Wednesday 28/04/21

  1. In PROPERTY NEWS, the City plans new homes, rents in the ‘burbs rise and IWG talks a good game
  2. In RETAIL NEWS, online shopping loses momentum and Waitrose deepens the relationship with Deliveroo
  3. In CAR NEWS, Tesla’s performance looks shakier under the hood and Lotus goes electric
  4. In INDIVIDUAL COMPANY NEWS, Maersk’s profit guidance doubles, BP’s Q1 earnings triple, Microsoft and Google rake it in and Crocs make a comeback
  5. AND FINALLY, I thought I’d leave you with iron-flavoured ice cream and bad interview answers…



So the City commits to some residential, IWG reckons it’s past the worst and young people return to London as rents slide…

📢 I’m doing a roundup of the business and financial markets for April TONIGHT. If you want to participate in this month’s roundup with me and Jake Schogger of the Commercial Law Academy, please register on THIS LINK. If you haven’t been before, this is where I summarise the month and Jake Schogger gives you the legal spin on it. You don’t have to be a lawyer to participate! It would be great to see you there!

In City of London plans to build 1,500 homes and ban cars (Daily Telegraph, Simon Foy) we see that the City of London is looking to convert empty office space into 1,500 homes and is also thinking about banning cars from the Square Mile on weekends! It is also thinking about offering low-cost, long-term leases in vacant buildings and providing cultural and exercise spaces for the public. The new residential units will be a mix of new and converted-old buildings by 2030. This may potentially be quite attractive if the current trend identified in Exodus drives rents outside London to six-year high (Daily Telegraph, Rachel Mortimer) continues as London’s rents have returned to the levels of five years ago, according to data

from Rightmove. New lease of life: young renters lured back to the heart of London (Financial Times, Alexandra Goss) shows that this trend of falling London rents and rising suburban rents means that younger people (who are still in work!) are being offered the opportunity of living in the city once more. Interestingly, according to data from flatsharing website Ideal Flatmate, search volumes for flat shares in Zone 1 for the first two weeks of April were 47% higher than the entirety of February!

Meanwhile, on the subject of office property, IWG says demand for office space rising as UK companies plan for hybrid working (The Guardian, Joanna Partridge) cites IWG chief exec Mark Dixon as being particularly bullish about the future due to the previous generally-accepted work model evolving to a hybrid work/home model. It said that occupancy rates and tenancy retention is improving to the extent that it is considering raising prices! * SO WHAT? * I must say I find this really hard to believe. OK, so I can get my head around higher demand for suburban office locations and workers having access to satellite offices, but the sheer amount of space that is coming online in London in particular is surely going to mean depressed rents and demand for quite some time yet. Also, what about all those department stores in city centres that are potentially being converted to offices/mixed use?? Although the company has made a right song and dance about some impressive recent deals, overall I think that Dixon is just talking up the market – and you can’t blame him. He’s like the rental office version of Ryanair’s Michael O’Leary 😂.



Online shopping loses momentum and Waitrose goes further with Deliveroo…

Perhaps unsurprisingly, Online shopping slips as Britons return to streets after lockdown (The Times, Gurpreet Narwan) cites the latest data from Kantar which shows that shoppers are venturing out to shop as lockdowns lift and spending less online. The number of supermarket visits were up by 4% between March and April and it was the busiest month for supermarkets in over a year! Interestingly, older shoppers accounted for almost half of the increase in footfall as more people get vaccinated and those people are spending more in-store. Online orders accounted for 13.9% of the average grocery spend versus 15.4% in February. I would imagine that this trend will continue for a while longer.

Waitrose to expand its partnership with Deliveroo (Daily Telegraph, Laura Onita) shows that Waitrose is about to expand the delivery partnership that it has with Deliveroo from 40 to 150 shops by the end of summer and new jobs will be created in-store to help to pick and pack the orders. Customers will be able to pick from a range of 750 to 1,000 products and get them delivered in about 20 minutes. * SO WHAT? * This sounds just great, but comes at a time when online grocery shopping is losing momentum (as per the previous article). Mind you, Waitrose’s own delivery option has been pretty useless so the prospect of getting groceries in 20 minutes sounds quite exciting (yes, I need to get out more – but hey, Covid and all that 😁). It has to make up the ground it lost when Ocado went to M&S. This does sound like a rather expensive undertaking to me but I hope it works.



We take a look under the hood of Tesla’s results and see that Lotus is going electric…

Tesla: bitcoin and credits drive profits at electric car company (Financial Times, Lex) follows on from what I said yesterday about Tesla’s record quarterly earnings and points out that Tesla’s profits don’t really come from actual car sales as such. Although it is selling more cars, it is having to cut prices in order to compete in tight markets. Its net income of $438m in Q1, for instance, was supported by cryptocurrency trades where it made about $101m from selling about 10% of the $1.5bn bitcoins it bought in February. If you then add in emissions credits sold to other car companies so they can hit their environmental targets and Tesla’s increased overheads and price cuts – and its focus on an increasingly tricky China, things do look a bit on the shaky side. * SO WHAT? * Is Tesla’s situation likely to improve short-term? Probably not. There is a danger that income from emissions credits will keep falling as rival car manufacturers get on with electrifying their fleet and

making more attractive models, Tesla’s costs keep rising, bitcoin continues its unpredictable run (well unless Elon Musk sends out a supportive Tweet 😂) and China continues to chip away at Tesla’s credibility. FWIW I think that Tesla needs to make better inroads into more markets to mitigate any potential China shocks.

Then in Lotus plans to build electric car plant in UK (Daily Telegraph, James Cook) we see that the British carmaker is planning to build electric sports cars in the UK with a £2.5bn investment designed to boost sales tenfold. It will hire 250 staff to add to its Norfolk base where 1,500 are currently employed. This is all part of a turnaround plan put together by owners Geely and Etika Automotive. Lotus is planning on unveiling its last ICE sports car, the Lotus Emira, on July 6th and then go fully electric on production. * SO WHAT? * This sounds like a very positive move and marks a change in direction after years of under-investment. Let’s hope it goes well. I would have thought that sales of its last ever ICE car will be pretty stellar as well unless it is absolutely butt-ugly (which I’m sure it won’t be)!



Maersk gets positive, BP rakes it in – as do Microsoft and Google – and Crocs make a comeback…

In other news, Maersk doubles profit guidance for 2021 as Suez disruption pushes up prices (Financial Times, Richard Milne) shows that the share price of the world’s biggest container shipping group strengthened as it said that its profits were likely to double for the year due to the logjam caused by the recent Suez Canal blockage leading to increased prices. * SO WHAT? * It’s always interesting to hear what Maersk has to say because it is seen as a bellwether of global trade as it moves about 20% of all global seaborne freight. Freight rates have gone sky-high due to a shortage of containers – and this was made even worse by the Suez Canal blockage.

BP’s quarterly profit hits $3.3bn as oil price rebounds (The Guardian, Jillian Ambrose) highlights the strongest quarterly performance from the company since the

pandemic hit – so strong, in fact, that it plans to give investors a £500 cash windfall in the form of a share buy-back. A lot of this was due to the recovery in oil prices, but gas marketing and trading were also strong areas.

The feelgood continues in Tech titans Microsoft and Google boast profits surge (Daily Telegraph, James Titcomb and Margi Murphy) as both tech giants reported booming profits. Google had its strongest sales growth for almost nine years and Microsoft benefited from more customers using its services under lockdown. Gaming revenues grew by a whopping 40% while revenues from Office 365 grew by a very healthy 21%. The march to tech supremacy goes on!

Then in Those home comforts boost Crocs (The Times, Callum Jones) we see that the maker of the foam footwear saw a 17% jump in its share price yesterday as it announced a massive 63.6% rise in sales in Q1 as people wore their plastic clogs at home without fear of ridicule from the fashion police 😁. The company added that it expected 40-50% revenue growth for the year. Nice!


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Some of today’s market, commodity & currency moves (as at 0722hrs 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 **
6,945 (-0.26%)33,981.57 (-0.18%)4,187.62 (+0.18%)14,138.78 (+0.87%)15,249 (-0.31%)6,274 (-0.03%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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