WEEKLY FAYRE – Monday, 6th July 2020

July 6, 2020

THEY shut the road through the woods
Seventy years ago.
Weather and rain have undone it again,
And now you would never know
There was once a road through the woods
Before they planted the trees.
It is underneath the coppice and heath,
And the thin anemones.
Only the keeper sees
That, where the ring-dove broods,
And the badgers roll at ease,
There was once a road through the woods.

Yet, if you enter the woods
Of a summer evening late,
When the night-air cools on the trout-ringed pools
Where the otter whistles his mate,
(They fear not men in the woods,
Because they see so few.)
You will hear the beat of a horse's feet,
And the swish of a skirt in the dew,
Steadily cantering through
The misty solitudes,
As though they perfectly knew
The old lost road through the woods.
But there is no road through the woods.”


Rudyard Kipling – author & poet – 1865-1936


It may have been run behind ‘locked-doors’, but what an extraordinary outcome to this year Investec Derby. Many thought it was probably not going to be of the highest quality with a lack of race preparation and the late start to the season. Aiden O’Brien saddled 6 runners and won the race with one of his least fancied entries – ‘Serpentine.’ He ‘made all’ and lost the rest of the field to win easily by 9 lengths at 25/1, ridden by Emmet McNamara to give the Ballydoyle handler his eighth Derby success. O’Brien also saddled the third home – ‘Amhran Na Bhfiann’ with William Buick in the saddle at 66/1. ‘Mogul’, supposedly Coolmore’s first choice ridden by Ryan Moore, was unplaced.

However, Ryan Moore was also aboard the mighty impressive filly ‘Love’, who streaked away to win ‘The Oaks’ with her head in her chest pulling a train. Both the Derby and Oaks winners were sired by ‘Galileo’, easily the most prolific and successful stallion around. Tom Marquand, who had been ‘jocked-off’ ‘English King’ in favour of Frankie Dettori, came second on Andrew Balding’s second string ‘Khalifa Sat.’ All racegoers were delighted for Marquand, who will be a very top jockey before too long.  

Fulham’s vitally important game at home to Birmingham City proved the dullest of affairs. The Cottagers had no strikers available due to the suspension of Mitrovic and injury doubts about Kabana (sub) and Kamara. However, Fulham dominated possession and are learning to win ‘ugly’, which they did in the 96th minute from a goal by Onomah to keep them in the hunt for the ‘play-offs.’



29th June 2020

3rd July 2020

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The evidence that unemployment will be uncomfortably high when this pandemic finally stops raging, is out there, as large as life. The world of the arts and entertainment hangs in rags. ‘Despite Super Saturday’, when pubs, restaurants and bars were re-opened for business, this vital part of our economy has a long way to go to snatch survival from the jaws of ignominy. The same applies to retail, tourism and airlines, with thousands of redundancies announced in recent weeks by BA, Virgin Atlantic, easyJet, Ryanair, Upper Crust (SSP), Casual Dining, John Lewis, Harrods, Airbus,  Restaurant Group, Carluccio’s, Benson, WH Smith, Clydesdale Bank, Byron, Virgin Money and M&C Saatchi. I suspect there are thousands more in the pipeline. It will take time for these sectors to regroup and patience will be required. The one ingredient the economy does not have is time unless a vaccine can be produced with indecent haste.  It is, also, no secret than many businesses will take the opportunity of lightening up their workforce, with the need to become meaner and leaner, until demand picks up. Unemployment rates into double figures have been bandied about. They may not be fantasy!

Chancellor Sunak has been very generous with his furloughing scheme where over 9 million people have benefitted (hardly the right terminology – they deserved it). However, ‘the kissing will have to stop’ at the end of October, with the Government starting to lighted up its burden at the end of August. Furloughing will have cost £120 billion. This pandemic, overall, is likely to cost the UK Treasury £400 billion. I doubt there will be many ‘goodies’ handed out by Chancellor Sunak when he comes to deliver his medicine next Wednesday. Tax cuts will need to wait, unless they are offered to overseas companies to set down their stall in the UK, thus creating employment opportunities. Let us hope he just provides furloughing for those in entertainment and hospitality, who will need more time to get back on their feet. The Chancellor’s message is already out there – loud and clear. “Learn to go out again safely. Spend some of the money you have squirreled away in the past three months and help lift the economy. Above all else learn to live again!” Since March, the public have squirreled away £57 billion.  Some of it needs to be spent to inject confidence back into the economy.  The young will be terribly exposed in the coming months. We must hope for generous apprentice schemes and folk must learn to think outside their comfort zone to be re-employed. Hopefully, many infrastructure schemes will help their cause. It is also imperative that schools return PDQ, which will enable some people to save their jobs. 

It is thought that the Chancellor could offer £1000 cash to each small business employer who undertakes apprentice schemes for up to 10 people. It has also been suggested that those buying houses may have the threshold for stamp duty increased from £125k to as much as £500k temporarily to provide impetus during these uncertain times.

This week’s stock market rally was dominated by three issues – firstly, economic data, especially PMI numbers that gave credence to the perception that the world’s economy was recovering, aided and abetted by hopes that better than expected non-farm payroll data would be delivered on Thursday ahead of Friday’s Independence Day celebrations.  The data, which saw 4.8 million jobs created in June cutting the unemployment rate from 13.3% to 11.1%, did not disappoint. Secondly, FED Chairman Jay Powell, in his testimony to Congress promised greater clarity over interest rate policy, though there is scant prospect of any rise in the foreseeable future. And finally, news permeated out that Pfizer was hoping to have a vaccine fast tracked. The market was only too happy to latch on to this upbeat nugget of good news. However, in the same breath, POTUS announced that Gilead Scientists’ antidote drug Remdevisir would be for use in the US only. This news was greeted with some dismay, but on reflection not wholly unsurprising. The UK has also been given until next week to give a decision as whether it wants to pool resources with the EU in looking to patent a vaccine. It is thought that €16 billion had been spent on vaccine development.

Most market observers were dumfounded by investors’ ambivalence towards the serious spike on Covid19 in many parts of the US. There were 50,000 new cases on Thursday and again on Friday last week. This spike will restrict travel arrangements to and from the US, adversely affecting business and leisure, both fundamentally important ingredients to the US economy. Notwithstanding this idiosyncrasy, stocks and particularly the tech sector continued to blaze the trail, with the NASDAQ reaching its ‘all-time-record’ last Thursday. Facebook was under duress in the early part of the week when many advertisers, including Coca-Cola, Lego, Starbucks, Unilever, Microsoft and Verizonwithdrew their adverts, in the hope that Facebook will make visible, measurable, and assertive efforts to effectively prevent the promotion of hate, division, defamation and misinformation by the year-end.  Facebook’s shares fell by 8% on Monday, but by Thursday these shares had rallied 11%! Tesla shares also enjoyed a momentous week with its shares adding 21% to $1208, valuing this electric car company at $224 billion. This is an astonishing achievement for a company that made just 367k vehicles last year against Toyota, which manufactured 10.5 million, which is currently valued at $200 billion. What an IPO debut Lemonade enjoyed on Thursday! Lemonade, a tech-driven insurance company backed by Softbank, soared 139% on its trading debut. This company set its IPO price at $29, representing a market valuation of $1.6 billion. Shares closed at $66.

Amongst the retail carnage, Primark’s opening after the lockdown provided a little joy out of the smouldering ashes. Primark is going ahead with plans to open five new stores in the US, France, and Poland, despite economic uncertainty over the coronavirus. The latest update from Primark owner AB Foods revealed the full impact of the lockdown on trade, with Primark's sales down 75% in the past quarter. Now though, all but eight of Primark's 375 stores are trading again. On Wednesday, Sainsbury’s new CEO Simon Roberts, who replaced Mike Coupe on 1st June, posted like for like sales up 7.8% for the last quarter – groceries +10.5%, Argos +10.7%, general merchandising +7.2%. Mr Roberts was somewhat circumspect about the future. Sainsbury’s expected weaker consumer spending. The Company had spent £9 million keeping customers and colleagues safe. Sainsbury’s shares have been a massive disappointment since Qatar bought 25% in 2007, when the shares were over 500p – now 197p – down 11% year to date.

Two weeks after the spectacular crash of the German fintech giant Wirecard, Deutsche Bank said on Thursday, that it was open to provide emergency financing to help keep the company functioning. The statement was perhaps the first bit of good news for Wirecard since the Company, once a rising star of Germany’s tech scene providing digital payment services across the globe, imploded two weeks ago after its auditor could not find 1.9 billion euros ($2.1 billion) listed in the Company’s books. The disclosure forced the resignation of Markus Braun, the chief executive. He was later arrested and then released on bail. The Company stands to lose €3.5 billion.

Andy Haldane, the Bank of England’s chief economist said there was the prospect of a ‘V’ shaped recovery. However, he reiterated that spending and employment were key components. He sounded a note of caution on jobs. He said either consumer spending would ease unemployment or unemployment would cut household spending. Both could create virtuous or vicious cycles. Nationwide announced that house prices were 0.1% lower in June than the same month a year ago and that prices had fallen 1.4% since May. However, it will be some months before a real trend is established; Again, pointing to the unemployment rate.

BoE Governor Andrew Bailey has warned business to gear up for the possibility of negative interest rates. Firms would almost certainly require a year to revamp their technology and computer systems. In its 325-year history, the BoE has never resorted to negative rates. Tesco appears to be demanding up to 50% discount from their suppliers to match competition from the likes of Aldi. Tesco may not be alone in its demands such are the narrow margins of profitability.

Prime Minister Boris Johnson is expected to announce a phasing out of the Huawei Chinese telecom giant's technology in Britain's 5G network as soon as this year. Earlier in January, Mr Johnson allowed Huawei to play a limited role in the UK's 5G network, defying security concerns. However, a revised risk assessment report from the GCHQ is resulting in the major policy reversal, according to The Telegraph. Countries including the US and Australia have already banned Huawei in their telecommunications infrastructure development, with other nations mulling similar measures.

Finally, to end on a good note, the Sunday Times tells us that GSK and Sanofi Aventis are in advanced talks to provide the UK government with 60 million doses of their coronavirus vaccine. Human trials are due to start in September.

UK companies posting interim results this week – Tuesday – Micro-Focus, Photo-Me, Electrocomponents, Whitbread, Halfords, JD Sports Fashion, Wednesday – PurpleBricks, First Group, LionTrust, Thursday – Robert Walters, Rolls Royce, PageGroup, Superdry, Friday – Carnival 

US companies posting earnings this week – Monday – Dean Foods, Tuesday – Levi Strauss, Wednesday – Simply Good Foods, Bed, Bath & Beyond, Thursday – Walgreen Boots, WD-40 Co, Delta Airlines

Economic data to be posted this coming week – Monday – UK New Car sales, UK PMI Construction for June, US HIS Markit PMI composite, US ISM Non-manufacturing, Tuesday – Halifax House Prices, Wednesday – US MBA Mortgage Applications, US consumer Credit for May, Thursday – US Initial Jobless Claims, US Wholesale Inventories, Friday – US PPI