The Week - UK (2021-02-13)

CITY 45

13 February 2021 THE WEEK

Globalshareshitanall-timehighon

Covidrecoveryhopes.TheFTSEAll-

Worldindexclimbed0.3%,boostedby

optimismaboutvaccineefficacy–

particularlyreportsthePfizer/BioNTech

jabgavetwo-thirdsprotectionafterone

shot.EuropeanandAsianboursesalso

rose.IntheUS,theS&P 500 andNasdaq

bothhitnewhighs,buoyedbybumper

quarterlyearningsinBigTech.Bankof

Americareportedarecord$4.2bnwas

investedbyfundmanagersin“Faang”

stockslastweek.USTreasurySecretary

JanetYellenheldtalkswithregulators

overtheimpactofmarketexuberance.

InBritain,ChancellorRishiSunak

extendedthetermsoftheBounceBack

Loanscheme,enabling1.4millionsmall

businessestospreadrepaymentsovera

longerperiodtoallayfearsoffailures.

Officialshaveplannedfora“payasyou

grow”structure.TheBritishBeerand

PubAssociationpressedGovernment

forareopeningtimelineanda“roadmap

to recovery”. TheBoE held out hopes for

arapid vaccine-fuelled recovery in the

second half of the year.

EU lawmakers announced plans to force

tech companies, notablyFacebookand

Google,to payfor news on their

platforms, echoingasimilar move in

Australia.SoftBank’s Vision Fund

recorded its best quarterly performance

since 2017 witha$13bngaininthevalue

ofinvestments.Sainsbury’sjoinedTesco

in promising to price-match the German

discounterAldi,ratcheting up the

supermarket price war.

Online retail:taxraid
Ocado’slatestfiguresaretestamenttotheonlinegrocer’sstandingas“alockdown
winner”,saidBenMarlowinTheDailyTelegraph.Thanksto“soaring”sales,Ocadois
nowworthan“astonishing”£ 20 bn–“or£8bnmorethanSainsbury’s,Morrisonsand
Marks&Spencercombined”.Butincommonwithotheronlinegiants–including
AmazonandfashionoutfitsAsosandBoohoo–itnowfacesareckoning.Inaneffortto
“plugtheblackhole”inthenation’sfinancesand“stemthecollapseofthehighstreet”,
Treasuryofficialsareplanninga“doubletaxraid”ononlineretailerswhohave“cashed
inonthecoronaviruscrisis”,reportedTimShipmaninTheSundayTimes.Aswellasa
newonlinesalestax,theyare“workingupproposals”foraone-off“excessiveprofits
tax”.Themoveislikelytobepopular:Amazon’sUKsalesjumped51%to£19.5bnlast
year,buttheUSbehemothreportedlypaidjust£14.5mincorporationtaxin2 01 9.
Neithertaxriseisexpectedtofeatureinthe3MarchBudget,“whichwillfocuson
furthershort-termrelief”.Butgoingaftertheonlinegiantscouldbecome“acentrepiece
ofeffortstocutBritain’sdebtsthisautumn”.

Shell/BHP:hotcommodities?
“CommoditieshavebeenonatearsinceMarch,andhavesurgedtothehighestlevelin
morethansixyears,withralliesineverythingfromironoretosoybeans,copperand
corn,”saidSybillaGrossonBloomberg.Eventhebatteredoilpricehasbeenonaroll
thankstosupplycuts: Brentcruderoseabove $60 perbarrelthisweekforthefirsttime
inayear.Thatnewscametoolatefor Shell,whichhasreported awhoppingannual
lossof$21.7bn –its “firsteverheadline lossandoneofthebiggestintheUK’srecent
corporatehistory”,said AnjliRavalinthe FinancialTimes. Likeitspeers,theAnglo-
Dutch oilmajorhasbeen“tryingtonavigatethetwinchallenges ofthepandemicandthe
shifttowards lower-carbonenergy”.It maynow bebankingon a“consumptionboom”
as the pandemic fades and “pent-updemand”isunleashed, saidSybillaGross.That
dynamichasalreadyled toashake-uponthe FTSE 100 leaderboard,saidEmilyGosden
inTheTimes.TheAnglo-Australianminer BHPhasdisplacedUnileverto toptheindex
forthefirsttimein its history,withamarket capitalisationof£162bn.Shares havemore
thandoubled sinceMarchlast year,whenmarkets crashed asthepandemictookhold.

London Capital&Finance:bruisedBailey
With somuch onhisplateright now,thegovernoroftheBankofEngland, Andrew
Bailey, could probablyhave donewithoutagrillingfromMPsabouthis previous
deficiencies asheadoftheFinancialConductAuthority,saidAlexBrummerin theDaily
Mail.But that ’sexactlywhathappenedwhenthe TreasurySelectCommitteegotstuck
intoadamningreporton theFCA’s“faulty policing”of LondonCapital&Finance
(LCF) –apurveyor ofunregulated “minibonds”whichcollapsed inearly 2019 ,wiping
outsome11,600smallinvestors.Bailey hitbackat suggestions thathetriedtohavehis
nameremovedfromthereport. Buthe didn’thavealeg tostand onwhenaskedwhythe
“snoozyregulator”he wasleadingmissed somany“redflag”warnings,saidNilsPratley
inTheGuardian.Isthiscareer-threatening?Unlikely.“Do not besurprisedif thisaffair
nowfizzles away.”Baileywillprobablyemerge“bruisedbutstillthegovernor”.

Tesla: Elon Musk’s “mercurial power” is moving new markets

When the British high-street jeweller Gerald

Ratner described his products as “total crap”

in 1991, he wiped £500m off the company’s

shares in days and nearly sank the firm, said

Berny Torre in the Daily Star. Bosses have been

making similar gaffes (“Ratner moments”) ever

since, but perhaps none quite so insouciantly

as Elon Musk. Taken to task last week by an

industry analyst, who compared Tesla’s

$36,490 Model3to“aKia in the 1990s”

because of its dodgy paint jobs and shoddy

exteriors, Musk agreed the criticism was

“accurate”–and warned against buying his

electric cars duringa“production ramp” when

“it’s super-hard to get everything right”.

Adamning admission? Apparently not. Shares

in Tesla, which is valued at around $805bn, barely budged on

Musk’s comments. On the other hand, the price of bitcoin shot to

anew high of more than $48,000 on news that the world’s richest

man (worth some $183.8bn) is investing $1.5bn

of his company’s cash in the cryptocurrency,

said The Economist. “In one of the biggest

endorsements so far byaprominent American

firm”, Tesla also plans “to accept bitcoin as

payment for its vehicles”.

The bitcoin community cheered the move as

an “exclamation point” for institutional accept-

ance of the digi-currency, said DealBook in The

New York Times. It’s unlikely many corporate

treasurers will follow suit immediately: volatile

bitcoin isn’t the obvious way to protect a

company’s financial liquidity and cash reserves.

Still, Musk clearly hasn’t lost his mercurial

power to move markets, said Patrick Hosking

in The Times. Asamisc hievous curtain-raiser

to his bitcoin coup, he tweeted an apparent endorsement of

dogecoin, “a minor cryptocurrency created asajoke” to “satirise

the rise of digital currencies”. The price duly leapt 47%.

Is thisaRatner moment for Musk?

Seven days in the

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