Tuesday 05/01/21

1. In MACRO, MARKETS & CRYPTO NEWS, BoJo presents Lockdown 3.0, trading goes to Europe, Asia goes meh, NYSE backtracks on Chinese company expulsion and the bitcoin drama continues
2. In M&A NEWS, we look at what’s going on in cars, drugs, choccy bars and plumbing
3. In STREAMING NEWS, Discovery bets on the Olympics and Roku closes in on Quibi content
4. In PROPERTY NEWS, London offices lose their lustre and UK mortgage approvals hit new highs
5. AND FINALLY, I bring you a crucial Zoom tip and a cake fail…

So Lockdown 3.0 happens, markets shift and the Bitcoin frenzy continues…

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In UK news, Boris Johnson orders third lockdown for England (Financial Times, Sebastian Payne, George Parker and Mure Dickie) outlines last night’s bad news as we go into Lockdown 3.0 with the PM saying that there’s an end in sight. The measures will once again be reviewed in the week commencing February 15th. FTSE 100 vaccine optimism tempered by prospect of full lockdown (The Guardian, Richard Partington) shows that New Year optimism was tempered by the spectre of lockdown (the PM’s announcement happened at 8pm last night, so quite some time after the markets closed) but then again Brexit rush drives  up factory activity (The Times, Gurpreet Narwan) cites the latest IHS Markit/CIPS manufacturing PMI which shows that manufacturing grew at its fastest pace since November 2017 last month as companies built up their stockpiles ahead of new tariffs being introduced in the New Year. * SO WHAT? * Although the uptick sounds positive, it is likely that this is more of a blip rather than a trend as the Brexit thing is a one-off event which led to companies bringing forward their purchases.

In markets, EU share trading flees London on first day after full Brexit (Financial Times, Philip Stafford) sounds

pretty ominous as the first trading day of 2021 showed almost €6bn of EU share dealing (equivalent to a sixth of all business on exchanges in Europe yesterday) flowing away from London and into European capitals. * SO WHAT? * Until Brexit, up to 30% of all EU shares traded passed through the City and the Europeans will be eager to lay their hands on this business as UK financial firms flounder in the darkness due to trade deal offering them slim pickings. Financial service lobbies on both sides of the Channel are trying to build on the trade deal and draft a memorandum of understanding, but even if they do it won’t have the same legal clout as an international treaty. Tough times ahead…

Meanwhile, Asian shares drift after Wall Street’s worst sell-off since October (Financial Times, Hudson Lockett) shows that Chinese stocks edged ahead of Asian counterparts, although the NYSE scraps plans to delist Chinese telecom stocks (Wall Street Journal, Chong Koh Ping and Ben Otto) news, lifted Hong Kong-traded shares in China Mobile, China Telecom and China Unicom. Investors are waiting for two run-off elections in the US state of Georgia that will effectively decide who controls the Senate, so will be keen to see the result before wading into the markets again. * SO WHAT? * The NYSE thing is quite a turnaround from the previously-aggressive stance that the index would delist China’s three largest telecoms companies following a US government order signed by Trump in November. The Georgia elections thing is important because if Democrats win both seats, incoming president Joe Biden would get the upper hand in the Senate and have more power to push through his legislative agenda.

While all of that is going on, Corporate giants join Bitcoin merry-go-round (Daily Telegraph, Michael Cogley and Matthew Field) highlights the ongoing Bitcoin frenzy as the cryptocurrency broke $34,000 this weekend, but then fell by 17% yesterday. * SO WHAT? * The cryptocurrency continues to polarise opinion of raging I-told-you-so fans in one corner and bitter sceptics in the other. However, the fact is that more “legit” institutions are being forced to at least acknowledge Bitcoin and are jumping on the bandwagon. At the end of the day, even if the fundamentals say otherwise, if enough people believe it’s possible, that success can become a self-fulfilling prophecy. Just ask anyone who bought Tesla shares early last year 😁

The M&A party continues, powered by cars, drugs, choccy bars and plumbing…

Fiat Chrysler, PSA aim to complete trans-Atlantic merger in mid-January (Wall Street Journal, Nora Naughton) shows that the two car companies are intensifying efforts to get the largest car merger this century completed this month versus the original target of the end of the first quarter of this year. They got overwhelming approval from shareholders yesterday and the new company will be called Stellantis NV. All going well, it will start trading in Paris and Milan on Jan 18th and in New York on Jan 19th. * SO WHAT? * This combo is expected to produce $6.1bn in annual cost savings, help them both face ever-tighter emissions regulations and give them more investment firepower in new technologies. The new company will have its work cut out what with 15 marques to contend with as well as how to boost businesses in China and Europe.

In Italy’s Angelini to buy Swiss biotech group for $1bn (Financial Times, Silvia Sciorilli Borrelli) we see that Italy’s Angelini Pharma has agreed to buy Arvelle Therapeutics for up to $960m in a bid to become a leading European player in central nervous system and mental illness treatments.

* SO WHAT? * This is the biggest acquisition that Angelini has ever made and it will propel it into the orbit of Europe’s top players.

In other M&A news, Mondelez nears deal to buy rest of paleo chocolate-bar maker Hu (Wall Street Journal, Cara Lombardo) highlights Mondelez’s approach to Hu Master Holdings, a company in which it took a minority stake in 2019, in ongoing efforts to broaden its product array in healthier snacks. The deal, which values Hu at about $340m, could be announced this week. Hu makes a bar that is vegan and contains no soy or refined sugar.

Then Private equity giant picks up Wolseley for ‘snip’ at £308m (The Times, Robert Lea) shows that Ferguson, a FTSE100 company, has ditched plans to float its British heating and plumbing Wolseley business and sold it to Clayton, Dubilier & Rice, a US private equity firm. £308m is indeed a “snip” considering that there had been speculation that it was worth about £600m. * SO WHAT? * Ferguson was originally called Wolseley, but changed its name to Ferguson (an American company it bought years ago) in 2017 because it did most of its business in the US and it wanted to reflect that. Interestingly, Clayton, Dubilier & Rice bought a 25% stake six months ago in SIG, the listed building and insulation materials group and said that it was looking for further acquisitions to bolt on to Wolseley.

Discovery bets on the Olympics and Roku closes in on Quibi content…

The drama continues in the world of streaming in Discovery bets on Olympics and live sport as it joins streaming wars (Financial Times, Murad Ahmed and Anna Nicolaou) as Discovery is hoping that its €1.3bn deal to show the Olympics will boost subscriber numbers for its new streaming service, in a competitive field composed of the likes of Disney, Apple and Netflix. The new Discovery Plus service will launch in the US and a number of European countries including Italy and the Netherlands on Monday. * SO WHAT? * I think that this sounds like a VERY risky move by Discovery because the Olympics is a one-off and it is still eye-wateringly expensive to buy sporting rights. It’s not like, say, Disney+, where the channel owns the content and many highly popular franchises that are effectively “evergreen”. Maybe they will benefit from a

surge in people yearning to see the world’s biggest festival of sport (that’s if it goes ahead, of course!), but if you are a streaming service, people can cancel on you pretty quickly. Maybe this is all they’ve got…

Then in Roku/Quibi: dis-content (Financial Times, Lex) we see that streaming device maker Roku is departing from its highly successful model of not owning or producing any content towards getting its hands dirty and potentially buying the content of failed short-form video start-up Quibi. The company made its name selling streaming devices but now earns revenue from selling advertising on its channels and slices of every streaming service subscription made on its devices. * SO WHAT? * It sounds pretty risky for a relatively small player like Roku to make a big bet on such an expensive and competitive area – especially when it concerns buying content that no-one wanted to watch in the first place! Does it REALLY make sense for the this company to do anything other than sticking to its knitting?? I think not… 

Offices lose their lustre and UK mortgage approvals hit new highs…

The contrast in fortunes in property continues in Law firms ditch trophy office moves as pandemic reshapes City (Financial Times, Kate Beioley and George Hammond) where leading international law firms are reconsidering their office requirements as they look to cut space by up to 50% due to increased amounts of remote working. Norton Rose Fulbright, DWF and Fieldfisher are among those looking to cut floorspace by 30-50% as a result of changing working requirements. London property: out of office (Financial Times, Lex) shows that it’s not just law firms

who are rethinking their requirements what with near-home and at-home working trends and it is likely that rents will be weaker as a result. * SO WHAT? * I don’t think that the office is completely dead, but there is certainly a lot of evolution going on!

In contrast to this, Record £22bn mortgage cash lent as approvals hit a 13-year high (Daily Telegraph, Tim Wallace) highlights strength in the residential property market as the latest Bank of England figures show that mortgage approvals shot up in November to their highest level since August 2007. Unsurprisingly, everyone is trying to beat the stamp duty holiday deadline that currently stands at the end of March! I suspect that the frenzy will continue to intensify even if Sunak announces any extensions.

…in other news…

I thought I’d kick off the year with a cautionary tale in Student ‘mortified’ as she notices embarrassing username for university interview (The Mirror, Paige Holland) and the rather amusing Girl, 7, asks for duck birthday cake and mum’s hilarious attempt goes viral (The Mirror, Luke Matthews). Well we can’t all be perfect, can we!