Tuesday 22/09/20

1. In MARKETS NEWS, we see that global stocks fell on second wave fears
2. In PLANES, TRAINS & AUTOMOBILES NEWS, Airbus promises zero emission aircraft, UK railways get a massive shake-up and VW is in talks to sell Bugatti
3. In TECH NEWS, Microsoft buys the owner of Doom, Facebook considers leaving Europe in a huff and TikTok’s ownership causes confusion
4. In INDIVIDUAL COMPANY NEWS, Nikola just gets worse, HSBC is hit by scandal and Illumina buys Grail for $8bn
5. AND FINALLY, I bring you a pizza hack…

So markets take a tumble on coronavirus nervousness…

World markets slide over fears of more lockdowns (The Times, Tom Howard and James Dean) highlights the FTSE100’s worst day of trading since June 11th and lowest close since September 4th as fears of a second wave of coronavirus hit investor sentiment. Airlines, hotels and pubs took a major hit – The Restaurant Group, which owns Wagamama, saw its shares slide by 17.7%, Marston’s fell by 16% and IAG, which owns British Airways fell by 12.1%. Bank shares were hit by the whiff of scandal at HSBC and

market weakness was also apparent in Europe.

HSBC and StanChart sell-off worsens as virus concerns hit markets (Financial Times, Hudson Lockett) highlights the knock-on effects in Asia as a bad day for scandal-hit HSBC and Standard Chartered was made worse by wobbles over the prospect of more coronavirus lockdowns. Hong Kong’s Hang Seng, China’s CSI300 and Australia’s S&P/ASX200 all fell – Japan’s markets didn’t because yesterday was a market holiday. * SO WHAT? * Markets are hyper-sensitive to any coronavirus news these days and so the prospect of curfews, more cases and the start of cold/flu season appears to have filtered through to investor sentiment – for the moment at least.

Airbus makes nice promises, UK railways get a jolt and VW looks to offload Bugatti…

Amid all the airline industry carnage going on at the moment, Airbus reveals plans for zero-emission aircraft fuelled by hydrogen (The Guardian, Jillian Ambrose) shows that European aerospace company Airbus has announced plans to produce the world’s first zero-emission commercial aircraft models that run on hydrogen and could be in the air by 2035. It unveiled three concept aircraft which all look lovely. * SO WHAT? * What-evs. The fact is that the whole industry is facing calamity at the moment so talking about zero-emission aircraft that won’t be produced until God-knows-when (because, let’s face it, 2035 might as well be light years away!) is a bit like someone offering out cushions to people sitting in deck chairs while the Titanic is sinking 😂. On a more positive note, I would imagine that EVERY effort will be made to ensure Airbus’ survival because without this “local” European hero, we’ll all be flying on Boeing planes. Funding that without being accused of over-subsidising will be tricky, however…

UK railway rescue spells end of franchising system (Financial Times, Jim Pickard, Bethan Staton and Josephine Cumbo) highlights a major rethink of the UK’s train system as the government yesterday unveiled a massive multibillion pound rescue deal to ensure the survival of train operating companies for the next 18 months. The Emergency Recovery Management Agreements (ERMAs) will cover losses until March 2022 and will help to move the UK towards a contracts-based

system as the current system of franchises ends. * SO WHAT? * This is the biggest shake-up of the rail transport system since it was privatised around 25 years ago. Given that major problems had been emerging anyway with some of the train operators before Covid hit (e.g. Virgin Trains East Coast and Northern), now would seem to be a good time to start with a clean sheet. Operators will pay a fixed annual fee for running the service rather than the previous system which meant that a train company’s income rose and fell according to passenger numbers. How the end of the rail franchise system will affect Britain’s trains (The Guardian, Gwyn Topham) gives an interesting view of what the new deals will look like from the passengers’ point of view – not much difference apart from emptier trains (as part of the new deal, operators will have to provide near-enough the full normal timetable), possibly less confusing fares and maybe less disruption as well if track manager Network Rail and the operating companies were forced to work more closely.

Then in Volkswagen in talks to sell Bugatti brand to Croatian upstart (Wall Street Journal, William Boston) we see that VW is in talks to sell luxury brand Bugatti to Croatia’s Rimac Automobili, which is an electric performance car maker. * SO WHAT? * This is interesting from the point of view that it indicates that VW may well be thinking of pruning its existing portfolio which currently includes the likes of Audi, Bentley, Lamborghini, Porsche, SEAT and Skoda. Divesting marques has been something that has been on the table in the past, but has always been met with very stiff resistance with the unions, but I suspect that the unions will not be quite so aggressive now given the current state of the car market. Of the marques they currently own, Bugatti and Lamborghini are the ones that look most vulnerable to sale given their marginal impact on VW’s bottom line.

Microsoft goes shopping, Facebook considers leaving Europe and TikTok’s ownership causes confusion…

Microsoft to buy Doom owner in $7.5billion videogames deal (Wall Street Journal, Aaron Tilley and Sarah E.Needleman) shows that Microsoft is back in shopping mode after failing to secure TikTok as it plans to buy the owner of the popular Doom franchise, ZeniMax Media (which, in turn, owns Bethesda Softworks) as home gaming continues to be a hot area under lockdown. Bethesda is also known for other hit franchises The Elder Scrolls and Fallout. * SO WHAT? * Sounds decent enough, especially with the launch of the new Xbox gaming consoles around the corner. I suspect that content will be increasingly important as time goes on a more devices are able to play increasingly complex games over 5G networks. Fun fact: Microsoft has form in buying developers – it bought Mojang AB, owner of Minecraft, back in 2014.

Facebook warns it could pull out of Europe over data row (Daily Telegraph, Margi Murphy) sounds like clickbait – but it isn’t. Basically, the company has threatened to exit

Europe (“Fexit?”) if it is forced to stop sending user data to the US. This follows a suggestion from the Irish Data Protection Commissioner (DPC) that it could support (and enforce) a European Court of Justice decision that such data transfers are illegal. * SO WHAT? * I don’t think anyone has the balls to face down Facebook – and maybe the company will take heart from Apple’s recent win over the European competition authorities. Equally, I think that Facebook’s threat is empty – I just don’t think they’d pull out. Maybe some compromise could be reached but I don’t think it will happen anytime soon

Following on from yesterday’s news, TikTok deal hit by confusion over who will own and control the app (Financial Times, Yuan Yang, Nian Liu, Miles Kruppa and James Fontanella-Khan) shows that confusion still reigns over who will own TikTok, subject to final approval. TikTok Global: victory gap (Financial Times, Lex) thinks that any gains for US national security are modest (US data is already stored on domestic servers) and ByteDance will own the majority of TikTok unless you count for the American shareholders of ByteDance. * SO WHAT? * As things stand, the Chinese company has come out from this very well – it has avoided a US ban and kept control of TikTok whilst also avoiding having to give up its algorithm. However, you never know if Trump will drop another bombshell – so watch this space! 

Nikola just gets worse, HSBC gets pummelled and Illumina buys Grail…

The whole scandal surrounding Nikola, and the Hindenburg Research report that sparked it all off, seems to be gathering as much pace as a truck rolling down a hill with no engine as Nikola founder Trevor Milton steps down after fraud allegations (Financial Times, Peter Campbell, Harry Dempsey and Claire Bushey) – something I mentioned in a “newsflash” yesterday – to be replaced by board member Stephen Girsky, who was a former vice-chairman of General Motors and Nikola: escape velocity (Financial Times, Lex) contends that there will an uphill (with a working engine and no video editing?) task in getting the company back on track without Milton’s apparently silky sales skills. Other tech start-ups will need to watch out as investors are likely to be looking more closely at what they are putting their money into. Separately, Nikola taps outside supplier to provide batteries in contrast with earlier company statements (Wall Street Journal, Ben Foldy) shows that the company is now going to a third party supplier for batteries despite previous statements that it had developed its own battery tech!

HSBC shares hit 25-year low on reports of alleged suspicious transfers (Financial Times, Hudson Lockett) highlights more scandal – this time in the banking world – as HSBC was named in media reports of being central in laundering dirty money. The Global Times, a state-run Chinese tabloid, said over the weekend that HSBC could be included in Beijing’s first “unreliable entities” list. HSBC: time warped (Financial Times, Lex) says that the potential blacklisting is the most serious threat that the bank is now facing because if it makes the list, it could be banned from investing in China and see employees’ work permits revoked. Uncertainty will continue here as HSBC is in a very precarious position as it has alienated US and UK support for supporting Beijing’s new security legislation and it is now alienating China. Tough times.

Elsewhere, Illumina agrees $8bn deal for cancer screening group Grail (Financial Times, Hannah Kuchler and Ortenca Aliaj) highlights a chunky acquisition of Grail, which specialises in liquid biopsy – taking blood samples to test for cancer. This could be huge in the future as it is less invasive than current tests and detects cancers early. Sounds like a good strategic deal.

…in other news…

I thought I’d leave you today with a very good idea that might help you out: Mum shares tip to fit three pizzas on one oven shelf to make family cooking easy (The Mirror, Luke Matthews). Simple, yet effective!