Wednesday 09/09/20

  1. In MACROECONOMIC & OIL NEWS, Global trade boosts Germany and France but fears of a wobble hit oil prices. Blue collar jobs in the UK surge but warnings are made over furlough extension
  2. In TECH NEWS, Apple countersues Fortnite maker, ByteDance offers staff bonuses, Microsoft announces two console releases and Slack fails to convert
  3. In RETAIL NEWS, Iceland hires, JD Sports benefits, Halfords rides high and SCS sells more sofas
  4. In INDIVIDUAL COMPANY NEWS, Tesla’s share price craters, GM buys a chunk of Nikola, AstraZeneca halts progress and Beyond Meat makes moves in China
  5. AND FINALLY, I bring you the most amazing ice cream bars ever…



So global trade picks up but there are worries for the outlook while UK blue-collar jobs outpace white-collar ones and Andy Haldane warns about extending furlough…

Global trade rebound fuels rise in German and French exports (Financial Times, Martin Arnold and Valentina Romei) cites the latest Eurostat figures which show that German exports rose for the third month in a row while France also showed a healthy increase. * SO WHAT? * The implication here is that Europe is on track for a decent recovery in Q3 of this year but some economists are warning that momentum may be waning and Benchmark oil prices drop below $40 a barrel for first time since July (Daily Telegraph) also reflects wider fears that demand for global trade may be weakening. Saudi Arabia cut future selling prices earlier this week as coronavirus cases seem to be on the rise again.

On the employment front, Blue-collar openings recover faster than office jobs in the UK (Financial Times, Delphine Strauss) cites findings from a monthly KPMG/Recruitment & Employment Confederation survey

which reflects a strong uptick in the hiring of temp staff in August. On the other hand, there was only a small rise in permanent staff appointments and overall demand remained weak. Vacancies for blue-collar and construction roles grew strongly while those for clerical and secretarial staff and finance and accounting roles fell. Top economist warns against furlough scheme extension (The Guardian, Phillip Inman) heralds some potentially worrying news for some as Andy Haldane, the Bank of England’s chief economist, is warning the government against extending the furlough scheme saying that it would only be delaying the “inevitable” shake-out of businesses induced by the pandemic. He is saying that a “necessary process of adjustment” is needed and that extending the current 31st October deadline would only postpone the process. * SO WHAT? * It’s understandable that there are more temp roles out there than permanent ones given that employers will be nervous about committing to full time employees given the uncertain economic backdrop. I suspect that many will privately agree with what Andy Haldane is saying, but this is not what people want to hear as his advice would lead to a massive rise in unemployment going into Christmas and undoubtedly even more carnage on the high street as people become even more cautious about spending.



Apple countersues Epic Games, ByteDance offers employee bonuses, Microsoft announces the release of two consoles and Slack disappoints…

Apple countersues ‘Fortnite’ maker Epic Games, seeks punitive damages (Wall Street Journal, Tim Higgins) shows that Apple has decided to take the fight back to Epic Games, accusing it of duplicity and greed and is now seeking punitive damages, arguing that its 30% charges are fair given the huge value it gets from being on the App Store. * SO WHAT? * This is really turning into a battle royale between the two, although I still don’t fancy Epic’s chances given Apple’s sheer size and financial firepower. Yes, Spotify is accusing Apple of the same thing and Facebook CEO Mark Zuckerberg said in an employee webcast that Apple has the power to restrict innovation and “to charge monopoly rents” – but unless all of these companies get together to gang up on Apple, I don’t think Epic stands a hope.

ByteDance gives bonuses to staff after TikTok turbulence (Financial Times, Ryan McMorrow) shows that TikTok’s owner is doling out the readies to all of its 60,000-odd employees globally (equivalent to half a month’s wages!) as it faces question marks over the future of its business against the backdrop of ongoing US-China trade wars and ban in India (which means that TikTok is now banned in its top two markets). * SO WHAT? * Given what’s going on, you can understand why staff are going to be feeling somewhat antsy, because even if they stay on there could be a long, slow and painful decline into oblivion if the company decides to drag things out in court. IMO, this is a sticking plaster being put on cracks in a dam. The company has also been handing bonuses to TikTok stars with over 10,000 followers in order to stop a mass exodus (presumably to Facebook’s Instagram Reels). Microsoft

and Oracle are still in the running to buy the business but, as I said last week, I think that a deal is going to be far harder (if not impossible) to make given China’s recent moves on restricting the export of Chinese AI-related tech – which includes TikTok’s valuable “recommendation” algorithms.

There’s some exciting news for gamers in Microsoft to release two new Xbox consoles; Series S to cost $299 (Wall Street Journal, Sarah E. Needleman) as the company aims to release two games consoles this autumn – the “premium” all-singing-all-dancing Series X (no prices released yet) and the cheaper-and-more-cheerful Xbox Series S for $299 (it’s smaller than previous models and doesn’t have a disk drive). Current speculation suggests a November launch, but there’s no official guidance on that. * SO WHAT? * Given lockdown and ongoing restrictions on so many “normal” activities, I would expect the launch of the new generation of consoles by Microsoft and Sony to be PARTICULARLY strong this time around. There will no doubt be massive shortages heading into Christmas…

Then in Slack’s pandemic growth takes hit from disappointing billings (Wall Street Journal, Aaron Tilley) we see that Slack’s shares fell almost 20% in after-hours trading as quarterly billings undershot expectations despite the company reporting strong sales. It suffered from having fewer users as more people were being laid off in addition to intensifying competition from Microsoft, which is aggressively pushing usage of Teams. * SO WHAT? * It’s interesting to see that although Slack has benefited from the pandemic, it has not done quite as well from it as Zoom, for instance. Slack’s stock was up 30% this year prior to announcing its results whereas Zoom’s share price has quintupled over the same period. FWIW, I think this could be down to Slack’s pricing strategy. I use Slack and it seems to me that there is a massive gulf between the free offering and the paid one – which really means that you have to think very hard about whether you really want to use it, especially if you can get Teams for “free” as part of Office365.



There’s reason to cheer for Iceland, JD Sports, Halfords and SCS…

In the usually gloomy world of UK retailing, it’s good to see some good news for a change! Iceland in hiring spree amid online boom (Daily Telegraph, Laura Onita) shows that the frozen food specialist is looking at recruiting 3,000 delivery drivers and extra staff to help with the growth in online orders. It also announced a tie-up with UberEats for delivery within London initially, with a view to expansion thereafter. Iceland bosses said that online orders had shot up by over 300% since April. * SO WHAT? * Iceland is just the latest retailer to announce more jobs following the huge uptick in its online business. The tie-up reflects similar deals that others have made – e.g. Co-Op and Deliveroo and Asda with JustEat. I personally think that tie-ups are the way to go rather than building your own networks as that incurs massive costs and takes a lot of time to build – plus there’s the advantage that scaling up or down quickly is likely to be far less time-consuming. It’ll be interesting to see whether the likes of Aldi and Lidl follow suit…

Online shift buoys JD Sports as footfall struggles (Daily Telegraph, Simon Foy) shows that JD Sports’ online sales were stronger under lockdown but the cost of boosting its

online capability took the shine off half-year profits. Online sales more than doubled during lockdown but footfall at physical stores is still disappointing at the moment.

Elsewhere on the high street, Halfords keeps show on road with cycling boom (The Times, Ashley Armstrong) highlights a double-boost for Halfords as it benefited from rising demand in car services as well as strong demand for bicycles as consumers continue to elect to avoid public transport. Although the company is expecting a fall-off towards the end of the year (which spooked investors a bit), current demand appears to be brisk. * SO WHAT? * I would agree with the company on this because I think that the car thing is likely to be short-lived as people trickle back to work. After all, not everyone can get to work by car anyway! Also, I think that people who buy bikes (or service older ones) for commuting purposes are far less profitable than those who do it for sporting purposes. I would argue that commuters tend to buy one bike and ride it into the ground whereas sports users tend to buy more (and more expensive) steeds. Still, it was probably a boost that they were not expecting!

Then in SCS is sitting comfortably as customers upgrade sofas (The Times, Ashley Armstrong) we see that sales of sofas have also surged under lockdown, according to a trading update by the retailer. It said that like-for-like orders had risen by 51% in the six weeks to September 5th but it was less certain about prospects going into the end of the year given economic uncertainty.



Tesla’s share price craters, GM buys into Nikola, AstraZeneca halts proceedings and Beyond Meat moves into China…

In a very quick scoot around some other very interesting news today, Tech stocks rout grows with Tesla falling 21% (The Times, Simon Duke and Robert Miller) shows Tesla falling further south as it had its worst ever day in trading (although they will be congratulating themselves that they got their capital raising away right at the top of the market!) for no apparent reason and General Motors takes 11% stake in electric vehicle maker Nikola (Financial Times, Claire Bushey) shows that momentum is continuing to build for the electric truck specialist Nikola as GM tried to buy into tech rather than develop it organically, which GM/Nikola: honey for the badger (Financial Times, Lex) observes is something that investors seem to prefer.

Meanwhile, there’s potential bad news for a quick vaccine in AstraZeneca pauses vaccine trial after suspected adverse event (Financial Times, Hannah Kuchler and Sarah Neville) but good news for meat alternatives in Beyond Meat builds China presence with new production facility (Financial Times, Thomas Hale). Meatless marches on!



…in other news…

Today, I thought I’d leave you with something that is even better than a Magnum: Matcha parfait ice cream bars: Kyoto tea store deconstructs parfaits, creates stunning new sweets (SoraNews24, Oona Mcgee). These things look like works of art!

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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 *Nasdaq*DAX *CAC-40 *Nikkei **Shanghai **
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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