extent that traders couldn’t get into work (remote working wasn’t possible back then!). Although closing them sounds like a sensible enough thing to do, reopening them would be very difficult as trading volumes would be huge and the levels would be all over the place. Also, companies would find it almost impossible to raise funds via stock issues and pension funds would be unable to reallocate capital for their underlying savers and investors. I would add that China – which extended the period of market closure it normally has in the New Year (so is therefore a recent example of what could happen if markets shut down) –  has been able to keep its markets surprisingly stable during the outbreak when you consider the market carnage elsewhere – but that’s presumably because China has vast sums of money it can throw at the problem (i.e. it can just buy stocks and other investments to prop up the market). This is not the case everywhere else, so what happened there may not necessarily be reflected in other countries and markets.



Some predict a UK recession, WeWork faces difficulty and councils take a hit…

When I see things like Factory and shop closures ‘will push UK into deep recession’ (The Guardian, Phillip Inman) I must admit that I roll my eyes because it hardly takes a genius to reach such a conclusion! Some study published by KPMG has shown that, surprise-surprise, there will be a “very substantial negative impact on the global economy” that will affect us for the next year or two. * SO WHAT? * OK so it’s their job to come up with these ground-breaking conclusions 😂 but still – TBH, I think that it would be far more interesting to see a report on how the UK and global economy could recover. Given the unique circumstances of what’s going on at the moment, you wonder whether conventional wisdom will go out of the window and as soon as the coronavirus effects calm down, what if there was an unprecedented rush of spending en masse as people that have been confined to their homes for months on end go out, spend on things other than food, go out to sporting events etc. in a mixture of relief and community spirit to support local businesses?? OK, so no-one is predicting that because it sounds like a pipe dream, but I do believe that this is potentially possible, especially if individuals don’t lose out too much financially because of government support. Of course there will be fewer places to go because many businesses will fail, but if governments give new grants, I think that there could be a rush of “independent” businesses on the high street,

making it look very different to before. Also, more people would be aware of the importance of supporting locals and perhaps be more inclined to spend. There will, of course, be a lot of pain as well but all I’m saying is that it is possible that we are in unique circumstances that are happening pretty much at the same time EVERYWHERE around the world. Like I said, conventional thinking may be inappropriate for unconventional circumstances…

Lockdown gives WeWork’s brave new world its biggest challenge (The Times, Simon Duke) shows that WeWork’s exposure to start-ups and month-to-month contracts could prove to be an Achilles heel for the highly-indebted company. * SO WHAT? * If WeWork’s problems get worse, it will no doubt make other landlords nervous as it is the largest private sector renter of commercial property in London and New York. This would be because its usual model of taking on long-term leases and the subletting space on shorter deals may come unstuck if tenants start to abandon en masse.

Talking of commercial property, Councils take a hit on £6.6bn investment in commercial property (Daily Telegraph, Rachel Millard) shows that local authorities will be facing massive falls in income as big spending since 2016 to attract more rental income is biting back. This is so acute for some councils that there are concerns about their ability to provide basic services. * SO WHAT? * Before everyone gets hysterical about this, a spokesman for the Local Government Association, which represents local authorities, said that they are working with the government on this problem. Still, the prospect of enforced lower rents will be damaging not only for local councils, but also the already-embattled British Land, Hammerson, Intu and Landsec, who are Britain’s biggest retail property owners.



Corner shops and luxury yachts see a huge rise in demand…

Independent UK food stores enjoy unexpected sales bonanza (Financial Times, Jonathan Eley) shows that a large number of independent shops are seeing a huge increase in business as customers flock to them when faced with empty supermarket shelves. * SO WHAT? * Although they may be enjoying a mini-boom now, the bonanza could be derailed as their own supply chains continue to feel the pressure. Although I have seen reports on social media of some shops taking advantage, one owner observed that “There’s a lot of people coming in here for the first time. I don’t want them to think I’m pulling their pants down”. Wholesale prices are increasing and deliveries are getting spread out more. Also, given that many of these operators are very small and employ family members, they are very conscious of the effect of getting the virus themselves. I think it is highly unlikely that

customers will continue to shop at these places once supermarkets come back on line properly, so I hope that they can make hay while the sun shines.

I don’t know about you, but I must say that I was unaware of Demand for luxury yachts fuelled by self-isolation of super-rich (Daily Telegraph, Alan Tovey) but given that some of the world’s super-rich are hoping to ride out the coronavirus storm by self-isolating aboard a luxury yacht, you can see why yacht brokers are being inundated with requests! Clients are getting their children schooled on board, getting cooking lessons from the yacht’s chef and tech lessons from the crew in the engine room! In case you were thinking of doing this yourself, it is worth pointing out that for a vessel of up to 150ft, it will cost you £100,000 a week plus crew costs and provisions, rising to £500,000 and the rest for some of the largest yachts! Private jets are also seeing a boom in demand as people want to fly home to their families without having to deal with all the cancellations for everyone else and mixing with the plebs at airports. * SO WHAT? * Not a bad option if you can afford it! Your swimming would improve no end if you were on a yacht for a few months! Maybe this is what Philip Green should be doing 😂



And finally, in other news…

As governments around the world put more restrictions on who can work and who can’t, Tooth fairy in quarantine? Argentina makes exemption in coronavirus lockdown (Reuters, shows that world leaders are able to be decisive about the things that matter 😁. Then I thought it would be important to take a moment to ponder one of life’s great questions – where does Thousand Island dressing actually come from? Wonder no more as the answer lies in The Mysterious Origins of Thousand Island Dressing (mental_floss, Michele Debczak Other questions that need answering include: what is that weird scum stuff you get sometimes on the surface of a cup of tea and why is it, when you buy sausages at a supermarket that they still come in a string?? Don’t worry, when I get the answers, I shall reveal them…

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Some of today’s market, commodity & currency moves (as at 0728hrs 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 **
5,191 (+0.76%)8,929 (+3.70%)4,031 (+5.19%)16,888 (+2.02%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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