Wednesday 18/03/20

  1. In MACRO NEWS, the US and UK unveil new packages and we look at why the UK stepped-up
  2. In RETAIL NEWS, Amazon and Sainsbury’s start prioritising while Carphone Warehouse and Laura Ashley slip away
  3. In MANUFACTURING NEWS, US factories face coronavirus pressures
  4. In OTHER NEWS, I bring you some amazing virtual experiences…



So new economic packages are unveiled and we see why the UK stepped-up…

US ponders helicopter cash as Fed revives loan market (Daily Telegraph, Russell Lynch) highlights the real possibility that millions of Americans will be sent cheques for $1,000 to help them through the coronavirus crisis. This prospect of so-called “helicopter money” – a direct distribution of cash to the population – was brought up by Treasury secretary Steven Mnuchin as Donald Trump announced a $850bn package of measures to help with the coronavirus effort.

Then Rishi Sunak promises £350bn emergency rescue package for business (Financial Times, Jim Pickard, Sebastian Payne and Daniel Thomas) looks at the latest package unveiled by the new UK chancellor designed to give additional support to business and individuals over what he announced last week. Some of the highlights include a year’s break from business rates, grants of up to £25,000 for pubs and retailers and mortgage holidays for up to three months. If “Get Brexit done” was the conservative pre-election mantra, “We will do whatever it takes” (and its variations) was the message Sunak clearly wanted to get across yesterday. * SO WHAT? * No doubt there will be grumbles that some of this money is in the form of loans (not “helicopter cash”), but the chancellor was at pains to point out that this wasn’t the end of it and there could be more to come. In fact, when Labour shadow chancellor John McDonnell attacked the new package as forgetting renters, Sunak said that more measures would be announced “in the coming days”. I have to say that I think that the government is going to have to look at some form of direct payment to individuals in the very near future because people are just going to be running out of money. I think that it would be fair to say that many people go from month-to-month and don’t have the luxury of cash reserves

to cover such an unseen circumstance. If he doesn’t act quickly enough, he could start to face civil order problems.

Given the ongoing deluge of newsflow on the outbreak, I think it’s worth considering Coronavirus: why the UK stepped up its emergency response (Financial Times, Clive Cookson and Sebastian Payne) because there will be many people out there who will still have doubts in their mind about whether this is all overreaction. Yesterday heralded more “social distancing” guidance, but many are questioning why the government didn’t get more aggressive sooner. Well apparently, the government has been working with psychologists and behavioural scientists who have said that if strict social distancing measures were brought in too early, people might get bored with the restrictions and go back to their normal behaviour at the most crucial time for self-isolation. However, this has now changed as new medical and scientific evidence has pushed things into overdrive following a radical change in the NHS’ original projections for the spread that take into account the latest developments in Italy. UK measures are still pretty relaxed in comparison to other nations, but some people think we need to go further and ban all public gatherings and carry out much more testing – including priority testing for healthcare workers. And why are schools still open when many countries have shut theirs down? One reason is that there are concerns that closures may cut NHS capacity by forcing staff to stay at home to look after their children. I would have thought closures will come soon enough, though. One other thing I think is worth mentioning is South Korea’s apparent success at controlling the virus. You may recall that South Korea has been hit badly by the outbreak (in part, due to a religious cult actively trying to infect other people), well it has been said to be seeing success because it has an extensive testing programme, with over 270,000 people tested so far. Although the UK plans to increase testing, we’re only doing 10,000 tests a day and they are being prioritised (for those who are very ill) because of a current lack of testing kits. The drama continues…



Amazon and Sainsbury’s prioritise while Carphone Warhouse and Laura Ashley succumb…

Amazon stops accepting non-essential goods into warehouses (Financial Times, Dave Lee) highlights a change in strategy for the e-tailer as it is suspending shipments of all non-essential goods until at least April 5th in order to prioritise capacity for household essentials, medical supplies and other related high-demand products. The company said that it was changing its strategy due to a shortage of important household goods and was communicated to vendors yesterday. * SO WHAT? * This will result in a major fall in the number of third party goods being offered via Amazon’s Prime service and is likely to affect the vendors badly. When you consider that data from Superfly Insights showed that demand for hand sanitiser alone on Amazon shot up by 250% at the end of February/beginning of March, you can understand the need for prioritisation.

Sainsbury’s to close its meat, fish and pizza service counters to free up staff (The Guardian, Sarah Butler) shows that the supermarket is closing any extraneous areas, including its cafés, in order to allocate more staff to stock the shelves and ease deliveries (even head office staff have been drafted in to help at the stores). The closures will happen from tomorrow, but it will also bring into force today a limit of three items of any grocery product and two packs of items like toilet paper, soap and UHT milk. Chief exec Mike Coupe said in a letter to customers that “We have enough food coming into the system, but are limiting sales so that it stays on shelves for longer and can be bought by a large number of customers”. Other supermarket chains are expected to follow, although some already have restrictions in place. * SO WHAT? * It seems that it’s all hands to the pump at the moment as members of staff from HQs of all the major supermarkets

join the shopfloor workers to keep things going – Waitrose is even asking store workers to recommend friends and family who can help out as well. Currently, supplies of fresh produce are OK but there has been, rather unsurprisingly, an increase in demand as people switch away from shop-bought sandwiches and canteen lunches.

Elsewhere, Dixons Carphone to close 531 stores, with loss of 2,900 jobs (The Guardian, Sarah Butler and Julia Kollewe) highlights the closure of all of its standalone stores on 3rd April and its future focus on selling mobiles at its Currys PC World stores. * SO WHAT? * Hardly surprising as it had already been suffering from the lengthening mobile replacement cycle anyway. It’s difficult to tell how much the coronavirus factored into this decision, but you would have thought it would have at least hastened the process. Until now, I thought that this year could be a good year for mobile phone sales as 5G services are rolled out and new handsets are introduced to ride the wave, but now I wonder whether product launches will be delayed. If they are, then maybe sales won’t quite be where they could have been. After all, if you have had to work from home for three months with possibly less money coming in, are you going to want to pay $1,500 for an all-singing, all-dancing 5G phone?

In Laura Ashley calls in the administrator (The Times, Ashley Armstrong) we see that the coronavirus outbreak has become the last straw for the troubled fashion and homeware retailer as the company called in the administrators from PwC. It has 155 shops and employs 2,700 staff. Restructuring firms Hilco, Alteri and Gordon Brothers are said to be among those expressing an interest in the brand and its international business but it seems that no-one wants the British shops. * SO WHAT? * Good luck in finding a buyer for the shops against a nightmare retail backdrop and the coronavirus decimating footfall. This business has been suffering for some time and the coronavirus outbreak has provided the coup de grâce of what was once a sought-after brand. A sad demise, but not an unexpected one. Yet another gap for the high street…



Factories face tough dilemmas…

In manufacturing, Coronavirus pushes factories to stagger shifts, separate workers (Wall Street Journal, Austen Hufford and Bob Tita) looks at how the current epidemic is forcing manufacturers around the world to improvise in order to keep factories going. They are implementing measures like staggering shifts, banning visitors and putting barriers between workers to protect them from infection – but they are racing against time as more and more people get infected and have to stay at home. Stories like UAW presses auto makers to close US plants amid pandemic (Wall Street Journal, Mike Colias and Ben Foldy), where the United Auto Workers Union is pushing for

a two-week shutdown across the US and Sheriff quashes Elon Musk’s aim to keep Tesla production humming (Wall Street Journal, Tim Higgins) show the conflict between companies wanting to crank out product on the one hand and concern for worker welfare on the other. The Alameda County Sherriff ordered Tesla to cut production at its Fremont factory to “minimum basic operation only” after counties in the San Francisco area were ordered to close down non-essential businesses. * SO WHAT? * This is clearly a nightmare and shows that there are opposing forces of companies wanting to keep operations going (in order to survive!) and wider responsibilities towards the health of the nation. I guess that the latter is going to win, but the government needs manufacturing to survive so it will need massive injections of cash. The question is whether any injections will be enough.



And finally, in other news…

Given the increasing amount of social distancing we are all having to do at this time, I thought it would be a good idea to highlight some really great “virtual” experiences you can have whilst being stuck at home: All the virtual concerts, plays, museums and other culture you can enjoy from home (, AJ Willingham There are some amazing things in this!

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Some of today’s market, commodity & currency moves (as at 0724hrs 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 **
5,295 (+2.79%)2,403 (-4.99%)7,3358,939 (+2.25%)3,990 (+2.91%)16,727 (-1.68%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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