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CITY 45

28 March 2020 THE WEEK

Centralbanksandgovernmentsglobally

deployedanunprecedentedarmoury

ofmeasuresinanattempttodefraythe

economicfall-outfromthepandemic.

Amongothermeasuresincludedinthe

massive$2trnstimulusdealagreedby

theUSCongresswasapledgetohand

out$1,200tomanyAmericansandcash

toboostunemploymentinsurance.But

thecentrepieceofthedealwasa$500bn

loanprogrammeforcompaniesand

states.Thepackageincluded$50bnto

shoreupUSpassengerairlines;theUK’s

Chancellor,RishiSunak,toldUK-based

airlinestofindotherformsoffunding

andsaidtheGovernmentwouldonly

stepinas“alastresort”.

InBritain,theBankofEnglandcut

interestratesforthesecondtimeina

fortnighttoarecordlowof0.1%and

injectedafurther£200mintothe

economythroughbondpurchases.The

measureswereintendedtocomplement

theChancellor’s£350bnrescuepackage

forbusiness.TheFCAimposeda

companyresultsreportingbanforat

leastthenextfortnight,butspeculation

thatitcouldleadtoafullstockmarket

closurecametonothing.

Thepriceofoilcontinuedtofall:Brent

crudehitalowof$26.98/barrel.Gold

bookedthelargestone-daydollar

gainonrecordinadayonTuesday,

beforefallingbackto$1,635.70/ozon

Wednesday.Demandgloballyforthis

traditionalplaceofsafetywasreported

tobesohighthatsovereigncoinsand

bullionbarswerehardtocomeby.

FTSEcompanies:dividendscut

Marketsusedtowhip“divi-cutters”,saidKateBurgessintheFT.Butlikesomuchelse,

thathabithasbeenturnedonitshead.Indeed,whenGo-AheadandKingfisherjoinedthe

30-pluslistedUKcompaniesthathave“decidedtopass,cutordelaypayoutstoinvestors

sincethecoronavirusoutbreak”,theirsharesactuallyrose.Giventheparlousstateofthe

economy,fewinvestors,itseems,“wanttoseecompanycashsplashed”.Manyother

businesses–particularlyhigh-yielders–maynowfollowsuit.EvenShell,whichboasts

ithasn’tcutitsdividendsinceWWII(itcurrentlyyieldsagenerous14%)maybeforced

intoarethink.Forthemoment,management“stillisn’treadytothrowinthetowelon

apaymentthatcost$15bnlastyear”,saidNilsPratleyinTheGuardian–despitea

loomingglobalrecession“andthepriceofabarrelofBrentat$30”.Theprospectofa

cutwillcertainlyterrifymanyincome-seekingpensionfundswhowere“sureofShell”

• acompanywhich,togetherwithBP,accountsforafifthoftheFTSE 1 00’sdividend
  payout.Forthem,thesuddenlossofincomefromdividendcutsisgoingtobe“yet
  anotherproblem”.Inthemeantime,whatofdirectors’pay?WelldonetoStagecoach,
  whichistohalveboardroomsalariesforthetimebeing.Otherboardroomsannouncing
  joblossesandpaysqueezesshouldtakenote–orriskapublicbacklash.

F1/carmakers/Dyson:ventilating

HatsofftoFormulaOne,saidBBCBusinessNews.Itsmotor-racingteamshavebeen

inthevanguardofcompanies answeringcallsfromgovernmentsto makemoremedical

ventilators.The Britishcarmaker McLaren hasteamedupwithNissan’s F1teamandthe

aerospacecompanyMeggitt.Nowcarmakers globallyarepilingin. Ford isworking with

GEHealthcareand3Mtodesignmodified respiratorsandventilators,“usingfans,batt-

eries”and othercarparts. GeneralMotorsandTeslahavealso pledgedtheirsupport.

Nooneisunderestimatingthechallenge,said TheTimes.But concernsthatdisruption to

ChinesesupplychainsmighthamperUKplanstoproduce30,000 emergencyventilators

haveapparentlybeenovercome.Accordingtoone industrysource,“weareconfident

we candothiswithmaterialsalreadyavailable intheUK”.Another player,Dyson, is

already“scalingup”themanufactureofaventilatorusingcomponents from itsvacuums,

saidRupertEvelyn onITV.com. Prototypesare“likely”tobe tested onpigs’lungs.

Sports Direct: fairplay?

“FightoffthedeadlycoronaviruswithanaluminiumDonnaytennisracket,available

in store atyourlocalSports Direct.PurchaseapairofSondicogoalkeeper glovesfor

additionalprotection...” The spoofMike Ashleyaccounts onTwitterwereworking

overtime this week,aftertheformersquashcoach’sSportsDirectemporiumannounced

thatitsstores would stayopen–indefianceofthegovernmentshutdown–because, the

company argued,theyarevitaltothehealth ofthenat ion,anditsstaff,therefore,qualify

as“key workers”.Cueoutrage.Soonafter,Ashley’sFrasersGroup,which alsoowns

EvansCycles (which saidit wouldstay openforthesamereason),wasforced into a

hasty “clarification” –thestores would,infact, shut.According tothenewsagencyPA,

SportsDirecthasinst eadhiked theonline priceofsportskit“includingskippingropes,

weights andresistancebelts”.There’sno keeping agoodsportsmandown.

McDonald’s: atale of two countries

Hordesof“faithfulfans”queuedforanhouror

moreatMcDonald’srestaurantsanddrivethru

operations“foronelastBigMac”beforethefast-

foodgiantshutupshoponMondaynight,said

TheMirror.Thefeedingfrenzywassobadatone

Cambridgeshirerestaurantthatthecopswere

called.Elsewhere,“policecars”joined“theline-up

forthedrivethru”.McDonald’shadalready

stoppedservingin-housediners,butaficionados

hadhopedtheycouldstillgettakeawaysviaUber

Eats.Nodice.McDonald’shasjoinedotherchains,

includingCosta,SubwayandNando’s,in“total

lockdown”.UKCEOPaulPomroysaidthemove–

whichfollowedtheGovernment’spledgetopay

80%ofemployees’wages–hadbeentaken“with

thewell-beingandsafetyofemployeesinmind”,

aswellas“thebestinterestsofourcustomers”.

Whatacontras ttot hestancetakenintheUS,saidKateTayloron

BusinessInsider.There,executivesatchainssuchasMcDonald’s

andBurgerKing“arepushingargumentsthatitis

crucialtotheAmericanpublicthattheystayopen

duringthecoronavirusoutbreak”.Anddespite

worriesvoicedbysomeworkersabouttherisks

involved,“itlookslikethey’veconvinced”

PresidentTrump–“al ong-timefast-foodfan”.

Thebigissueformanyofthechain’sUSworkers

isthatMcDonald’s,whichearned$5.3bnlastyear,

isn’tguaranteeingsickleaveformostemployees–

eventhoughmanyofthemlivefrompaycheckto

paycheckandneedtoworktostayafloat,saidThe

NewYorkTimes.Accordingtooneshiftmanager

atabranchinKansas,thecompany’srecent

pledgetoprotectits“McFamily”bypayinganyone

quarantinedonlyappliesto“corporate-owned”

restaurants.“Don’tbefooled...95%ofMcDonald’s

storesarefranchisestores,sothatdoesnotbenefitus

whatsoever,”hesaid.“IfIcaughtcoronavirus,wouldyouwant

memakingyournextmeal?”

Trump:a“fast-food fan”

Seven days in the

Square Mile

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