Wednesday 14/10/20

  1. In MACRO/TRADE-RELATED NEWS, China grows, EU/US Boeing/Airbus tensions rise and Boeing’s orders hit a covid pocket
  2. In CORONATRENDS NEWS, trials are halted for Lilly and J&J, UK unemployment rises and we spend on booze but not at cinemas
  3. In INDIVIDUAL COMPANY NEWS, Apple does its reveal, Amazon pushes on, JPMorgan surprises on the upside and Cornish Lithium continues to garner interest
  4. AND FINALLY, I bring you an unusual depiction of Peppa Pig…



So China shows growth in a troubled world, EU/US tension on Airbus/Boeing increases while Boeing’s orders continue to suffer…

*** 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 thought I’d put it up here as well! ***

China ‘to be only major economy to grow in 2020’ (Daily Telegraph, Lizzy Burden) cites the latest figures from the China Association of Automobile Manufacturers which show that car sales rose by 12.8% last month – in the sixth consecutive month of growing sales. Official customs data released yesterday shows that Chinese goods exports rose by 9.9% in September versus September 2019. Imports also grew by 13.2% last month to their highest levels so far this year with particularly strong demand for things like soya beans, grains and semiconductors as well as for copper and steel products. * SO WHAT? * There is a marked contrast between China’s fortunes and those of the rest of the world and it is benefitting from everyone still being in some form of lockdown with heightened demand for things like PPE and laptops. I think this is a GOOD thing, however, as it means that when things get worse covid-wise in countries outside China at least we stand some chance of getting supplies. In the first lockdown, China’s factories were closed and production was dead but now

that China is open at least there is some production going on! However, it would be interesting to see how much price-gouging or supply of sub-standard product occurs given what happened the first time around.

WTO rules against Boeing in 16-year fight with Airbus (Daily Telegraph, Alan Tovey) shows that US imports to Europe could get hit by billions of dollars worth of taxes after the World Trade Organisation supported claims by Airbus that Boeing received illegal subsidies. The WTO said that illegal support via subsidies and tax breaks received by Boeing caused Airbus damages of $4bn a year in lost sales and market share. The body gave the European Commission permission to now impose levies on US goods equal to that value. * SO WHAT? * This battle has been dragging on for 16 years and the latest decision is thought to be getting towards the home straight of reaching a FINAL decision. It’s not all one-way, though – the WTO gave the US the right to impose taxes on $7.5bn of EU goods last year. This spat is bound to fuel Trump’s campaign and make him look all combative but Airbus is trying to push for a settlement to end the row once and for all. IMO this is all childish one-upmanship – and I have no doubt that both companies received state subsidies, but then why not? It is an incredibly expensive industry and there is a lot of prestige at stake. They should just admit it and move on. The main winners out of all this are undoubtedly the lawyers who will have earned some fat fees! You can understand Boeing’s whinging, though, given Boeing delivered 11 aircraft in September and won no new orders (Wall Street Journal, Doug Cameron) shows that it needs all the money it can get given the continued grounding of the controversial 737 MAX planes.



A couple of vaccine trials hit pause, UK unemployment rises and we stock up on booze rather than go to the cinema…

Two Covid-19 drug trials halted on safety concerns (Financial Times, Donato Paolo Mancini and Kiran Stacey) highlights a pause on enrolment for Eli Lilly’s antibody treatment (similar to the one Trump was waxing lyrical about recently) and a suspension of all trials of Johnson & Johnson’s experimental Covid-19 vaccine after one participant developed an “adverse reaction”. J&J hopes Covid-19 vaccine trial will restart shortly (Wall Street Journal, Peter Loftus) shows that the company is hopeful that it can resume testing in the next few days, but let’s face it, these things are highly complex and there is a lot of pressure to get it right. After all, AstraZeneca’s trials were halted in September after at least one participant displayed unexplained neurological symptoms – but these have now resumed everywhere but the US. We are bound to see more of this as time goes on.

Meanwhile, UK job losses rise at record rate in 3 months to August (Financial Times, Delphine Strauss) cites the latest figures from the Office for National Statistics which show the biggest jump in redundancy numbers since records began in 1995 as the gloom continues. Maybe

people are trying to drink their worries away in UK shoppers spend £261m more on alcohol amid pub curfew (The Guardian, Sarah Butler) which shows that the latest figures from Kantar show a big hike in booze consumption since the end of Eat Out To Help Out. Sales of toilet paper and flour rose by 64% and 73% respectively but there are few others signs of the panic buying we saw at the beginning of the outbreak. Interestingly, Morrisons has been seeing the fastest sales growth of the “big four” supermarkets as it benefited from new delivery services and its deepening partnership with Amazon. Unfortunately, Cineworld and Odeon ‘running out of cash’ (Daily Telegraph, Oliver Gill) shows that the world’s biggest two cinema operators could run out of cash by the end of this year. Cineworld is thought to be weeks from collapse whereas AMC Entertainment (which owns Odeon) could potentially last slightly longer, according to some analysts. Given that the list of films being booted into next year gets longer by the day I don’t see this improving any time soon. * SO WHAT? * It seems that everyone is making preparations to stock up under lockdown and hide away. This is terrible news for companies who rely on a constant flow of people and although movie studios can still use the “streaming” lifeline, cinemas have nothing in the locker as far as I’m concerned. The only way they will be able to survive is to accept outside money. I suspect hedge funds and private equity firms are licking their lips at the prospect of picking up such assets at potential fire sale prices.



Apple reveals, Amazon advances, JP Morgan surprises and Cornish Lithium attracts interest…

Apple bets on 5G to power ahead of rivals (Daily Telegraph, James Titcomb) highlights Apple’s reveal yesterday of four new phones priced between £699 to £1,399 featuring 5G tech as well as a £99 mini home speaker that will take the fight to Amazon and Google’s devices. The iPhone 12 series will be released between next Friday and November 13th. The phones will not come with earphones or charging plugs. Apple sows seeds of 5G future with ‘a new era’ for iPhone (Daily Telegraph, James Cook and James Titcomb) highlights the company’s hopes for a 5G future and I would say that if anyone can get people to buy into 5G, it’s Apple. * SO WHAT? * I think that the fact that the whole line-up has 5G capability with arguably more reasonable price points than in the past will give people reason to upgrade. Apple has also included AR features that will probably be of limited use now but will come into their own as time passes. I am expecting a huge uptick in iPhone sales.

Elsewhere, Amazon braces for winter demand surge with relentless expansion (Financial Times, Dave Lee) highlights the continuation of Amazon’s ambitious expansion plans, but also some of the issues it faces as it remains steadfast in its commitment to deliver in time for Christmas. In order to do that it has, so far grown its workforce by over 25% so far this year and continued its efforts to rely less on third parties to deliver on their behalf – with the expansion of its own airline Amazon Air being a

“prime” (sorry) example of this. All the while the company will continue efforts to expand the number of Prime members. In the US, Prime members will spend about $1,400 on the site versus non-Prime members spending $600 on average. * SO WHAT? * Amazon’s expansion into so many areas is incredible to behold, but the problem is that everyone else is going to get squeezed out if it is left to its own devices. I really think that it needs to be split up or restricted in some way before it gets too big and too powerful to stop – but will lawmakers and politicians have the stomach to take Amazon on?

JP Morgan profits rise in a quickfire recovery (The Times, James Dean) shows that America’s biggest bank has surprised the market by recovering more quickly than everyone expected from the lows of lockdown and it is now confident enough to set aside less money to cover the expected wave of loan defaults that will inevitably follow. * SO WHAT? * The company has a big consumer lending division and major trading, investment and corporate banking businesses which make it an economic bellwether that observers take a close interest in. However, JP Morgan: Holding pattern (Financial Times, Lex) says that the bank continues to be cautious about the future given the lack of obvious bank-friendly catalysts.

Then in Crowd of investors jump on Cornwall’s lithium bandwagon (The Times, Emily Gosden) we see that the start-up mining company Cornish Lithium has managed to raise £4m in a crowdfunding that was initially trying to raise £1.5m to finance ongoing work. This follows last month’s discovery of a “globally significant” grade of lithium in hot springs near Redruth. Given that lithium is a vital ingredient in batteries, this could obviously be huge for the region. Go Cornwall!



…in other news…

In these troubled times, some of us yearn for an escape to a more innocent past. Peppa Pig’s ‘front face’ is what ‘nightmares are made of’, say terrified fans (The Mirror, Paige Holland) gives us a view of Peppa that we’ve never seen before. If you found that too traumatic to take, I would recommend that you watch/listen to the sheer musical genius that is The Bing Bong Song. Once you have heard this, you know the world is just going to be OK (also, apologies, but you may well find yourself whistling or humming this song for the rest of the day 😂).

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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)