WEEKLY FAYRE – Monday, 28th September 2020

September 28, 2020

To Autumn

“Season of mists and mellow fruitfulness,
Close bosom-friend of the maturing sun;
Conspiring with him how to load and bless
With fruit the vines that round the thatch-eves run;
To bend with apples the moss’d cottage-trees,
And fill all fruit with ripeness to the core;
To swell the gourd, and plump the hazel shells
With a sweet kernel; to set budding more,
And still more, later flowers for the bees,
Until they think warm days will never cease,
For summer has o’er-brimm’d their clammy cells.

Who hath not seen thee oft amid thy store?
Sometimes whoever seeks abroad may find
Thee sitting careless on a granary floor,
Thy hair soft-lifted by the winnowing wind;
Or on a half-reap’d furrow sound asleep,
Drowsed with the fume of poppies, while thy hook
Spares the next swath and all its twined flowers:
And sometimes like a gleaner thou dost keep
Steady thy laden head across a brook;
Or by a cider-press, with patient look,
Thou watchest the last oozings, hours by hours.

Where are the songs of Spring? Ay, where are they?
Think not of them, thou hast thy music too, –
While barred clouds bloom the soft-dying day,
And touch the stubble-plains with rosy hue;
Then in a wailful choir the small gnats mourn
Among the river sallows, borne aloft
Or sinking as the light wind lives or dies;
And full-grown lambs loud bleat from hilly bourn;
Hedge-crickets sing; and now with treble soft
The redbreast whistles from a garden-croft,
And gathering swallows twitter in the skies


John Keats – poet – 1795-1821


Last Thursday, when Chancellor Sunak delivered his fresh financial package to replace the job retention scheme at the end of October, his body language suggested the Cabinet was almost certainly not singing from the same hymn sheet in tackling the threat of a potential spike in Covid-19. PM Johnson is clearly fearful of the scientific and medical advice and threats, whereas Rishi Sunak made it clear that the country needed to be brave and learn to live with Covid-19. In round figures the measures he offered in his ‘job support scheme’ probably had a £5 billion price tag, with the Government already having spent £190 billion bolstering up the economy over the past 6 months. In the same breath, by further shutting down the economy with curfews and restricting the size of gatherings, the Government was potentially cutting the economy by about £40 billion, which is about 2% of GDP, according to some respected economists.

The distinguished economist, Dr Gerard Lyons, writing in the Spectator this week said – “ The Chancellor addressed the immediate need to bridge the gap between the ending of existing support and the hoped for return to normal of the economy next spring. But, both on Thursday and in cancelling the Budget, he has avoided addressing the issue of affordability.”

Dr Lyons poignantly pointed out – “The UK needs to avoid now the triple policy whammy of a national lockdown, negative interest rates and a tax bombshell. None of these would help. This week our independent Bank of England did not feel constrained about opining on fiscal matters and the need to provide further assistance to those sectors in difficulty. It is a point I have been stressing for some time. But it begs the question as to what else the Bank should be doing to ensure monetary and financial stability and to support the economic agenda?”

Dr Lyons believes the economy could recover by the end of 2021, but it could come at a price – high unemployment. This could absorb much of the policy oxygen of Downing Street. The temptation is to say this will highlight the need for skills and training. Let me throw my ‘two penny-worth’ into the mix – any further shut down of the economy would surely take a terrible toll on the economy and society.



21stSeptember ‘20

25thSeptember ‘20

% Loss/Gain

















S&P 500




















ASX 200





As the weeks go by, with US Congress failing to agree President Trump’s $1.2 billion stimulus package, economists and investors are slightly in fear that the promised ‘V-shaped’ recovery might start to change shape into a ‘U’! This was reflected in a loss of confidence in equities in the middle of the week and it also stirred the redoubtable JP Morgan into action, in stating that it might feel obliged to cut its growth target for the US economy. JP Morgan forecasts a cut from 3.5% to 2.5% in the fourth quarter of 2020 but maintains a 2.3% year-on-year growth in 2021, after a 4.2% decline in gross domestic product this year. The celebrated Wall Street titan also felt obliged to get involved in the BREXIT spat, by announcing the departure of 200 staff to Frankfurt to be almost certainly accompanied by $200 billion of assets, with a view to having direct access to EU based business through a new subsidiary. Good luck in the event, as Frankfurt is a modest financial centre in comparison to London. JP Morgan employs 12000 in London. I still maintain all is not dead on the BREXIT negotiation front. Nil desperandum! - Brinkmanship continues to prevail!

The IHS Markit PMIS for UK, US, and EU for last month were also starting to show signs of an economic slowdown. The Labor Department reported on Thursday that initial jobless claims for the week ending 19th September came in at 870,000, adjusted for seasonal fluctuations. This further frustrated the Fed, which continues to argue with Congress the need for an agreement to a further economic stimulus package to be implemented forthwith. Finally, on the economic front, UK Government borrowed £35.9 billion in August 2020 - the third highest amount in a month ever recorded. The total borrowing for the year will be £250 billion plus, with total debt amounting to £2 trillion, less the Bank of England’s holding of Gilts. These are eye-watering levels of debt. The 'kissing has to stop!', but not for a year. "Don't throw the baby out with the bathwater!" Let us start to recover first! Car production was down 44% in August, with only 51,000 vehicles leaving the factories.

As can be seen from the table above most markets struggled thanks to the spike in Covid-19, concern about earnings, the threat of massive unemployment and the inability of Congress to agree the $1.2 trillion stimulus package. However, towards the end of the week the NASDAQ and S&P 500 tried valiantly to redress the correction of the ‘sell-off’ earlier in the week with some degree of success. In the UK the painful BREXIT negotiations, with a ‘no-deal’ scenario far from ruled out, together with a downbeat reaction to further Covid curbs, took their toll on the FTSE 100.

Microsoft agreed to pay $7.5 billion to acquire ZeniMax Media and its game publisher Bethesda Softworks. This deal was perceived as good news, in the wake of Microsoft shareholders failing to co-acquire TikTok with Walmart last week. It will give Microsoft a bigger piece of a large computer game market. Oracle was deemed to be a suitable candidate by President Trump to acquire the US assets of Tik-Tok. Nike posted ‘blow-out’ sales on Thursday with on-line sales up a staggering 82%. Some US discount retailers such as Ross Stores and T.J. Maxx struggled to re-create their treasure-hunt shopping experiences online. Elon Musk’s ‘battery day’ was not an unqualified success, as investors were not wholly convinced that Tesla could produce a battery with greater strength, in the3-year time frame suggested. Also, to increase the production of cars retailing at a significantly cheaper price (circa $20,000) seemed a touch fanciful. Tesla shares dipped 7%, but not to worry, they are up over 360% since the turn of the year.

Now to deal with business stories associated with ‘Old Blighty’ – Sadly, few brought tidings of great joy, but there were some that did. On Monday HSBC was vilified for allegations of further money-laundering, with fraudsters moving millions of Dollars around involving New York, London, and Hong Kong. The irregularities (SARS) were reported to the FCA but there was little evidence of a ‘follow up.’ This news followed in the wake of a $1.9 billion fine imposed in the US on the ‘Local Bank’ back in 2012 under Stuart Gulliver’s stewardship. It cost David Bagley, the head of compliance, his job.

Whitbread put 6000 people on notice that their jobs at Premier Inn could go. JD Wetherspoon are likely to make 1000 people redundant. This I fear, is the tip of the iceberg, once the furlough scheme ends at the end of October. ARM Holdings, owned by Softbank since 2016, is to be sold to Nvidia for $30 billion. It is hoped that a commitment from the Californian software titan will guaranty the 3000 jobs in Cambridge as well as expand the operation. We do not want a repetition of Kraft’s Irene Rosenfeld’s false promises made to Cadbury Schweppes back in 2012. Splendid trading statements were posted by DFS furniture (household furniture sales up by 39% in September) and Pets at Home, which posted a double-digit growth in the last quarter which saw its share price rise by 27.8% on Thursday. There has been a temporary delay in the US’s FDA approving Astra Zeneca’s and Oxford’s vaccine. Hope, however, springs eternal.

M&B sales the year to the 19th September 2020 were down 35.4%. However, 95% of its 1700 hostelries are now open. The owners of Toby Carvery, O’Neill’s and All-Bar-One have found the going challenging. Cineworld posted dire numbers – a loss of £1.3 billion against a profit of £139 million last year. The company cancelled its $2.8 billion controversial bid for Cineplex of Canada. Fresh banking covenants and funding are being negotiated. 561 out of the 778 cinemas are now open.

Last week it was confirmed that Unilever, which enjoys a staggering array of brands in its portfolio, including Domestos, Dove, Persil, Ben & Jerry’s, Knorr, Marmite, Bovril, Surf, Coleman’s and PG Tips, confirmed that the Anglo-Dutch conglomerate would have its head office in London. This is an excellent outcome for the UK and ‘hats off’ to CEO Alan Juppe.

There were signs of anxiety coming from representatives from easyJet that the company was ‘hanging by a thread’. Though the share price has fallen by 66% since the start of the year, the share capital is still worth £2.2 billion. The company is purported to be haemorrhaging money and 75% of the pilots are working part-time, the company having laid off 4500 staff. Boohoo’s management apparently knew about the ‘low-paid’ staff working in unacceptable conditions in some Leicester factories, which the company did not own. This evidence was posted in a 234-page review. Boohoo’s shares bounced 15.4% on Friday, triggered by management promising to make sure conditions are improved.

Caesar Entertainment – a merger between Eldorado and Caesar – in conjunction with Apollo have made an audacious £3 billion bid for bookmakers William Hill. Hills used to be UK largest bookmaker but are now only a one fifth the size of Flutter (valued at £19 billion Paddy Power & Betfair). However, it has a presence in the US. Wm Hill has 1400 betting shops and an ‘on-line’ presence. Caesar has 57 properties including 7 casinos in the UK. Wm Hill shares were up 43% on Friday. The synergy of the 2 operations seems to justify the interest.

The Sunday Times tells us that Sir Philip Green has appointed BNP Paribas to dispose of Corinthian House in Tottenham Court Road for circa £80 million. France is concerned about the UK government’s financing of nuclear power, having lost Hitachi’s patronage. Walmart will make its decision as to who will buy ASDA. It appears to be down to Apollo or TDR Capital.

UK companies posting interim results this week – Monday – Cairn Energy, Ferguson, Tuesday – Card Factory, AA, Wednesday – 888 Holdings, Boohoo, Thursday – Burford Capital

US Companies posting interim results this week – Monday – Manchester United Tuesday – Micron Technology, Thursday – Bed, Bath & Beyond, Conagra, Constellation Brands, PepsiCo

Economic data to be posted this coming week – Tuesday – Bank of England Consumer Credit & Mortgage Approvals, US Goods Trade Balances and Wholesale Inventories, Wednesday – UK 2nd Quarter GDP Final (EST: -20.4%, Y/O/Y 21.7%), UK Business Investment, Nationwide House Prices,, BoE Haldane Speech, US MBA Mortgage Applications, US GDP 2ndquarter Final (EST: -33%), US Chicago PMI, US Pending Home Sales, Thursday – Japan Tankan Survey, US Initial Jobless Claims, US Construction Spending, UK PMI Manufacturing, US PMI Manufacturing, US ISM Manufacturing, Friday – US Non-Farm Payrolls (EST:+915k), Unemployment rate (EST: 8.3%), US Hourly earnings (EST: 4.6% Y/O/Y), US Michigan Consumer Confidence