WEEKLY FAYRE – Monday, 30th November 2020

November 30, 2020

I wish I could remember that first day,

First hour, first moment of your meeting me,

If bright or dim the season, it might be

Summer or Winter for aught I can say;

So unrecorded did it slip away,

So blind was I to see and to foresee,

So dull to mark the budding of my tree

That would not blossom yet for many a May.

If only I could recollect it, such

A day of days! I let it come and go

As traceless as a thaw of bygone snow;

It seemed to mean so little, meant so much;

If only now I could recall that touch,

First touch of hand in hand – Did one but know!”


Christina Rossetti – poet – 1830-1894


Quite a few senior members of the Biden administration are hardly in their prime – Biden 77, Kerry 76 and Yellen 74, However, they also have one or two youthful members, such as Anthony Blinken, who is but a mere youth at 58 years of age. The Franco-American Secretary of State Elect has really 'put the boot into' our so called former 'special relationship.' He described Brexit as a 'total mess': “This is not just the dog that caught the car, this is the dog that caught the car and the car goes into reverse and runs over the dog.” Dix points pour diplomatie et C'est la vie ou peut-etre, C'est La Guerre! A pity, as Mr Blinken may just need our help in terms of security in the years to come as we need the US’ cooperation. So, a little ‘entente-cordiale’ might be the order of the day!

Talking of BREXIT, with only a month to go, the silence over negotiations remains deafening, despite the spiteful briefing both sides continue to indulge in. Frankly, with both the EU and the UK in a parlous position economically, a deal, though likely to be watered down, is essential in the circumstances, provided concessions are made by both sides, which seems to be the problem as we head towards ‘D-Day’ on 31st December 2020.



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It has been a strange and frustrating week for global markets. Investors ‘leapt out of the traps’ with gay abandon early in the week. The mood was positive with vaccine hysteria gripping all suffering countries with frenzy at the prospect of inoculations starting to be made available towards the end of December. The DJIA breached 30,000 on Wednesday for the first time, closely followed by the S&P 500 breaking into fresh record levels, followed by the NASDAQ achieving the same goal. By Thursday it was becoming clear that not only was Covid-19 still rampant, but also there could be delays with the Astra Zeneca/Oxford University vaccine for regulatory reasons. This contributed to Astra’s share price falling by 6% last week.

It was interesting to note that the NASDAQ, having played second fiddle the week before last, to those sectors that were in recovery mode, was now back in vogue. The week was, of course, significantly shortened in the US by the Thanksgiving holiday, with markets on Friday only being open for half a day. Thanksgiving Day spending rose by nearly 22% on the previous year to $5.1 billion, hitting a new record, according to Adobe Analytics data. Almost half of the online purchases were made on mobiles. The strong online shopping data reflects a trend that many retailers and industry watchers expected: More consumers are avoiding malls and buying gifts from their couch during the coronavirus pandemic.

The economic data in the US was quite sparse in terms of influence. Markit’s PMI Manufacturing was positive as it was for the EU and UK, though momentum was drifting. US Initial Jobless Claims saw first-time unemployment claims total 778,000 for week ending 21st November. The pace of first-time filings for jobless claims picked up last week. The jobs market showed increasing vulnerability to the coronavirus spread. The full data of Black Friday and Cyber Monday will not be available by the time this missive reaches your breakfast table or desk. However, in the UK, after the announcement of a second lockdown in England, and with Wales in its ‘firebreak’, it is thought that interest in Black Friday had tumbled (from 51% to 38%). This meant that spending expectations this year for Black Friday sales are to fall to £6.2bn - a 20% decline versus last year. Also, the fact that 55 million people out of a population of 67 million are in Tier two and three, threatens to destroy the hospitality sector, possibly putting as many as 500,000 extra personnel on the dole, unless the government’s policy shows significantly more flexibility.

Last week’s news in the UK was dominated by Chancellor Sunak’s ‘Spending Review’ and the ‘OBR’s’ forecasts. Rishi Sunak proposed a three-pronged attack – save jobs, improve public services, and increase infrastructure spending. However, there was no covering up the dire state of the UK’s finances - £280 billion already spent on Covid-19 and £394 billion to be borrowed by the end of the year against £55 billion last year. GDP for 2020 would come in at -11.3%, but 2021 likely to see growth of 5.5% and 2022 by 6%, even though growth would be 3% lower than in 2019. Unemployment would reach an eye-watering 7.5%, with 2.6 million on the dole. Apart from the NHS, public sector salaries were to be frozen. Some £3 billion would be spent on the NHS and significant sums would be appropriated to new hospitals, new schools, and the police. Also, £3 billion would be set aside for training the young between 16 years of age and 35 years of age to learn a new trade. No mention was made of increased taxations, though I suspect we are all in for a rude shock at the March 2022 Budget – CGT, corporation tax, Inheritance tax, VAT, NI and income tax all in the frame. It is essential that the Government does not throw the baby out with the bath water and kill off incentives to rekindle growth – hence no immediate taxation hikes.

Apart from Thanksgiving, it was a significant week for retail in the US, with many brands posting earnings – some excelled such as Nordstrom (+7.5%) on the week, Dollar Tree (+17%) and Dick’s Sporting Goods (+5%) with others that did not fare so well – Chico’s FAS (-7.5%), Best Buy (-6%) and GAP (-11%). Urban Outfitters were all but unchanged on the week. Shares in Tesla rose an astonishing 17% last week to $585 (+460% year to date), valuing the company at $555 billion, eclipsing the value of Toyota, which makes 1.6 million vehicles a year. In the process, Elon Musk became the World’s second richest businessman with $127.9bn. He has passed Bill Gates as the world’s second-richest person at $127.7bn, with Amazon’s Jeff Bezos remaining in poll position with $186 billion. Several interesting business issues manifested themselves in the UK last week. Amanda Blanc, Aviva’s new CEO is making serious waves of change at the insurer, by selling its operations in Singapore, France, Ireland, and Canada. The company, currently valued at £13 billion, is also likely to be spilt up. Boohoo has appointed Sir Brian Leveson to head an inquiry into the company’s controversial corporate governance and business practices. M&S announced that it had changed its mind and its 600 outlets will be closed on Boxing Day, despite incurring a loss of £86 million for its last trading period. Next, B&M, Wilco and M&S made it clear that they would not be indulging in Black Friday’s discount party. Netflix announced it would be doubling in production expenditure in the UK to $1 billion, thanks to the Crown and others. The BBC currently spends £1.6 billion on drama productions and ITV £1.1 billion.

Go Compare is to be sold to Fortune for £600 million. This deal will contribute a further £170 million to Sir Peter Woods’s coffers to add to the two fortunes he has made from his insurance ‘baby’ Direct Line. The AA is to be sold to private equity – TowerBrook Capital Partners and Warburg Pincus - for £216 million, after 6 years of inexplicably poor management. In 2014, AA enjoyed an IPO issue price of 250p. Today its stands at 33.50p! Cineworld has managed to secure a £560 million rescue package, which might just save its 660 chain of cinemas. Talk of Cineworld buying Canada's Cineplex Inc. for $2.15 billion is but a distant dream! The Sunday Times informed us of the unsurprising news that HSBC may retreat from having a major presence in the US, due to severe competition and its close relations with China.

JD Sports wanted to buy Debenhams. However, with news that Arcadia is likely to go into administration may force the sportswear titan to have a re-think, as news of a possible break up of Sir Philip Green’s empire, could change the complexion of the high Street. However, if JD Sports went through with the purchase, 60 out of Debenhams’ 124 outlets are likely to be closed, making close to half of their 12,000 employees vulnerable. JD Sports’ shares were down 6% last week.

News that Arcadia is likely to apply for CVA, due to temporary insolvency, with a view to eventually paying creditors in the future and the possibility that the group could enter administration on the arm of its advisors Deloitte, won’t really come as the shock of the decade. The Pandemic has savaged the high street, but Sir Philip Green’s emporium which includes Top Shop, Dorothy Perkins, Burton’s and Wallis has been under duress for some months, if not years, due to this high-flying entrepreneur’s inability to grasp the fortunes that have been available from on-line trading for the best part of a decade, losing out to the likes of Next, Boohoo, and ASOS. One might have thought that some lessons would have been learned from the demise of BHS, which also had an added cost of a pension deficit of £530 million, to which Sir Philip contributed £363 million to cover much of the black hole. Ian Grabiner has been running Arcadia’s affairs with Sir Philip imprisoned in Monaco for obvious tax reasons. Many will not forget the £1.2 billion dividend paid to Lady Tina in 2005. It looks as if the white flag could be raised as early as today.

When there’s trouble at mill in the retail world, Fraser’s Mike Ashley is never far away, seeing if he can sniff out a bargain. Over the years apart from Sports Direct, he has bought, House of Fraser, Black’s Leisure, had a 29% stake in Debenhams, a 38% stake in Game Digital, 12,5% stake in Mulberry, the assets of DW Sports and was recently infuriated that Edinburgh Woollen Mills refused Ashley permission to enter the race to buy Peacocks and Jaeger. It is understood that Sir Philip Green is none too pleased that Mike Ashley has offered a £50 million loan in exchange for security over assets. Six hundred outlets and 13,000 jobs are at stake here. It is understood that there may be a pension deficit of £350 million in the Arcadia Group.

UK companies posting interim results this week – Monday – CSH, Foxton’s, St James’s Place, Tuesday – Topps Tiles, Wednesday – Avon Rubber, Ixico, Numis, Quiz, Paragon, Thursday – AJ Bell, Countryside Properties, Friday – Berkeley Group.

US Companies posting interim results this week – Monday – Zoom, Tuesday - HWP Enterprises, Thursday – Smith & Wesson, Dollar General, Kroger, Tilly’s, Signet, Friday – Big Lots, Genesco, Johnson Outdoors

Economic data to be posted this coming week – Monday – BoE Consumer Credit, UK Mortgage lending and approval, US Chicago PMI, US Pending Home Sales, Tuesday – UK Nationwide House prices, UK IHS Markit PMI Manufacturing, EU IHS Markit Manufacturing EU Inflation, US IHS Markit PMI Manufacturing, US ISM Manufacturing, US Construction Spending, FED Chairman Powell Testimony, Wednesday – BoE FPC Meeting, EU Unemployment rate October (EST: 8.5%), US MBA Mortgage Applications, US ADP Employment, US Beige Book, FED Chairman Powell Testimony, EU,UK & US IHS Markit PMI Services, US Initial Jobless Claims, Friday – UK Car Sales, UK Construction PMI, US Non-Farm Payrolls (EST: +500k), US Unemployment rate (EST: 8.6%), US Imports & Exports, US Factory Orders