A trendy year
Written by Juan Palenzuela, associate
Edited by Katie Stanton, associate partner
22 July 2020
Good morning,
So far, 2020 has been the year of the trend. From baking sourdough bread during peak lockdown, to star-jumping with Joe Wicks and ‘meeting’ friends on Zoom for yet another quiz, we’ve all been busy keeping up with the latest crazes.
Just yesterday market research firm Kantar revealed we’ve been splashing out on tea, coffee and biscuits in the last three months, searching for comfort amid the turbulence of the pandemic. There has been a surge in reading too, with old favourites such as Harry Potter and more recent titles relating to the Black Lives Matter movement topping the bestseller lists.
The way we shop has changed drastically, with a firm shift to digital. We’ve all been glued to our front windows in anticipation of our latest parcel; a welcome break from the boredom of lockdown. Yesterday, Hermes delivery service announced it is creating 10,000 new jobs – a strong indicator of this online shopping extravaganza.
Meanwhile, high-street retailer M&S has announced hundreds of job cuts. There really is no gain without pain.
But our values are changing too. Research by Deloitte suggests that consumers and businesses alike have begun to seek out an authentic purpose. In tandem, social media users are quick to publicly condemn businesses that go against their own social or ethical stances.
And then there are those long-term trends. A study published in The Lancetpredicts that there will be a drastic population decline due to falling fertility rates, so much so that 23 countries including Spain and Japan could see their population halve by 2100.
Such a scenario has its pros and cons. The pros could include less environmental devastation and a better paid workforce. On the other hand, it could lead to a “top heavy” population, with more people out of jobs than in them. In theory, this would present problems with social services and our ability to support aging populations.
So, as we look towards an uncertain future, we can reflect on the last few months and appreciate the value of cohesive action, sharing, innovating, digitising, and embracing the abnormal. We must prioritise these behaviours going forward to recover from the economic and health crisis. While tea and biscuits have comforted us through this time of uncertainty, we’ll now need resilience, agility and ambition to power us through the enormous changes to come.
A new law requiring foreign agents to register in the UK is being considered by ministers. This comes after a report published yesterday revealed that the UK government had “badly underestimated” the threat of Russian interference. The government will face questions in the House of Commons later today.
The UK government has abandoned hopes of reaching a US-UK trade dealahead of this autumn’s presidential election. Boris Johnson and international trade secretary Liz Truss had hoped to agree a deal by the late summer, however British officials have blamed the pandemic for slow progress. (£)
John Kasich, Trump’s 2016 Republican rival, will back Joe Biden in a speech at the Democratic convention next month. He will become the most prominent Republican yet to urge conservatives to vote for Biden. (£)
Business and economy
The International Monetary Fund (IMF) has warned governments globally to take swift action to limit the economic damage for women unleashed by the coronavirus pandemic. The organisation said the crisis threatened to undo gains in women’s economic advancement and widen gender gaps, and urged governments to extend income support, protect employment and provide incentives to balance work and family responsibilities.
Amazon-owned supermarket Whole Foods is being sued by its staff for punishing them for wearing Black Lives Matter masks. The firm forbids staff from wearing clothes with messages that are not company-related, and the lawsuit says more than 40 employees have been punished.
Australia will extend its furlough scheme until March 2021, which will cost £47bn but protect the jobs of around 3.5m people. This comes as Australia recorded a double-digit unemployment rate and faces its first recession in almost three decades. (£)
Columns of note
In The Guardian, Clare McNeil argues that ending furlough is a catastrophic mistake, and that we should instead be cutting hours, not people. With forecasts suggesting as many as 1.3m jobs will be lost when the furlough scheme ends, McNeil hails countries such as France and Switzerland, where workers can hold on to their job with reduced hours. Distributing work more evenly would help arrest the “disastrous backwards slide in gender equality” since the pandemic began, she notes.
The Economist examines how different generations perceive the threat of coronavirus. New research from the Universities of Oxford, Harvard and Bocconi shows that respondents aged between 18 and 34 consider themselves to be nearly three times more likely to contract the disease than respondents over 70 do. “When it comes to beliefs about Covid-19, it appears that foolhardiness comes with age, and prudence with youth”.
What happened yesterday?
After EU leaders agreed on a €750bn pandemic recovery fund, US and European stocks rose. Investors snapped up the debt of EU countries badly hit by the pandemic, causing the euro to rise to $1.151, its highest level against the dollar in 18 months.
Further optimism was sparked by news of promising coronavirus vaccine trials. Oil prices climbed too, reaching their highest level since early March: Brent crude was up 2.4%.
In company news:
Coca-Cola suffered its steepest quarterly sales drop in at least 25 years, due to the closure of bars, restaurants and other venues. The company announced it would axe “zombie” brands as part of its efforts to recover.
Deutsche Bank said its corporate clients were repaying loans quicker than expected, meaning the bank’s balance sheet is in a better position than analysts expected. Its common equity tier one ratio stood at 13.3% by the end of June, higher than the forecasted 12.4%.
Ted Baker reported a slump in sales of 55% after it closed stores during the pandemic. Revenue for the 11 weeks to 18 July dropped to £60.9m. The company said its online performance was stronger than expected.
What’s happening today?
Finals
Global Yachting Group
Knights Group
Stagecoach
Trading Announcements
Close Bros
Eve Sleep
Tristel
AGMs
Abdn.asn Inc
Anexo Group Plc
Experian
HarbourVest Private Equity
Lenta S
LondonMetric
Maven Income 1
Mediclinic International
President Enrgy
Wincanton
UK Economic announcements
(11:00) CBI Distributive Trades Surveys
Int. Economic announcements
(12:00) MBA Mortgage Applications (US)
(14:00) House Price Index (US)
(15:00) Existing Home Sales (US)
(15:30) Crude Oil Inventories (US)
People have been making bread for at least 14,000 years, that’s about 4000 years longer than they’ve been farming.
Parliamentary highlights
House of Commons
Oral questions
Women and Equalities (including Topical Questions)
Prime Minister’s Question Time
Ten Minute Rule Motion
Welfare (Terminal Illness) – Jessica Morden
General debate
Matters to be raised before the forthcoming Adjournment
Adjournment
Economic benefits of a southern Heathrow rail link – Angela Richardson
House of Lords
Oral questions
Impact of COVID-19 pandemic on global progress towards UN Sustainable Development Goals – Lord Collins of Highbury
Oral questions
Teaching of arts and other creative subjects in online and in classrooms, as COVID-19 restrictions are lifted – The Earl of Clancarty
Oral questions
Discussions they have had with the Church of England, the Catholic Church in England and Wales and other Churches about the reopening of church buildings for private devotional prayer and public worship – Lord Lexden
Legislation
Immigration and Social Security Co-ordination (EU Withdrawal) Bill – Second reading – Baroness Williams of Trafford
Scottish Parliament
In recess until 10 August (with the exception of 23, 30 July and 6 August 2020, on which dates business may be programmed by the bureau)
Copyright© 2020 Charlotte Street Partners