Wednesday 25/03/20

  1. In MARKETS, MACRO & CORONOVIRUS MEASURES NEWS, markets rise and we look at the latest responses from China, Trump, Putin and Sunak
  2. In GROCERY-RELATED NEWS, food service companies are roped in, better weather helps UK farmers, grocers continue to hire and Aldi staff are given a bonus
  3. In CORONAVIRUS “WINNERS” , we take a look across the spectrum
  4. In OTHER NEWS, I bring you what some people are doing under lockdown…



So markets rise while China, Trump, Putin and Sunak have varied responses to the crisis…

Dow soars more than 11% in biggest one-day jump since 1933 (Wall Street Journal, Alexander Osipovich, Caitlin Ostroff and Joanne Chiu) highlights the market response to signs that lawmakers were closing in on a massive coronavirus bailout package and just an hour ago, White House, reaches deal with lawmakers on $2trillion coronavirus stimulus bill deal (Wall Street Journal, Joshua Jamerson and Andrew Duehren) shows that a deal has been secured. I don’t know what the details of it are right now, but if it goes beyond expectations there will be further strengthening in the market but if it’s deemed to fall short, I would imagine yesterday’s gains would be wiped out and then some. US boost hopes trigger biggest one-day FTSE rise since 2008 (Daily Telegraph, Louis Ashworth) highlights big gains in the UK markets yesterday before a deal was reached so again, if it’s deemed to exceed expectations there will be another ramp up today, but if it falls short, I’d expect most (if not all) of the gains to be lost. The devil will be in the detail! Let’s hope it’s good – it seems that central banks will be running out of ammo…

Responses to the ongoing outbreak differ around the world. China to ease coronavirus restrictions on Hubei province (Financial Times, Tom Mitchell, Xinning Liu and Nian Liu) shows that there is potentially light at the end of the tunnel as travel restrictions in and out of Hubei are being relaxed from today (although Wuhan will keep current restrictions until April 8th); The cure’s not worth it, says Trump as he plans to reopen US by Easter (Daily Telegraph, James Titcomb) shows that the US president is keen to get things back to normal, even suggesting that the economy could reopen by Easter, April 12th and that people could return to work with the right precautions; Russian official questions Vladimir Putin’s coronavirus data (Financial Times, Henry Foy and Max Seddon) shows that Moscow’s mayor, Sergei Sobyanin, is casting doubt on Putin’s rather downbeat assessment of the coronavirus as he believes that the government’s official data is lowballing the number of coronavirus cases; and UK chancellor Rishi Sunak is clearly managing down expectations in UK chancellor: ‘We won’t be able to save every business’ (Financial Times, Chris Giles, Jim Pickard and Daniel Thomas) as he continues to try to cobble together a rescue package for the self-employed – and UK airlines and airports told not to expect sector bailout (The Guardian, Gwyn Topham), following calls from the industry for outside help as the International Air Transport Association (IATA) doubled its worst-case scenario figures from a fortnight ago.



Food service companies switch customers, farmers get planting, grocers continue to hire and Aldi staff get a bonus…

Food service groups enlisted to assist the vulnerable (Financial Times, Jonathan Eley and Laura Hughes) shows that the government is about to enlist the help of food service companies to put together and distribute groceries for vulnerable people who are self-isolating. Companies such as Brakes and Bidfood normally supply food in bulk to caterers, but given that cafés, pubs, restaurants, hotels and canteens have shut down and they still have a ton of product. The Department for the Environment, Food and Rural Affairs is putting together a scheme that will prioritise food deliveries to some of the 1.5m people classified as being vulnerable. The scheme isn’t yet finalised but it could be overseen by council and NHS representatives and delivered by the armed forces. * SO WHAT? * This is potentially great news and will give a lot of people hope. It really is quite something to see how organisations and companies are all trying to work together for the general good, don’t you think?

After the floods, a rainbow for farmers (The Times, Philip Aldrick) heralds more good news as this week’s better weather means that many of the UK’s farmers, who had suffered recently with flooded fields from a ridiculously wet February, are now able to do some spring planting. * SO WHAT? * Some farmers will still suffer, but at least that this means that the harvest won’t be a complete dead loss. Let’s hope that the weather holds.

Grocers launch big hiring sprees as coronavirus spurs demand (Financial Times, Alistair Gray and Jamie Smyth) highlights the grocery retailer bonanza as both online and

offline retailers are hiring like crazy to cope with the huge demand as customers continue to buy like there’s no tomorrow. I’ve already mentioned in past editions of Watson’s Daily Walmart’s plans to hire 150,000 extra staff, Amazon hiring of 100,000 and now Instacart, the grocery delivery service, says it is looking for an eye-watering 300,000 extra employees. Companies are seeing a deluge of applications and are working hard to fast-track inductions. Australian supermarket Coles saw 36,000 applications for 5,000 casual employees last week and CVS, the US drugstore chain, is looking to fill 50,000 positions immediately. * SO WHAT? * No-one could have foreseen this only a few months ago. Supermarkets have gone from being boringly essential to potentially the saviours of society! Clearly, many of these roles will be temporary/contract in nature but when this coronavirus thing calms down, supermarkets will have learned A LOT about their customers. I would expect the UK incumbents to use the extra money they’ve earned over this period to upgrade their delivery networks and capabilities while Aldi and Lidl will either have to significantly up their commitment to it or pay through the nose to try and get on board with Ocado or maybe even Amazon. Alternatively, they may just avoid delivery all together and put their money into lower prices or other initiatives – but I think that putting money into delivery is more likely.

Talking about Aldi, Aldi staff to be given 10pc bonus after tireless work (Daily Telegraph, Laura Onita) highlights the German discounter’s gratefulness towards their staff as they announce a 10% bonus (cynics will say that this is possibly a sweetener to stop them from going to rivals). The award will be backdated to March 9th and it has also cut its hours to 8am-8pm Monday to Saturday to give staff a rest and allow for restocking. * SO WHAT? * Tesco announced a similar bonus last week. From a human aspect this is great, but from a commercial aspect, treating staff well will be key to keeping them as EVERYONE is hiring and will continue to hire for a while yet.



I take you from the virtuous to the dubious in this list…

Let’s start on a positive note! How the viral app Houseparty is entertaining a generation in lockdown (Financial Times, Hannah Murphy) shows that viral video chat app Houseparty’s popularity is booming as millions of people stay home but want to keep in touch with friends. It is seeing a massive uptick in users from youngsters and their parents alike and the app’s developer, Epic Games (of Fortnite fame), said that it got 2m downloads worldwide last week alone! It is now #1 in the UK app store in 17 countries! If this is a more casual thing, Video apps: rising chatter (Financial Times, Lex) also mentions Zoom as a huge beneficiary of the current situation as more people work from home. * SO WHAT? * I think that Houseparty is a VERY interesting prospect as it touts itself as a more socially responsible alternative to Facebook. Epic Games bought it last June and has a LOT of money to chuck around – so expect more features and more games to get more people hooked. On the other hand, Zoom’s share price has doubled so far this year and expectations are high and I would say that there is a risk that the interest is fleeting and that many free subscribers won’t convert to paying ones. However, enforced video chat may make something that was a relative rarity into something much more commonplace. Coronavirus may well have created a more permanent demand for video conferencing.

Keeping on the positive, Facebook usage soars, but online advertising plunges (Wall Street Journal, Jeff Horwitz and Suzanne Vranica) shows that although the company is seeing a 50% increase in traffic across its apps, online advertising revenues are likely to take a drubbing as budgets are hit across virtually all companies. (As an aside, Facebook eyes multibillion-dollar stake in Reliance Jio (Financial Times, Anjli Raval, Tim Bradshaw and Benjamin Parkin) heralds a preliminary deal for the former to take a

10% stake in the latter to give Facebook a foothold in the Indian markets). Nike says digital orders offset damage to retail from coronavirus (Wall Street Journal, Khadeeja Safdar) shows that there may well be hope for some retailers post-coronavirus as Nike said that it was able to offset the majority of its lost retail sales with online orders and Punters stuck at home bet on 888 to break boredom (The Times, Dominic Walsh) shows that the share price of 888 shot up by 31.7% as it announced a strong performance. It is benefiting from a relatively low exposure to sports betting (which has been a massive growth area for others, but which has also been hit by the unprecedented levels of event cancellations) and increasing interest in online poker, which had been in decline, as punters confined to their abodes try to beat the boredom by gambling. * SO WHAT? * I think the rise in Facebook usage is unsurprising and Nike’s news is pretty interesting given that it could give other retailers hope. I’m a bit more circumspect on 888 though because I would imagine that the government will be keen not to let gamblers slide into old habits in a bid to “earn” money. OK, so playing online poker initially may provide cheap distraction for a while, but the danger is that it lures people into betting on a larger scale and I expect that the government will want to keep a lid on that.

Going down the dodgier end of the scale, but still staying with “winners”, Gilead criticised over ‘orphan status’ for potential virus treatment (Financial Times, Donato Paolo Mancini) shows that the US drugmaker is being accused of being greedy as it applied for “orphan status” under legislation that will give it exclusivity on sales and the ability to set prices for its remdesivir treatment for seven years. Critics say that this would give the company a virtual monopoly in the potential coronavirus treatment. Ooh, nasty. Then Sports Direct hikes prices of some goods by 50pc (Daily Telegraph, Simon Foy and Laura Onita) highlights bad news for home exercisers as it seems that Mike Ashley is trying to cash in on demand. Understandable, but morally questionable…



And finally, in other news…

I thought you might be interested in what some people are getting up to in the lockdown, so for those who like to party, there’s Don’t stop the music: DJ hosts 10-hour Instagram dance party (AFP However, for those who want to do something a bit braver, how about Woman uses isolation to call exes asking ‘what went wrong’ – replies are telling (The Mirror, Paige Holland This sounds very risky to me!

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Some of today’s market, commodity & currency moves (as at 0737hrs 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 **
5,446 (+9.05%)7,4189,701 (+10.98%)4,199 (+7.63%)19,547 (+8.04%)2,782 (+2.17%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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