- In MACROECONOMIC NEWS, India unveils a $10bn stimulus package and the Bank of England talks about negative interest rates
- In TECH NEWS, digital tax reforms hit snags, Apple is about to unveil new phones and Samsung has BTS problems
- In CORONATRENDS NEWS, PC demand hits new highs, Disney+ gets promoted, retail sales rise and Amazon readies itself for Prime Day
- In INDIVIDUAL COMPANY NEWS, P&O takes delivery of a massive cruise ship, British Airways’ chief departs and Jaguar faces potential expense
- AND FINALLY, I bring you an unusual alternative to WFH and an unfortunate engagement announcement…
So India unveils a $10bn stimulus package and the Bank of England prepares the ground for negative interest rates…
*** If you got through the FIRST ROUND of the Watson’s Daily x More From Law x LittleLaw competition, please find the questions for Round Two HERE. You should be getting an e-mail on this if you achieved the pass mark, but I thought I’d put it up here as well! ***
India unveils ‘underwhelming’ $10bn stimulus for pandemic-hit economy (Financial Times, Amy Kazmin) highlights a proposed new stimulus that is already garnering criticism from economists that it doesn’t go far enough to kick-start growth in a coronavirus-battered economy. It was designed to increase capital expenditure on things like roads, water supply, urban development and defence infrastructure as well as giving poorer states more money and incentivising consumers to spend. Yesterday’s announcement comes shortly after the Reserve Bank of India said that GDP would contract by a whopping 9.5% during the current April to March financial year. You could
say that the new initiatives were designed to boost consumption on the cheap. * SO WHAT? * Coronavirus has decimated India’s economy and everyone is crying out for money. After seeing GDP contraction of 24% in the April to June quarter it would seem that the government is taking a very cautious approach and seeing how the dust settles before committing more finances and risking debt downgrades by ratings agencies (this effectively makes their debt more expensive).
There has been talk recently of negative interest rates as a way to help the economy through the current nightmare. What negative interest rates could mean for you (Daily Telegraph, Harry Brennan, Adam Williams and Sam Benstead) does a really good job of laying out what it all means! The most recent stance from the Bank of England’s Monetary Policy Committee is that interest rates should stay at record lows of 1% but it is now saying that they could go lower. Homeowners on fixed morgages wouldn’t see any change, but those on tracker and variable rate mortgages would. Although negative rates are intended to encourage businesses to borrow in order to invest, it is unlikely that individual savers to pay interest. They could, however, increase charges on premium accounts and making deals dearer in other parts of their business. There are other permutations, so I would encourage you to read this article in full if you can.
Digital tax reforms stall, Apple is to announce new phones and BTS get Samsung into trouble…
Setback for $100bn tech tax reforms (The Times, Philip Aldrick) shows that negotiations between 137 countries to rewrite the century-old international tax rules and bring it into the digital age have failed to reach an agreement for a self-imposed deadline this week. The deadline has been booted into the middle of next year. The Organisation for Economic Co-operation and Development (OECD) has been trying to do an overhaul of the global tax code since 2018 due to increasing public anger aimed at Big Tech companies paying very little or no tax. * SO WHAT? * Trying to get 137 countries to agree to something (especially on tax!) was never going to be easy. Failing to reach agreement will likely result in increased tensions between Europe and the US and potential trade wars. The OECD was supposed to bring in a blanket tax but instead, it has left countries like France, Italy and the UK hanging (these countries decided to impose their own digital taxes) by delaying a tax change until next year. It looks to me like the OECD is useless and needs to get its act together on this as the clock continues to tick.
Elsewhere, Apple’s new iPhone 12 with 5G technology carries high expectations (Wall Street Journal, Tim Higgins) shows that Apple is set to unveil a lineup of new phones with 5G tech that many expect will sell in big numbers as 5G gives users who have been hanging onto their 4G phones a reason to upgrade (and I am one of them!). Internet speeds with 5G are way faster and will
allow all sorts of extra activities and functions. Some analysts are expecting a massive sales uptick as per 2014 (which it introduced a larger screen with the iPhone 6 Plus) and 2018 (new model X with facial recognition). * SO WHAT? * Although services and wearables revenue continues to climb, the iPhone still accounts for 50% of Apple’s sales so a meaningful uptick in sales will have a major impact. Even so, Apple’s share price has already risen by 50% this year – but with the advent of this new line-up things could get even better! On the other hand, sceptics point to the fact that Samsung has been pushing 5G for over a year and haven’t seen much of a hike in interest, possibly because it hasn’t yet found a killer 5G app that makes people want to upgrade. Maybe Apple can change all that…
Samsung pulls BTS-branded products from online Chinese platforms (Financial Times, Edward White, Song Jung-a, Yuan Yang and Nian Liu) is a story that popped up yesterday as the “leader” of K-pop superstars BTS made a comment about the Korean War that offended Chinese. * SO WHAT? * Samsung removed BTS branded products from its sites on JD.com and Alibaba’s Tmall in addition to its own website in the wake of the backlash but these things have happened all the time with other brands as well. AS far as Samsung is concerned, this isn’t great for PR, but its effect is likely to be minimal given that its smartphone market share in China is about 1%. This is also going to be a bit of a pain for Big Hit Entertainment, which manages BTS, because the company is scheduled to list in an IPO on Thursday that currently values it at $4.1bn. However, China sales for BHE are minimal because Korean celebs aren’t allowed to appear on TV or hold concerts in the country.
PC demand during pandemic fuels strongest US market growth in a decade (Wall Street Journal, Maria Armental) highlights one of the ongoing results of increased working from home as PC sales grew in Q3 – Chromebooks saw a 90% surge in sales over the period, for instance. Gartner Inc also said that worldwide PC shipments increased by 9% in the quarter versus the previous year. * SO WHAT? * I would expect this to continue as those who have hung on will no doubt upgrade, especially if more lockdowns occur.
reorganisation to priorities its streaming video services. Given that this division has been pretty much the only thing to thrive under this lockdown, you would have been surprised if Disney had decided to do anything else!
Then Retail sales rise biggest in decade (The Times, Callum Jones) cites the latest BRC/KPMG figures which show that retailers had their best monthly sales rise for ten years last month and separate Barclaycard data also showed strong spending due to brisk grocery sales (stockpiling again??), kids going back to school and more people doing DIY. Is this the storm before the calm, I wonder?? An October Amazon Prime Day opens a remade holiday shopping calendar (Wall Street Journal, Sarah Nassauer) shows that Amazon is trying to get in early to tempt shoppers, but it’s not alone as it joins Walmart and Target in trying to temps consumers to part with their cash. * SO WHAT? * I think that many retailers are going to throw caution to the wind and try to get sales as soon as they can rather than risk consumers not spending at Christmas time.
INDIVIDUAL COMPANY NEWS
P&O gets a new ship, BA’s chief leaves and Jaguar potentially faces big fines…
P&O takes delivery of UK’s largest cruise ship (Financial Times, Alice Hancock) highlights the delivery of an incredibly expensive ship at a time when the cruise industry is dying badly (it took two and a half years to build and cost about $950m. Ouch!) and all the papers seem to be banging on about British Airways chief heads for exit as industry faces ‘worst crisis’ (The Times, Robert Lea and Martin Strydom) but TBH I think this is just a company-specific story that reflects the wider malaise of the airline industry.
Jaguar faces huge fines as it lags behind on emissions (Daily Telegraph, Alan Tovey) shows that the car company is falling behind its peers on reducing pollution and could face massive fines for not hitting strict new environmental guidelines, according to environmental group Transport & Environment (T&E). It is currently 10% behind the CO2 target required to meet European Union rules which stipulate emissions of 95g of CO2/km as an average across 95% of the cars they sell. * SO WHAT? * If they don’t meet this level from 2021 they will be fined €95 per car registered – which could run into the billions across the industry. Those who sell fewer than 300,000 cars a year have been given less demanding targets. T&E estimates that if 15% of cars sold in 2020 by Jaguar Land Rover are electric or plug-in hybrids, it can meet its target. Peugeot, PSA, Volvo, Fiat Chrysler and BMW are already meeting the emissions standards.
…in other news…
Today, I thought I’d leave you with an interesting alternative to working from home in Telecommute from a ferris wheel at this Japanese amusement park (SoraNews24, Oona McGee) as well as a highly amusing moment in Woman poses dog for photo to announce her engagement and quickly regrets it (The Mirror, Luke Matthews). You can’t blame the dog!
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)