Wednesday 19/05/21

1. In MACRO, VACCINE & CRYPTO/CURRENCY NEWS, the Eurozone bounces back, the US and UK close in on inflation concerns, employment rises but there are shortages and there are coronavirus-related developments in India and Denmark while the pound strengthens and Bitcoin has a nightmare
2. In CAR NEWS, Stellantis teams up with Foxconn on software and JLR plans for the future
3. In INDIVIDUAL COMPANY NEWS, Amazon is thinking of buying MGM, the Eurostar gets rescued and a cannabis company considers a London listing
4. AND FINALLY, just to show I’m not exclusively a dog person, I thought I’d bring you a (sort of) cat cushion…

So the Eurozone recovers, inflation concerns rumble on either side of the Atlantic, employment rises, India and Denmark see contrasting coronavirus-related developments, sterling strengthens and Bitcoin craters…

Further to more upbeat economic forecasts from the European Commission last week, Eurozone shows signs of bouncing back from double-dip recession (Financial Times, Valentina Romei) highlights some high-frequency data indicators which back this up. Increases in the number of job ads, more travel to entertainment and leisure venues and a hike in holiday bookings all point to better economic times ahead after falling into a double-dip recession in Q1. Google Mobility data shows increasing numbers of trips to the shops and entertainment while consumer spending in Germany is also nearing pre-pandemic levels. Bookings on Airbnb, Vrbo and Booking.com are also all up. It seems that positive momentum is building as lockdowns ease…

Meanwhile, Larry Summers accuses Federal Reserve of ‘dangerous complacency’ over inflation (Financial Times, James Politi) reflects discomfort in some quarters about the Fed’s loose monetary stance and BoE on alert for signs of prolonged spike in inflation (Financial Times, Chris Giles) reflects similar concerns over here. * SO WHAT? * Leaders on both sides of the Atlantic reiterate their current stance on interest rates – that inflationary pressures in the upward direction will be short-lived – but, as I keep saying, I reckon that there will be an interest rate rise in the US and/or UK by the end of this year because momentum is gaining across the board and we seem to see data almost every day on increased spending. When you see stories like Staffing shortages pose a threat to hotels’ budding recovery (Wall Street Journal, Dave Sebastian) in the US and UK unemployment drops as firms hire amid Covid easing (The Guardian, Richard Partington) and Shortage of workers threatens recovery (Daily Telegraph, Russell Lynch) in the UK, you really would have thought that wages

are bound to rise in order to attract people (and potentially wean them off generous state benefits – especially in the US). And if THAT happens along with more people spending more money, surely it’s only a matter of time before the economy starts to overheat, necessitating interest rate rises.

Meanwhile, there’s a stark contrast between Indian vaccine maker extends freeze on export of Covid jabs (Financial Times, Stephanie Findlay and David Pilling), where the Serum Institute of India continues to batten down the hatches in the face of increased cases, announcing the extension of an export ban until the end of the year, and Denmark on brink of returning to pre-Covid normality (Financial Times, Richard Milne) which signal’s Denmark’s almost complete reopening this Friday as it phases out its domestic coronavirus passport and face-mask usage. The only places that will remain closed will be nightclubs!

Then in currencies, Pound lifted by signs of job recovery (The Times, Gurpreet Narwan) shows that optimism about accelerating momentum in the British economy is boosting the value of sterling (useful, I guess, if you are going on holidays now!) as it hit a three-month high against the dollar but there’s bad news for cryptocurrency fans in Bitcoin’s obstacles mount amid China cryptocurrency warning (Bloomberg.com) which says that Bitcoin – and other cryptocurrencies – were hit by news that the People’s Bank of China issued a statement reiterating its position that digital tokens will continue not to be recognised as a form of payment. * SO WHAT? * This is just a continuation of the stance it started to take in 2017 when it abolished Initial Coin Offerings (ICOs) and really cracked down on virtual currency trading within its borders – quite a turnaround considering that it once accounted for about 90% of cryptocurrency trades. Some chartists (these are people who JUST look at charts and notice patterns – it’s quite interesting, but some people liken it to reading tea leaves 😂) are saying that it could drop down to $30,000. Interestingly, the country is currently nurturing its own digital yuan – so will other central banks take heart and continue to turn their talk of central bank digital currencies into something real?

Stellantis teams up with Foxconn and JLR looks to the future…

Jeep maker Stellantis teams up with Foxconn on in-car software (Wall Street Journal, Nick Kostov) highlights a very interesting development where the maker of Chrysler and Jeep brands and the company famed for assembling iPhones, Foxconn, are getting together to accelerate the development of in-car software. This will be a 50-50 joint venture called Mobile Drive, will focus on software used in dashboards and other online services and will sell its software to other car makers. * SO WHAT? * I think that this is really interesting given Foxconn’s recent announcement of its foray into making EV platforms and I wonder whether this JV will extend to cover this area. There is a race among auto makers to compete with the

likes of Google and Apple regarding the control of the dashboard display and other in-car features, so this should stoke things up quite nicely. You would have thought Apple would team up with Foxconn on this, but then again it’s not a bad thing to diversify your client base.

In Jaguar Land Rover eyes £3bn profit within five years (The Times, Robert Lea), there’s something for everyone. For the optimists, there’s news of positive sales momentum in China and its bullish profit forecasts, but there’s also plenty for the pessimists too. China was the only country which showed growth and one-off costs associated with its redundancy programme and its now-abandoned attempt to turn its XJ executive car into an EV also hit hard. * SO WHAT? * I think that JLR has commendable ambition to go fully electric by 2025, but I really don’t know how they are going to do it in time given their relative lack of EVs at the current time!

Amazon considers buying MGM, Eurostar gets rescued and a cannabis company plans a London listing…

Amazon in talks to buy MGM for $9bn (Financial Times, Anna Nicolaou, James Fontanella-Khan and Dave Lee) is a pretty eye-catching headline today isn’t it! Apparently, the e-tailing behemoth is looking to buy the studio behind the James Bond franchise, among other things. Just to put this into perspective, Amazon spent $11bn on making, buying or licencing music and video content for Prime subscribers last year and it has also been shopping for sports content as well, including a $1bn a year deal with the NFL. Amazon/MGM: need for compelling content justifies splashing the cash (Financial Times, Lex) says that this is going to be expensive, but Amazon has got tons of cash and can afford it in order to bulk up its film and TV operations. * SO WHAT? * There’s never a dull moment in streaming wars now is there! I have said this before, but I think that Amazon is justified in buying in good quality content like this because to them a subscriber doesn’t just mean an extra $10-15 or so a month – Prime Subscribers are worth way more than that because they will probably SHOP with Amazon as well, spending way more money. I think that we are going to reach streaming fatigue at some point in the future and Prime is going to be the one that is least likely to be ditched IMO because it provides so much more. The pressure on Disney+ and Netflix continues.

Another big story doing the rounds this morning is Eurostar gets £250m refinancing deal to manage Covid impact (The Guardian), which shows that the intercontinental train just got rescued by its shareholders and banks. It is 55% owned by France’s SNCF, 40% by the Patina Rail Consortium (made up of some investment firms) and 5% by Belgium’s SNCB. The UK government sold its stake in Eurostar back in 2015 and Eurostar rescued as the French government bows to British demands (Daily Telegraph, Oliver Gill) highlights the UK’s reluctance to get involved in the refinancing. * SO WHAT? * I think that, now the refinancing has been sorted, Eurostar could potentially do quite well as an alternative to the current faff of flying. Still, the lack of business trips could hit it in the short term I would have thought.

Then in Start-up focused on painkilling effects of cannabis to list in London (Financial Times, Clive Cookson) we see that biotech company Oxford Cannabinoid Technologies has announced plans to float on the London Stock Market this Friday. It aims to raise £16.5m from the IPO, which is massively oversubscribed (i.e. extremely popular with investors). It will use the money to prepare its two most promising drug candidates for clinical trials in Q3 of 2022. Will this result in more medicinal cannabis companies listing in London following the FCA’s decision last autumn to change its rules on the listing of such companies I wonder?

…in other news…

Although many people have bought pets under lockdown, not everyone has been able to do so. For those who can’t but sort of want one without the hassle, here is a bizarre alternative: Can’t have a pet in your home? This purring cat cushion is the purr-fect substitute (SoraNews24, Dale Roll). This is very weird…