cityam--2020-08-04--Amazon almost doubles size of UK Prime Air drone delivery arm

Amazon has ramped up expansion of its ambitious drone delivery project , almost doubling the number of staff in its Cambridge-based Prime Air team .
Prime Air now has close to 60 staff working on making Amazon deliveries by drone a reality , its largest since the project began in 2016 , data on Linkedin showed .
Its most recent hires have included several “ flight operators ” who would fly the drones , the Telegraph first reported .
The increase is part of Amazon ’ s pledge to hire more than 2,000 people across the UK last year , @ @ @ @ @ @ @ hubs in Cambridge , London and Edinburgh .
Read more : Amazon to create 2,000 UK jobs in ‘ clear vote of confidence ’ post-Brexit The Cambridge base is one of Amazon ’ s biggest research and development facilities in the country , where engineers and designers work on Prime Air drones as well as Amazon ’ s voice assistant Alexa .
Amazon said last summer it was aiming to begin launching the drones within months , which could travel “ up to 15 miles and deliver packages under five pounds to customers @ @ @ @ @ @ @ Amazon did not immediately respond to a request for comment .
The tech giant significantly out-performed expectations in its second quarter , jumping past profit estimates despite having warned earlier this year that it may face a loss due to the pandemic .
Read more : Amazon blows past estimates in revenue and profit beat Innovation in drone delivery has garnered more focus in recent months , as ministers seek ways to help improve access to resources during the coronavirus crisis .
Transport secretary Grant Shapps in April said the government would be @ @ @ @ @ @ @ in the Isle of Wight , while legislators seek to revamp rules that require drones to be in sight at all times .
A white paper was submitted to the government last month which called for the development of new testing grounds for drone deliveries , in order to ensure public safety while advancing technological innovation in the sector .

Amazon almost doubles size of UK Prime Air drone delivery arm
Amazon’s drone programme has been slated as the future of its delivery service
Amazon has ramped up expansion of its ambitious drone delivery project, almost doubling the number of staff in its Cambridge-based Prime Air team.
Prime Air now has close to 60 staff working on making Amazon deliveries by drone a reality, its largest since the project began in 2016, data on Linkedin showed.
Its most recent hires have included several “flight operators” who would fly the drones, the Telegraph first reported.
The increase is part of Amazon’s pledge to hire more than 2,000 people across the UK last year, including over 170 roles at its tech hubs in Cambridge, London and Edinburgh.
The Cambridge base is one of Amazon’s biggest research and development facilities in the country, where engineers and designers work on Prime Air drones as well as Amazon’s voice assistant Alexa.
Amazon said last summer it was aiming to begin launching the drones within months, which could travel “up to 15 miles and deliver packages under five pounds to customers in less than 30 minutes”.
Amazon did not immediately respond to a request for comment.
The tech giant significantly out-performed expectations in its second quarter, jumping past profit estimates despite having warned earlier this year that it may face a loss due to the pandemic.
Innovation in drone delivery has garnered more focus in recent months, as ministers seek ways to help improve access to resources during the coronavirus crisis.
Transport secretary Grant Shapps in April said the government would be launching a trial of drone delivery tools in the Isle of Wight, while legislators seek to revamp rules that require drones to be in sight at all times.
A white paper was submitted to the government last month which called for the development of new testing grounds for drone deliveries, in order to ensure public safety while advancing technological innovation in the sector.


cityam--2020-08-04--Public Health England becomes UK’s biggest advertiser during lockdown

Advertising spend in the UK almost halved during lockdown according to the latest figures , with Public Health England becoming the nation ’ s biggest advertiser over the course of the pandemic .
Traditional advertising spend — including on TV , newspapers , radio , cinema and billboards — fell more than £1.1bn year on year between the start of lockdown and the end of June , according to the latest data from Nielsen .
Read more : Twitter suffers advertising revenue slump amid pandemic and US protests Shuttered high streets , grounded airlines and crippled marketing budgets resulted in @ @ @ @ @ @ @ spend during lockdown , down from £2.3bn in the same period last year to £1.2bn in 2020 .
Tough market conditions during the pandemic also caused big advertisers to slim down their ad spending in a bid to boost finances .
McDonald ’ s slashed its advertising budget by 97 per cent from £43.5m to £1.3m during lockdown .
The fast food giant was forced to shut its 1,000 restaurants in the UK and Ireland from late March , which did not reopen for eat-in meals until last month .
Sky trimmed down @ @ @ @ @ @ @ lockdown from £47m to £19m , after wide-scale sporting cancellations caused a £575m plunge in revenue .
Even online retail titan Amazon slashed its UK advertising spend on traditional media by more than three-quarters to £6.5m .
However , the requirement for national health and safety messaging catapulted Public Health England ’ s ad spending to £44m , marking a 5000 per cent year-on-year increase .
The steep hike meant the government became the largest advertiser in the UK during the pandemic , after public service announcements were splashed all over the TV @ @ @ @ @ @ @ to curb the spread of infection .
“ Public Health England ran an effective campaign to encourage lockdown compliance and raise awareness of best health practices , and its incredible increase in spend reflects the importance of advertising as a communication platform for any public or private body , ” said Barney Farmer , the UK commercial director at Nielsen .
Public Health England ’ s ad output was almost 50 per cent higher than Unilever , the UK ’ s second highest advertiser during lockdown .
Read more : From Mad Men @ @ @ @ @ @ @ advertising Other notable brands that significantly increased their spend during lockdown included Walt Disney , which spent heavily to promote its Disney Plus streaming service .
Disney Plus , which launched in the UK and Europe at the start of national lockdowns , were being introduced , boosted ad spend by almost 1,000 per cent year on year to £10.2m .
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Public Health England becomes UK’s biggest advertiser during lockdown
Advertising spend in the UK almost halved during lockdown according to the latest figures, with Public Health England becoming the nation’s biggest advertiser over the course of the pandemic.
Traditional advertising spend — including on TV, newspapers, radio, cinema and billboards — fell more than £1.1bn year on year between the start of lockdown and the end of June, according to the latest data from Nielsen.
Shuttered high streets, grounded airlines and crippled marketing budgets resulted in a 48 per cent slump in ad spend during lockdown, down from £2.3bn in the same period last year to £1.2bn in 2020.
Big brands
Tough market conditions during the pandemic also caused big advertisers to slim down their ad spending in a bid to boost finances.
McDonald’s slashed its advertising budget by 97 per cent from £43.5m to £1.3m during lockdown.
The fast food giant was forced to shut its 1,000 restaurants in the UK and Ireland from late March, which did not reopen for eat-in meals until last month.
Sky trimmed down its budget by 60 per cent during lockdown from £47m to £19m, after wide-scale sporting cancellations caused a £575m plunge in revenue.
Even online retail titan Amazon slashed its UK advertising spend on traditional media by more than three-quarters to £6.5m.
Public Health England
However, the requirement for national health and safety messaging catapulted Public Health England’s ad spending to £44m, marking a 5000 per cent year-on-year increase.
The steep hike meant the government became the largest advertiser in the UK during the pandemic, after public service announcements were splashed all over the TV, radio and billboards in a bid to curb the spread of infection.
“Public Health England ran an effective campaign to encourage lockdown compliance and raise awareness of best health practices, and its incredible increase in spend reflects the importance of advertising as a communication platform for any public or private body,” said Barney Farmer, the UK commercial director at Nielsen.
Public Health England’s ad output was almost 50 per cent higher than Unilever, the UK’s second highest advertiser during lockdown.
Other notable brands that significantly increased their spend during lockdown included Walt Disney, which spent heavily to promote its Disney Plus streaming service.
Disney Plus, which launched in the UK and Europe at the start of national lockdowns, were being introduced, boosted ad spend by almost 1,000 per cent year on year to £10.2m.
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cityam--2020-08-04--Donald Trump questions accuracy of South Korean coronavirus stats

Donald Trump has questioned the validity of South Korea ’ s coronavirus statistics during a heated clash with a US TV station .
The President was questioned by Axios on why the US had such high rates of Covid-19 deaths , which are currently at around 1,000 per day , and why they were rising .
Read more : Trump demands US Treasury cut of Tiktok sale The interviewer said this was compared to South Korea , who has had just 301 deaths from a population of 51m .
The US , meanwhile , has recorded 158,000 deaths .
When @ @ @ @ @ @ @ of deaths , Trump said : “ You don ’ t know that , you don ’ t know that.
” Before the Open newsletter : Start your day with the City View podcast and key market data When asked if he thought South Korea had lied about its statistics , Trump said : “ I won ’ t get into that , because I have a very good relationship with the country , but you don ’ t know that.
” The interview also became heated when Trump was pushed on America @ @ @ @ @ @ @ one point , the President said that “ we ’ re lower than the world , lower than Europe ” when talking about Covid-19 death rates .
When the interviewer pointed out that Trump was looking at statistics that compared deaths with number of coronavirus cases and not overall population , the President said this did not matter .
He also denied that cases and deaths were rising in the US , despite official figures suggesting otherwise .
Read more : Trump gives Microsoft 45 days to clinch Tiktok deal as owners eye @ @ @ @ @ @ @ do that , you have to go by…look there is the US , you have to go by the cases , the cases of death , ” he said .
“ When you have somebody , where there ’ s a case the people that live from those cases .
”

Donald Trump questions accuracy of South Korean coronavirus stats
WASHINGTON, DC – AUGUST 03: U.S. President Donald Trump speaks during a news conference in the James Brady Press Briefing Room of the White House on August 3, 2020 in Washington, DC. With enhanced federal unemployment benefits now expired, Trump administration officials and Democratic Congressional leaders continue to negotiate on an extension of the unemployment benefits and an additional coronavirus economic stabilization and relief package. (Photo by Drew Angerer/Getty Images)
Donald Trump has questioned the validity of South Korea’s coronavirus statistics during a heated clash with a US TV station.
The President was questioned by Axios on why the US had such high rates of Covid-19 deaths, which are currently at around 1,000 per day, and why they were rising.
The interviewer said this was compared to South Korea, who has had just 301 deaths from a population of 51m.
The US, meanwhile, has recorded 158,000 deaths.
This actually happened pic.twitter.com/26of6Tjlpm — Paul Hutcheon (@paulhutcheon) August 4, 2020
When told about South Korea’s number of deaths, Trump said: “You don’t know that, you don’t know that.”
Before the Open newsletter: Start your day with the City View podcast and key market data
When asked if he thought South Korea had lied about its statistics, Trump said: “I won’t get into that, because I have a very good relationship with the country, but you don’t know that.”
The interview also became heated when Trump was pushed on America’s coronavirus death statistics.
At one point, the President said that “we’re lower than the world, lower than Europe” when talking about Covid-19 death rates.
When the interviewer pointed out that Trump was looking at statistics that compared deaths with number of coronavirus cases and not overall population, the President said this did not matter.
He also denied that cases and deaths were rising in the US, despite official figures suggesting otherwise.
“You can’t do that, you have to go by…look there is the US, you have to go by the cases, the cases of death,” he said.
“When you have somebody, where there’s a case the people that live from those cases.”


cityam--2020-08-04--Google parent Alphabet reveals record $10bn bond at lowest-ever price

Alphabet borrowed $ 10bn ( £7.66bn ) in the investment-grade corporate debt market yesterday , marking its largest ever bond issue at its lowest price to date .
Within the $ 10bn on offer , a $ 1bn five-year tranche was issued at a discount of 0.45 per cent — the lowest discount seen at that maturity since Apple issued a $ 1.5bn five-year note at 0.45 per cent in 2013 .
The six-part bond deal garnered more than $ 31bn in demand , according to data from Refinitiv , as low interest rates and corporate bond buying from the @ @ @ @ @ @ @ Read more : Google parent Alphabet sees revenue fall for first time ever Previously , Alphabet ’ s lowest coupon was 1.25 per cent on a $ 1bn May 2014 note .
Last week Alphabet reported its first quarterly sales drop in its listed history , though investors were largely unmoved as the loss was offset by a recovery in Google ’ s ads business .
“ There is a very narrow set of companies that were already super high quality , that are not impacted by this recession we ’ re going @ @ @ @ @ @ @ one of them , ” said Tom Graff , head of fixed income at Brown Advisory .
Of the $ 10bn bond offered , Alphabet said $ 4.5bn from the seven- , 20- and 40-year tranches will be used for general corporate purposes , including acquisitions .
Read more : Google to build undersea cable between New York and Cornwall The remaining $ 5.5bn will be put towards green initiatives , which the company said made it the largest-ever issue of corporate debt for environment , social and governance projects .
Alphabet ’ @ @ @ @ @ @ @ Amazon ’ s ( AMZN.O ) 0.40 per cent three-year note issued in June , which was among the lowest corporate discounts ever recorded .
Today ’ s 0.45 per cent five-year tranche was however cheaper than Amazon ’ s June 2020 offering at the same maturity , which priced at 0.80 per cent .

Google parent Alphabet reveals record $10bn bond at lowest-ever price
Alphabet borrowed $10bn (£7.66bn) in the investment-grade corporate debt market yesterday, marking its largest ever bond issue at its lowest price to date.
Within the $10bn on offer, a $1bn five-year tranche was issued at a discount of 0.45 per cent — the lowest discount seen at that maturity since Apple issued a $1.5bn five-year note at 0.45 per cent in 2013.
The six-part bond deal garnered more than $31bn in demand, according to data from Refinitiv, as low interest rates and corporate bond buying from the Federal Reserve continues to support issuance.
Previously, Alphabet’s lowest coupon was 1.25 per cent on a $1bn May 2014 note.
Last week Alphabet reported its first quarterly sales drop in its listed history, though investors were largely unmoved as the loss was offset by a recovery in Google’s ads business.
“There is a very narrow set of companies that were already super high quality, that are not impacted by this recession we’re going through right now. And Google is one of them,” said Tom Graff, head of fixed income at Brown Advisory.
Of the $10bn bond offered, Alphabet said $4.5bn from the seven-, 20- and 40-year tranches will be used for general corporate purposes, including acquisitions.
The remaining $5.5bn will be put towards green initiatives, which the company said made it the largest-ever issue of corporate debt for environment, social and governance projects.
Alphabet’s five-year tranche priced slightly higher than Amazon’s (AMZN.O) 0.40 per cent three-year note issued in June, which was among the lowest corporate discounts ever recorded.
Today’s 0.45 per cent five-year tranche was however cheaper than Amazon’s June 2020 offering at the same maturity, which priced at 0.80 per cent.


cityam--2020-08-04--Are you up to speed on major changes to business restructuring?

Among the many government schemes launched to help businesses during the COVID-19 pandemic , one valuable tool risks flying under the radar .
The Corporate Insolvency and Governance Act 2020 represents the biggest change to UK restructuring legislation in a generation .
It gives distressed companies new ways to address their difficulties while still remaining in control and being able to continue trading .
These new measures are likely to prove vital as many UK businesses ramp up trading but continue to face uncertain demand and constrained working capital .
The new Act provides such companies with vital breathing space @ @ @ @ @ @ @ But even if your company is trading successfully , it ’ s important to know the basics because it ’ s likely that , within your supply chain , customers base or even amongst your competitors , there will be a company deploying it soon – and this may well affect your business .
There are two new , critical areas to look at .
Firstly , the Act offers struggling companies some breathing space known as a moratorium .
This is an extendable 20-day period that provides a ‘ payment holiday ’ @ @ @ @ @ @ @ to develop a turnaround plan .
Directors need to appoint a licenced insolvency practitioner to act as monitor , pay promptly for any goods and services purchased during the moratorium , and crucially they need to believe they are likely to find a path to becoming a viable business to enable them to rescue the company .
Secondly , the legislation introduces the concept of a restructuring plan which allows companies to propose and , subject to creditor and court consent , enforce balance sheet restructuring alternatives .
One major attraction for companies @ @ @ @ @ @ @ outcomes for different creditor groups .
So that ’ s the theory , but what about the practice ?
If we take a struggling high street retailer , the new restructuring plan could be applied in a number of ways .
The first could be to amend leases and exit underperforming stores .
The second could be to reduce or rescheduled unsecured debts .
And thirdly , in certain circumstances , the retailer could reduce or write off their secured debt .
That is something that can not be done through a Company @ @ @ @ @ @ @ would have been the favoured option before the new legislation was introduced and is likely to be preferred to a pre-pack Administration .
That highlights another advantage of the restructuring plan .
It enables businesses dealing with the temporary impact of COVID-19 to address their problems without entering into a formal insolvency that may be less flexible and could result in reputational damage .
It also keeps directors in control throughout the process and means that their business can continue trading with suppliers and customers .
It ’ s important that all companies @ @ @ @ @ @ @ Even the healthiest business may have a struggling supplier looking to use the new tools to keep afloat .
Or you might have a customer in difficulty who tries to exit contracts or use a moratorium to delay payments .
You could even be asked to vote on their restructuring plan , in which they attempt to write off or restrict their debts to you .
Finally , a healthy business may find that a competitor is using these new restructuring tools to gain an advantage .
Although the new legislation was only @ @ @ @ @ @ @ we are already seeing businesses , including one major airline , put it to use – and we expect this trend to accelerate .
The Corporate Insolvency and Governance Act 2020 may not have received the fanfare that accompanied other recent government initiatives , but it could yet prove one of the most effective .
To find out more listen to our podcast .

What is City Talk? City Talk allows marketers to connect directly with our audience by publishing content on cityam.com
Are you up to speed on major changes to business restructuring?
The overpass is the conjunction of the Yan’an Elevated Road and the North-South Elevated Road, Shanghai, China.
Among the many government schemes launched to help businesses during the COVID-19 pandemic, one valuable tool risks flying under the radar.
The Corporate Insolvency and Governance Act 2020 represents the biggest change to UK restructuring legislation in a generation. It gives distressed companies new ways to address their difficulties while still remaining in control and being able to continue trading.
These new measures are likely to prove vital as many UK businesses ramp up trading but continue to face uncertain demand and constrained working capital. The new Act provides such companies with vital breathing space to get back on their feet. But even if your company is trading successfully, it’s important to know the basics because it’s likely that, within your supply chain, customers base or even amongst your competitors, there will be a company deploying it soon – and this may well affect your business.
There are two new, critical areas to look at. Firstly, the Act offers struggling companies some breathing space known as a moratorium. This is an extendable 20-day period that provides a ‘payment holiday’ from most debts and buys vital time to develop a turnaround plan. Directors need to appoint a licenced insolvency practitioner to act as monitor, pay promptly for any goods and services purchased during the moratorium, and crucially they need to believe they are likely to find a path to becoming a viable business to enable them to rescue the company.
Secondly, the legislation introduces the concept of a restructuring plan which allows companies to propose and, subject to creditor and court consent, enforce balance sheet restructuring alternatives. One major attraction for companies is the potential to put forward different outcomes for different creditor groups.
So that’s the theory, but what about the practice? If we take a struggling high street retailer, the new restructuring plan could be applied in a number of ways. The first could be to amend leases and exit underperforming stores. The second could be to reduce or rescheduled unsecured debts. And thirdly, in certain circumstances, the retailer could reduce or write off their secured debt. That is something that cannot be done through a Company Voluntary Arrangement (CVA), which would have been the favoured option before the new legislation was introduced and is likely to be preferred to a pre-pack Administration.
That highlights another advantage of the restructuring plan. It enables businesses dealing with the temporary impact of COVID-19 to address their problems without entering into a formal insolvency that may be less flexible and could result in reputational damage. It also keeps directors in control throughout the process and means that their business can continue trading with suppliers and customers.
It’s important that all companies are aware of the new legislation. Even the healthiest business may have a struggling supplier looking to use the new tools to keep afloat. Or you might have a customer in difficulty who tries to exit contracts or use a moratorium to delay payments. You could even be asked to vote on their restructuring plan, in which they attempt to write off or restrict their debts to you. Finally, a healthy business may find that a competitor is using these new restructuring tools to gain an advantage.
Although the new legislation was only introduced at the end of June, we are already seeing businesses, including one major airline, put it to use – and we expect this trend to accelerate. The Corporate Insolvency and Governance Act 2020 may not have received the fanfare that accompanied other recent government initiatives, but it could yet prove one of the most effective.
To find out more listen to our podcast.
Dan Hurd – EY UK and Ireland Partner, Turnaround and Restructuring Strategy
Lucy Winterborne – EY UK and Ireland Associate Partner, Turnaround and Restructuring Strategy


cityam--2020-08-04--The City View: Tony Matharu on why it's time to get London moving again

In this episode Christian is joined by top hotelier and London businessman Tony Mathura , who believes the capital needs an injection of confidence to get people back on public transport , back in the office and back into the pubs , restaurants , shops and hotels .
Also in this episode , Christian looks at the slow trickle of workers returning to the office ; BP ’ s dividend cut ; and a prediction that the Bank of England will take interest rates to zero , and lower .
Read more : The City View : Glass half full @ @ @ @ @ @ @ British pubs ETX Capital is one of the UK ’ s leading spread betting and CFD trading providers , offering services to retail , institutional , professional and high net worth customers via an award-winning trading platform .
With over 50 years of experience in the financial markets , customers and service are always put first at ETX , and the company prides itself in offering a tailor-made trading experience to every customer .
The multi-device TraderPro platform delivers a fully customisable , award-winning trading technology with customisable charts , instant execution and @ @ @ @ @ @ @ : Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage .
76 % of retail investor accounts lose money when spread betting or trading CFDs with ETX .
You should consider whether you understand how spread bets or CFDs work and whether you can afford to take the high risk of losing your money .
Authorised and regulated by the Financial Conduct Authority with Financial Services register number 124721 .
ETX Capital provides an execution-only service and therefore any market analysis , @ @ @ @ @ @ @ during this webinar is for educational purposes only and is not intended to be a personal recommendation or construed as advice .
ETX Capital and the presenter are not financial or investment advisors and do not recommend any instrument of any kind .
Any instruments that are mentioned throughout are cited only for illustrative and educational purposes .

The City View: Tony Matharu on why it’s time to get London moving again
Subscribe to The City View Podcast: Apple / Google / Spotify / RSS
In this episode Christian is joined by top hotelier and London businessman Tony Matharu, who believes the capital needs an injection of confidence to get people back on public transport, back in the office and back into the pubs, restaurants, shops and hotels.
Also in this episode, Christian looks at the slow trickle of workers returning to the office; BP’s dividend cut; and a prediction that the Bank of England will take interest rates to zero, and lower.
In association with ETX Capital
ETX Capital is one of the UK’s leading spread betting and CFD trading providers, offering services to retail, institutional, professional and high net worth customers via an award-winning trading platform. With over 50 years of experience in the financial markets, customers and service are always put first at ETX, and the company prides itself in offering a tailor-made trading experience to every customer. The multi-device TraderPro platform delivers a fully customisable, award-winning trading technology with customisable charts, instant execution and over 5,000 markets to trade.
Disclaimer: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76%of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets or CFDs work and whether you can afford to take the high risk of losing your money. Authorised and regulated by the Financial Conduct Authority with Financial Services register number 124721. ETX Capital provides an execution-only service and therefore any market analysis, opinion, commentary or other information provided during this webinar is for educational purposes only and is not intended to be a personal recommendation or construed as advice. ETX Capital and the presenter are not financial or investment advisors and do not recommend any instrument of any kind. Any instruments that are mentioned throughout are cited only for illustrative and educational purposes.


cityam--2020-08-04--US private equity firms step in where UK houses remain cautious

US firms are increasing their share of the market as UK private equity houses retreat amid market uncertainty .
Exclusive data seen by City A.M. shows the number of private equity investments in the UK fell by 17 per cent in the first half of the year .
Investments by UK PE houses plunged 27 per cent compared to the same period last year .
In total , UK private equity firms accounted for 58 per cent of the investment market by the number of deals , according to new analysis by accountancy and business advisory firm BDO .
This @ @ @ @ @ @ @ 2019 .
Simon Wood , M & A partner at Addleshaw Goddard said UK houses are facing a “ cocktail of headwinds ” due to the pandemic so it is unsurprising they are pulling back from deals .
UK houses are focusing on triaging their existing portfolios as well as facing “ uncertain valuations of new investments , and the traditional lending banks being less keen to finance strategic deals , ” Wood added .
By contrast the US share of the market grew five per cent to 25 per cent in the @ @ @ @ @ @ @ rest of the world accounted for 17 per cent , up from 14 per cent .
While the US economy has suffered heavily since the onset of the coronavirus crisis , private equity firms have bounced back in recent months .
Leading US firm KKR reported yesterday it raised a record $ 16bn in the second quarter as markets surged from March lows .
Blackstone also benefited from a strong fundraising quarter .
Graham Cross , a partner in Addleshaw Goddard ’ s private equity practice said : “ It ’ s possible @ @ @ @ @ @ @ because they often invest in the larger deals which may have been more protected from recent market volatility.
” While UK investors have been affected by falls in mid-market volumes , he noted .
There is some hope that activity will pick up towards the end of year as the pandemic settles .
Wood says : “ We expect to see UK PE engaging more in the fourth quarter and into next year .
Plc interim accounts season… will be instructive as it will provide the first widely-available concrete evidence of the effects @ @ @ @ @ @ @ “ Many PE houses continue to hold lots of dry powder and will be under pressure from investors to deploy funds as we emerge more fully from lockdown and the economy begins to recover , ” adds Jamie Austin , BDO ’ s national head of private equity .
Get the news as it happens by following City A.M. on Twitter .

US private equity firms step in where UK houses remain cautious
UK investors are fleeing domestic equities due to punishing stamp duty on shares
US firms are increasing their share of the market as UK private equity houses retreat amid market uncertainty.
Exclusive data seen by City A.M. shows the number of private equity investments in the UK fell by 17 per cent in the first half of the year. Investments by UK PE houses plunged 27 per cent compared to the same period last year.
In total, UK private equity firms accounted for 58 per cent of the investment market by the number of deals, according to new analysis by accountancy and business advisory firm BDO. This is down from 66 per cent in 2019.
Simon Wood, M&A partner at Addleshaw Goddard said UK houses are facing a “cocktail of headwinds” due to the pandemic so it is unsurprising they are pulling back from deals. UK houses are focusing on triaging their existing portfolios as well as facing “uncertain valuations of new investments, and the traditional lending banks being less keen to finance strategic deals,” Wood added.
By contrast the US share of the market grew five per cent to 25 per cent in the first half of 2020, while the rest of the world accounted for 17 per cent, up from 14 per cent.
While the US economy has suffered heavily since the onset of the coronavirus crisis, private equity firms have bounced back in recent months. Leading US firm KKR reported yesterday it raised a record $16bn in the second quarter as markets surged from March lows. Blackstone also benefited from a strong fundraising quarter.
Graham Cross, a partner in Addleshaw Goddard’s private equity practice said: “It’s possible that the prevalence of US investors arises because they often invest in the larger deals which may have been more protected from recent market volatility.” While UK investors have been affected by falls in mid-market volumes, he noted.
There is some hope that activity will pick up towards the end of year as the pandemic settles.
Wood says: “We expect to see UK PE engaging more in the fourth quarter and into next year. Plc interim accounts season… will be instructive as it will provide the first widely-available concrete evidence of the effects of Covid on various sectors”.
“Many PE houses continue to hold lots of dry powder and will be under pressure from investors to deploy funds as we emerge more fully from lockdown and the economy begins to recover,” adds Jamie Austin, BDO’s national head of private equity.
Get the news as it happens by following City A.M. on Twitter.


cityam--2020-08-04--Scottish Widows becomes first investor in Blackrock climate fund

Scottish Widows has become the first investor in Blackrock ’ s newly launched climate fund , which is designed for the transition to a low carbon economy .
The pension provider is initially allocating £2bn of its pension portfolios into Blackrock ’ s Climate Transition World Equity Fund .
Read more : Blackrock profit trumps estimates as Wall Street bounces back from coronavirus It marks a shift in strategy for Blackrock , which is using data to measure a company ’ s exposure and management during the transition .
The asset manager said it would help to provide investors with @ @ @ @ @ @ @ in the transition to a low carbon economy.
” Blackrock has been at the forefront of pushing climate change and ESG-related issues up the agenda .
Last month it punished more than 50 companies over their inaction on global warming after warning of huge investment risks from climate change .
The fund , which launches today , looks to increase investment in companies that are considered well prepared for a transition and reduce exposure to those less equipped .
In January chief executive Larry Fink said Blackrock would get tough on companies that @ @ @ @ @ @ @ climate change .
It announced it would put environmental strategy at the core of its investment strategy .
Its change in strategy came after criticism the asset manager had failed to use its power .
Blackrock ’ s Climate Transition fund also offers portfolio diversification by providing expsoure to companies across sectors and regions .
The asset manager noted a transition to a low carbon economy would hit hospitality , transportation and healthcare as well as oil and gas companies .
Read more : Blackrock punishes 53 companies over inaction on climate change @ @ @ @ @ @ @ Blackrock said : “ The global shift to zero and low carbon energy sources is underway and is accelerating.
” “ [ The fund ] expands our range of sustainable investment solutions… and aims to deliver long-term value to clients based on companies ’ readiness to transition to a low carbon economy.
” Maria Nazarova-Doyle , head of pension investments at Scottish Widows said : “ Offering customers more sustainable investment choices , and challenging companies in which we invest to behave more sustainably and responsibly , is a central part of our @ @ @ @ @ @ @ happens by following City A.M. on Twitter .

Scottish Widows becomes first investor in Blackrock climate fund
Blackrock is one of a number of US firms selling off their stakes in Chinese companies
Scottish Widows has become the first investor in Blackrock’s newly launched climate fund, which is designed for the transition to a low carbon economy.
The pension provider is initially allocating £2bn of its pension portfolios into Blackrock’s Climate Transition World Equity Fund.
It marks a shift in strategy for Blackrock, which is using data to measure a company’s exposure and management during the transition. The asset manager said it would help to provide investors with a “broad market approach to invest in the transition to a low carbon economy.”
Blackrock has been at the forefront of pushing climate change and ESG-related issues up the agenda. Last month it punished more than 50 companies over their inaction on global warming after warning of huge investment risks from climate change.
The fund, which launches on Friday, looks to increase investment in companies that are considered well prepared for a transition and reduce exposure to those less equipped.
In January chief executive Larry Fink said Blackrock would get tough on companies that were too slow to take action on climate change. It announced it would put environmental strategy at the core of its investment strategy.
Its change in strategy came after criticism the asset manager had failed to use its power.
Blackrock’s Climate Transition fund also offers portfolio diversification by providing exposure to companies across sectors and regions. The asset manager noted a transition to a low carbon economy would hit hospitality, transportation and healthcare as well as oil and gas companies.
Sarah Melvin, head of UK at Blackrock said: “The global shift to zero and low carbon energy
sources is underway and is accelerating.”
“[The fund] expands our range of sustainable investment solutions… and aims to deliver long-term value to clients based on companies’ readiness to transition to a low carbon economy.”
Maria Nazarova-Doyle, head of pension investments at Scottish Widows said: “Offering customers more sustainable investment choices, and challenging companies in which we invest to behave more sustainably and responsibly, is a central part of our strategy.”
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cityam--2020-08-04--Disney's earnings take a hit as pandemic wreaks havoc on theme parks business

Disney reported a profitable third quarter but missed analysts ’ expectations as it battled the effect of coronavirus on its theme parks business .
Revenue for the quarter was $ 11.78bn , substantially less than the $ 20.35bn in the comparable period , and missing the expected $ 12.39bn .
Read more : Tiktok poaches Disney streaming boss as new chief executive Net loss from continuing operations was $ 4.72bn , or $ 2.61 per share , in the third quarter .
This compares with a net profit of $ 1.43bn , or 79 cents per share , a year @ @ @ @ @ @ @ posted adjusted profit per share of eight cents compared to the loss of 63 cents per share which had been anticipated .
As expected , Disney ’ s parks , experiences and products segment was hit by the pandemic , with revenue plummeting 85 per cent to $ 983m from $ 6.58bn .
Analysts had expected $ 1.05bn .
In the three months to the end of June , Disney battled reduced attendance at its theme parks as global lockdowns forced their closure for most of the quarter .
Disney reopened its Shanghai @ @ @ @ @ @ @ quarter but shut its Hong Kong park due to a spike of coronavirus cases in the region .
Prior to the pandemic , the segment made up nearly half of last year ’ s annual operating profit .
In May , chief financial officer Christine McCarthy said coronavirus could deal a $ 1.4bn hit to operating income in the third quarter , with most of it affecting its theme parks .
Disney ’ s studio entertainment business felt the effect of the pandemic after it was forced to delay the release of major @ @ @ @ @ @ @ Revenue fell 55 per cent to $ 1.74bn .
Additionally a drop in advertising revenue on its media networks segment , including ESPN which is reliant on sport , also dampened its earning report .
Read more : Analysis : Can Disney Plus rescue the House of Mouse ?
A rare bright spot was the success of Disney ’ s streaming business through the pandemic .
Disney Plus , ESPN Plus and Hulu each grew subscribers in the quarter , but the unit as a whole reported losses as costs rose .
Disney @ @ @ @ @ @ @ to 57.5m by the end of June , up from 28.6m since February .
“ Despite the ongoing challenges of the pandemic , we ’ ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses , ” chief executive Bob Chapek said .

Disney’s earnings take a hit as pandemic wreaks havoc on theme parks business
Disney has focused on streaming after the pandemic sparked losses for its theme parks, cruises and film studios
Disney reported a profitable third quarter but missed analysts’ expectations as it battled the effect of coronavirus on its theme parks business.
Revenue for the quarter was $11.78bn, substantially less than the $20.35bn in the comparable period, and missing the expected $12.39bn.
Net loss from continuing operations was $4.72bn, or $2.61 per share, in the third quarter. This compares with a net profit of $1.43bn, or 79 cents per share, a year earlier.
However the entertainment giant unexpectedly posted adjusted profit per share of eight cents compared to the loss of 63 cents per share which had been anticipated.
As expected, Disney’s parks, experiences and products segment was hit by the pandemic, with revenue plummeting 85 per cent to $983m from $6.58bn. Analysts had expected $1.05bn.
In the three months to the end of June, Disney battled reduced attendance at its theme parks as global lockdowns forced their closure for most of the quarter. Disney reopened its Shanghai and Hong Kong theme parks during the quarter but shut its Hong Kong park due to a spike of coronavirus cases in the region.
Prior to the pandemic, the segment made up nearly half of last year’s annual operating profit. In May, chief financial officer Christine McCarthy said coronavirus could deal a $1.4bn hit to operating income in the third quarter, with most of it affecting its theme parks.
Disney’s studio entertainment business felt the effect of the pandemic after it was forced to delay the release of major films, including the widely-anticipated Mulan. Revenue fell 55 per cent to $1.74bn. Additionally a drop in advertising revenue on its media networks segment, including ESPN which is reliant on sport, also dampened its earning report.
A rare bright spot was the success of Disney’s streaming business through the pandemic. Disney Plus, ESPN Plus and Hulu each grew subscribers in the quarter, but the unit as a whole reported losses as costs rose.
Disney Plus reported its subscriber base had grown to 57.5m by the end of June, up from 28.6m since February.
“Despite the ongoing challenges of the pandemic, we’ve continued to build on the incredible success of Disney+ as we grow our global direct-to-consumer businesses,” chief executive Bob Chapek said.


cityam--2020-08-04--Thousands injured as explosion rocks central Beirut

A huge explosion has rocked the Lebanese capital Beirut leaving thousands injured and more than 50 dead .
Videos circulating on social media showed the aftermath of an explosion from the Lebanese capital ’ s port area , with doors and windows blown out in buildings across the city .
The port is near Mar Mikhael — a neighbourhood popular with aid workers and foreign journalists .
The explosion has killed at more than 50 people and left over 2,700 injured , Lebanon ’ s health minister said in televised remarks .
“ What we are witnessing is a huge @ @ @ @ @ @ @ ’ s Red Cross George Kettani told broadcaster Mayadeen .
“ There are victims and casualties everywhere – in all the streets and areas near and far from the explosion.
” Lebanon ’ s interior minister later told the MTV Lebanon channel the explosion appeared to have been caused by “ huge quantities of ammonium nitrate ” being stored at the port .
Hospitals are reported to be overwhelmed by casualties .
Local media showed people trapped beneath rubble , with a witness describing the first explosion as deafening .
The office of @ @ @ @ @ @ @ about 400 metres from the port , was among the buildings damaged from the explosion .
Three hours after the blast , a fire still blazed in the port district according to a Reuters report .
Prime Minister Boris Johnson joined others in offering their support to Lebanon after the explosion .
“ The pictures and videos from Beirut tonight are shocking , ” Johnson wrote on Twitter .
“ All of my thoughts and prayers are with those caught up in this terrible incident .
“ The UK is ready to provide @ @ @ @ @ @ @ including to those British nationals affected.
” The US State Department said it was closely following report of an explosion and stands ready to offer “ all possible assistance ” .
It comes at an incredibly difficult time for Lebanon , which is on the brink of financial collapse .
The coronavirus pandemic has compounded government corruption and financial mismanagement .
The explosion also comes ahead of a UN tribunal on Friday , which is set to issue its verdict in the trial in absentia of four suspects in the murder of ex-PM @ @ @ @ @ @ @ a car bomb 15 years ago triggered regional upheaval and a wave of international pressure which forced Syria to end its 29-year military presence in Lebanon .
The four suspects are from Iran-backed group Hezbollah , which is both a political party in Lebanon ’ s government and a guerrilla group .
Hezbollah denies any role in Hariri ’ s killing and has dismissed the UN tribunal as politicised .

Thousands injured as explosion rocks central Beirut
A huge explosion has rocked the Lebanese capital Beirut leaving thousands injured and more than 50 dead.
Videos circulating on social media showed the aftermath of an explosion from the Lebanese capital’s port area, with doors and windows blown out in buildings across the city.
The port is near Mar Mikhael — a neighbourhood popular with aid workers and foreign journalists.
The explosion has killed at more than 50 people and left over 2,700 injured, Lebanon’s health minister said in televised remarks.
“What we are witnessing is a huge catastrophe,” the head of Lebanon’s Red Cross George Kettani told broadcaster Mayadeen. “There are victims and casualties everywhere – in all the streets and areas near and far from the explosion.”
Lebanon’s interior minister later told the MTV Lebanon channel the explosion appeared to have been caused by “huge quantities of ammonium nitrate” being stored at the port. Hospitals are reported to be overwhelmed by casualties.
Local media showed people trapped beneath rubble, with a witness describing the first explosion as deafening.
The office of Lebanon’s Daily Star newspaper, about 400 metres from the port, was among the buildings damaged from the explosion.
Three hours after the blast, a fire still blazed in the port district according to a Reuters report.
Prime Minister Boris Johnson joined others in offering their support to Lebanon after the explosion.
“The pictures and videos from Beirut tonight are shocking,” Johnson wrote on Twitter. “All of my thoughts and prayers are with those caught up in this terrible incident.
“The UK is ready to provide support in any way we can, including to those British nationals affected.”
The US State Department said it was closely following report of an explosion and stands ready to offer “all possible assistance”.
It comes at an incredibly difficult time for Lebanon, which is on the brink of financial collapse. The coronavirus pandemic has compounded government corruption and financial mismanagement.
The explosion also comes ahead of a UN tribunal on Friday, which is set to issue its verdict in the trial in absentia of four suspects in the murder of ex-PM Hariri.
Hariri’s death in a car bomb 15 years ago triggered regional upheaval and a wave of international pressure which forced Syria to end its 29-year military presence in Lebanon.
The four suspects are from Iran-backed group Hezbollah, which is both a political party in Lebanon’s government and a guerrilla group.
Hezbollah denies any role in Hariri’s killing and has dismissed the UN tribunal as politicised.


cityam--2020-08-04--Could the bounce-back be quashed by a second wave?

With some countries fearing a second wave of Covid-19 cases , Schroders ’ chief economist Keith Wade considers whether a bounce back in the economy could be quashed .
While there are hopes that the easing of lockdowns and reopening of businesses are beginning to give life to the global economy , fears of second waves of infections are also growing .
Have we seen signs of a recovery ?
Keith observes that the data for June was strong , especially in the US .
“ So for example , we saw a strong bounce-back in retail sales , ” @ @ @ @ @ @ @ business surveys and housing surveys improve pretty sharply .
The economy did appear to be coming back pretty strongly.
” The US economy added 4.8 million jobs in June , while retail sales surged 7.5 % month-on-month .
Small business optimism increased after a seven-year low in April , according to the National Federation of Independent Business .
Meanwhile sales of previously owned homes jumped by 20.7 % .
Keith adds that it was a similar story across Europe , where the purchasing managers ’ index bounced quite sharply .
IHS Markit ’ @ @ @ @ @ @ @ activity based on responses from a panel of senior purchasing executives in the eurozone – increased to 51.1 in July , up from a reading of 39.4 for May .
“ And then looking in Asia , we had the second quarter GDP numbers for China , which showed a bounce back in activity .
So that was all very positive.
” China ’ s economy grew by 3.2 % in the second quarter , avoiding a recession .
Discover more from Schroders : Read : Sustainability : six ways the corporate world @ @ @ @ @ @ @ has driven stock market returns and what could drive them in the future ?
Watch : Why do markets rise when economies slump ?
What could halt the recovery ?
Keith says the concern is that worries over a second wave of infections building in the US , particularly in the southern states will have a knock-on effect on consumer spending , as local lockdowns are extended and households batten down the hatches .
Some of the high frequency data ( figures that are collected rapidly , in a matter of days ) @ @ @ @ @ @ @ appears to be levelling off somewhat ” .
He explains : “ The University of Michigan consumer confidence indicator was a bit disappointing .
Consumers don ’ t seem to be particularly confident at the moment .
In the meantime , given the number of new cases in the US is rising very rapidly , there ’ s likely to be renewed lockdowns .
For example Chicago put new restrictions in on bars and restaurants.
” He adds that research from Schroders ’ data insights unit shows that in sectors like hotels , @ @ @ @ @ @ @ been a bit of a levelling off , even a dip in activity .
These downbeat signals seem to have been confirmed by data released on Thursday 30 July from the Bureau of Economic Analysis suggesting the US economy contracted at the sharpest rate on record in the second quarter of the year – an annualised 32.9 per cent plunge .
What is the jobs situation like ?
That poor 30 July GDP reading was accompanied by disappointing employment data .
It showed new jobless claims in US rose for the second week @ @ @ @ @ @ @ 15 straight weeks .
“ It was 1.3 million earlier in July and if you think about that in historical context , the highest number before that was I think 890,000 .
“ Businesses are assessing their longer term future – and where they might have put their workers on furlough or on hold , they ’ re saying ‘ will we really need those workers ?
’ .
It looks like a lot of businesses are saying no , there won ’ t be a long-term future .
“ The level of @ @ @ @ @ @ @ very high at around 17 million .
So it is not a surprise to me that we got some disappointing data in July as a result of the rise in infections and the return of lockdowns in southern states.
” How does the Europe compare ?
Europe appears to have been “ much better at bringing the pandemic under control and bringing the rate of new cases down very significantly ” .
Keith says that does “ bode well ” for the reopening of the services sector , and that Germany has been @ @ @ @ @ @ @ He adds that prospects for the European economy have been improved by a massive €750bn worth of spending that “ will come through into the EU quite quickly ” .
The EU announced its ground-breaking deal for the “ Next Generation ” recovery fund in July .
He says : “ They expect to be spending 70 % of this over the next couple of years .
So that could provide quite a helpful boost to EU GDP .
That €750bn , on my calculation , is about 5 % of GDP in @ @ @ @ @ @ @ tension in Europe and it means Europe has moved on a long way from the aftermath of the global financial crisis.
” It represents a step towards much greater fiscal coordination than we ’ ve ever seen from the Eurozone – “ and this is exactly what the European Central Bank has wanted ” Keith observes .
However , looking forward , he warns that an improvement in global trade is critical .
He says that without this , “ Europe will struggle ” .
“ Like everywhere , the fiscal policy that @ @ @ @ @ @ @ far , a lot of it is filling the gap that ’ s been created by the fall-off in demand .
I think they are better placed than , say , the US for recovery .
But unless we can see that trade begin to improve , you won ’ t get those multiplier effects to really drive the European economy forward .
It ’ s not entirely within Europe ’ s hands.
” What is the situation in China ?
Keith has used Schroders ’ own activity indicators to break down China @ @ @ @ @ @ @ quarter .
“ What it looks like is that the industrial sector , the manufacturing sector , has bounced back pretty quickly .
Production has returned and risen above the pre-Covid levels .
And that ’ s good .
The difficulty is that the retail spending side seems to be lagging behind somewhat .
And I think this has been quite a general problem for the authorities in China , ” he says .
He adds that while the official unemployment rate doesn ’ t seem to have increased that much , it @ @ @ @ @ @ @ the economy .
“ And we ’ ve seen research and estimates that suggest that 10 million or so migrant workers have lost their jobs , ” he adds .
“ Many of them have had to return to their towns , villages , and leave the main cities .
And this has had quite a big impact on consumer demand overall.
” Some might find work back in their home region , but many will not and therefore be producing low or no incomes .
So Keith will be watching inventory build-up @ @ @ @ @ @ @ ’ re producing but you ’ re not selling then that will lead to an inventory build up .
And it could well be that what China ’ s done is cleared a lot of the backlogs of demand and bought production back .
But ongoing demand is not improving quickly enough for it to be able to sustain that increase in production.
” And that comes back to the question of indicators like those for global trade , which remain quite weak .
• You can discover more at Schroders insights and @ @ @ @ @ @ @ : This communication is marketing material .
The views and opinions contained herein are those of the author ( s ) on this page , and may not necessarily represent views expressed or reflected in other Schroders communications , strategies or funds .
This material is intended to be for information purposes only and is not intended as promotional material in any respect .
The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument .
It is not intended to provide and should not @ @ @ @ @ @ @ or tax advice , or investment recommendations .
Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions .
Past performance is not a reliable indicator of future results .
The value of an investment can go down as well as up and is not guaranteed .
All investments involve risks including the risk of possible loss of principal .
Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy .
Some information quoted was obtained from @ @ @ @ @ @ @ .
No responsibility can be accepted for errors of fact obtained from third parties , and this data may change with market conditions .
This does not exclude any duty or liability that Schroders has to its customers under any regulatory system .
Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell .
The opinions in this material include some forecasted views .
We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know .
However @ @ @ @ @ @ @ forecasts or opinions will be realised .
These views and opinions may change .
To the extent that you are in North America , this content is issued by Schroder Investment Management North America Inc. , an indirect wholly owned subsidiary of Schroders plc and SEC registered adviser providing asset management products and services to clients in the US and Canada .
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Could the bounce-back be quashed by a second wave?
Getty Images
With some countries fearing a second wave of Covid-19 cases, Schroders’ chief economist Keith Wade considers whether a bounce back in the economy could be quashed.
While there are hopes that the easing of lockdowns and reopening of businesses are beginning to give life to the global economy, fears of second waves of infections are also growing.
Keith Wade, Schroders’ chief economist, answers our questions.
Have we seen signs of a recovery?
Keith observes that the data for June was strong, especially in the US.
“So for example, we saw a strong bounce-back in retail sales,” he says. “We saw small business surveys and housing surveys improve pretty sharply. The economy did appear to be coming back pretty strongly.”
The US economy added 4.8 million jobs in June, while retail sales surged 7.5% month-on-month. Small business optimism increased after a seven-year low in April, according to the National Federation of Independent Business. Meanwhile sales of previously owned homes jumped by 20.7%.
Keith adds that it was a similar story across Europe, where the purchasing managers’ index bounced quite sharply.
IHS Markit’s manufacturing PMI data – which measures activity based on responses from a panel of senior purchasing executives in the eurozone – increased to 51.1 in July, up from a reading of 39.4 for May.
“And then looking in Asia, we had the second quarter GDP numbers for China, which showed a bounce back in activity. So that was all very positive.”
China’s economy grew by 3.2% in the second quarter, avoiding a recession.
Discover more from Schroders:
Read: Sustainability: six ways the corporate world will have to change
Learn: What has driven stock market returns and what could drive them in the future?
Watch: Why do markets rise when economies slump?
What could halt the recovery ?
Keith says the concern is that worries over a second wave of infections building in the US, particularly in the southern states will have a knock-on effect on consumer spending, as local lockdowns are extended and households batten down the hatches.
Some of the high frequency data (figures that are collected rapidly, in a matter of days ) Schroders uses shows “that the economy appears to be levelling off somewhat”.
He explains: “The University of Michigan consumer confidence indicator was a bit disappointing. Consumers don’t seem to be particularly confident at the moment. In the meantime, given the number of new cases in the US is rising very rapidly, there’s likely to be renewed lockdowns. For example Chicago put new restrictions in on bars and restaurants.”
He adds that research from Schroders’ data insights unit shows that in sectors like hotels, airlines, restaurants, there’s been a bit of a levelling off, even a dip in activity.
These downbeat signals seem to have been confirmed by data released on Thursday 30 July from the Bureau of Economic Analysis suggesting the US economy contracted at the sharpest rate on record in the second quarter of the year – an annualised 32.9 per cent plunge.
What is the jobs situation like?
That poor 30 July GDP reading was accompanied by disappointing employment data. It showed new jobless claims in US rose for the second week in a row – after dropping for 15 straight weeks.
Keith is concerned by unemployment claims remaining “very high”.
“It was 1.3 million earlier in July and if you think about that in historical context, the highest number before that was I think 890,000.
“Businesses are assessing their longer term future – and where they might have put their workers on furlough or on hold, they’re saying ‘will we really need those workers?’. It looks like a lot of businesses are saying no, there won’t be a long-term future.
“The level of unemployment as measured by continuing claims remains very high at around 17 million. So it is not a surprise to me that we got some disappointing data in July as a result of the rise in infections and the return of lockdowns in southern states.”
How does the Europe compare?
Europe appears to have been “much better at bringing the pandemic under control and bringing the rate of new cases down very significantly”. Keith says that does “bode well” for the reopening of the services sector, and that Germany has been “ahead of the curve”.
He adds that prospects for the European economy have been improved by a massive €750bn worth of spending that “will come through into the EU quite quickly”. The EU announced its ground-breaking deal for the “Next Generation” recovery fund in July.
He says: “They expect to be spending 70% of this over the next couple of years. So that could provide quite a helpful boost to EU GDP. That €750bn, on my calculation, is about 5% of GDP in Europe. That obviously relieved the financial tension in Europe and it means Europe has moved on a long way from the aftermath of the global financial crisis.”
It represents a step towards much greater fiscal coordination than we’ve ever seen from the Eurozone – “and this is exactly what the European Central Bank has wanted” Keith observes.
However, looking forward, he warns that an improvement in global trade is critical. He says that without this, “Europe will struggle”.
“Like everywhere, the fiscal policy that’s been put in place so far, a lot of it is filling the gap that’s been created by the fall-off in demand. I think they are better placed than, say, the US for recovery. But unless we can see that trade begin to improve, you won’t get those multiplier effects to really drive the European economy forward. It’s not entirely within Europe’s hands.”
What is the situation in China?
Keith has used Schroders’ own activity indicators to break down China’s economic performance in the second quarter.
“What it looks like is that the industrial sector, the manufacturing sector, has bounced back pretty quickly. Production has returned and risen above the pre-Covid levels. And that’s good. The difficulty is that the retail spending side seems to be lagging behind somewhat. And I think this has been quite a general problem for the authorities in China,” he says.
He adds that while the official unemployment rate doesn’t seem to have increased that much, it does not include many migrant workers in the economy.
“And we’ve seen research and estimates that suggest that 10 million or so migrant workers have lost their jobs,” he adds. “Many of them have had to return to their towns, villages, and leave the main cities. And this has had quite a big impact on consumer demand overall.”
Some might find work back in their home region, but many will not and therefore be producing low or no incomes. So Keith will be watching inventory build-up in China.
“Because if you’re producing but you’re not selling then that will lead to an inventory build up. And it could well be that what China’s done is cleared a lot of the backlogs of demand and bought production back. But ongoing demand is not improving quickly enough for it to be able to sustain that increase in production.”
And that comes back to the question of indicators like those for global trade, which remain quite weak.
You can discover more at Schroders insights and follow Schroders on twitter.
Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. To the extent that you are in North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc and SEC registered adviser providing asset management products and services to clients in the US and Canada. For all other users, this content is issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.


cityam--2020-08-04--AIG racks up $730m loss amid ‘ongoing catastrophe’ of pandemic

Insurance giant American International Group ( AIG ) has piled up $ 730m ( £558.7m ) in coronavirus-related losses during the first half of 2020 , its chief executive said today .
AIG chief executive Brian Duperreault warned of the “ formidable and ongoing catastrophe ” of the pandemic , as he ran through the insurer ’ s results in a call with analysts .
The firm , which is one of the biggest US insurers , yesterday posted a 56 per cent slump in quarterly adjusted earnings .
The group said the steep plunge was partly a result of @ @ @ @ @ @ @ general insurance business .
AIG pointed to a slump in travel demand for poor performance in its travel insurance business , which in turn contributed to a $ 1bn slump in the firm ’ s net premiums year on year .
AIG shares sank more than seven per cent to $ 29.9 at market open today , down from yesterday ’ s market close of $ 32.1 .
However , Duperreault attempted to reassure investors today by claiming the impact will affect AIG ’ s earnings and not its capital .
Read more @ @ @ @ @ @ @ for lawsuit insurance policy Peter Zaffino , AIG ’ s president and chief operating officer , added that pandemic-related losses affected a larger number of insurance lines in the last three months than during the first quarter .
Zaffino added that the insurance giant expects to recover some losses through reinsurance in the second half of 2020 .
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AIG racks up $730m loss amid ‘ongoing catastrophe’ of pandemic
Insurance giant American International Group (AIG) has piled up $730m (£558.7m) in coronavirus-related losses during the first half of 2020, its chief executive said today.
AIG chief executive Brian Duperreault warned of the “formidable and ongoing catastrophe” of the pandemic, as he ran through the insurer’s results in a call with analysts.
The firm, which is one of the biggest US insurers, yesterday posted a 56 per cent slump in quarterly adjusted earnings.
The group said the steep plunge was partly a result of $458m in Covid-related losses for its general insurance business.
AIG pointed to a slump in travel demand for poor performance in its travel insurance business, which in turn contributed to a $1bn slump in the firm’s net premiums year on year.
AIG shares sank more than seven per cent to $29.9 at market open today, down from yesterday’s market close of $32.1.
However, Duperreault attempted to reassure investors today by claiming the impact will affect AIG’s earnings and not its capital.
Peter Zaffino, AIG’s president and chief operating officer, added that pandemic-related losses affected a larger number of insurance lines in the last three months than during the first quarter.
Zaffino added that the insurance giant expects to recover some losses through reinsurance in the second half of 2020.
Before the Open: Get the jump on the markets with our early morning newsletter


cityam--2020-08-04--BP looks to a low carbon future after coronavirus oil carnage

It ’ s not every day that an oil giant gets a slap on the back from Greenpeace .
But that ’ s exactly what BP achieved this morning when it slipped out plans to produce 40 per cent less oil by the end of this decade .
Alongside its second quarter results – which made ugly reading for investors , as the firm booked a record $ 6.7bn loss – BP unveiled its “ strategic reset ” as it seeks to pivot from oil producer to “ integrated energy company ” .
Read more : BP halves dividend after @ @ @ @ @ @ @ Although the cut in oil production will attract the most attention , the full list of BP ’ s targets for the next decade underscores just how serious the firm is about this transition .
By 2030 , it will invest ten times as much in low carbon energy , increasing expenditure from $ 500m to $ 5bn .
It will also build as much renewable energy capacity – 50 gigawatts – in 10 years than currently exists in the UK .
Beyond that , it will also expand hydrogen business to 10 @ @ @ @ @ @ @ , while aiming to rollout 70,000 electric vehicle charging points by 2030 .
It currently has 7,500 .
It takes a lot to impress environmentalists , but even Greenpeace campaigner Mel Evans accepted that the list of actions were a “ necessary and encouraging start ” .
Mark van Baal of investor group Free Now agreed , saying that “ BP is the first oil major that walks the walk instead of just offering ambitions for 2050 , like its peers .
Read more : BP to sell aromatics and acetyls arms to @ @ @ @ @ @ @ sense of urgency and imagination beyond oil and gas .
It seems that other oil majors want to stay oil and gas companies , only don ’ t look like one.
” When in February chief executive Bernard Looney pledged that BP would be a net zero oil company by 2050 , no one could have predicted the firm would have made such substantial changes so fast .
But of course , that was before the coronavirus pandemic sent global oil markets into meltdown , leading BP to writedown billions of dollars of @ @ @ @ @ @ @ oil price forecasts .
For the Economist Intelligence Unit ’ s Cailin Birch , BP ’ s decision to revise down its asset valuation and slash dividends by 50 per cent “ illustrates both the speed and the extent to which the outlook for the global oil industry has deteriorated compared with the start of 2020 ” .
With oil prices now set to hover between $ 50 and $ 60 for the next 30 years , BP ’ s focus is now on getting the most out of its current assets while @ @ @ @ @ @ @ says Hargreaves Lansdown ’ s Nicholas Hyett .
Read more : Beyond Petroleum : Is BP finally moving from rhetoric to reality ?
Even so , he added , it ’ s a “ massive change ” of direction for the company , and suggests that BP “ feels there ’ s a real risk it ’ s left holding what are sometimes called stranded assets.
” It looks like bad news for shareholders , however , with any future surpluses to be put towards share buybacks rather than payouts for investors .
@ @ @ @ @ @ @ move to preserve cash and fund the strategic shift that ’ s underway , but it ’ s a further blow to income investors who have already seen their dividend cheques slashed ” , said Hyett .
Though today ’ s announcement will likely garner Looney plaudits among those concerned about the impact of the oil industry on the environment , there is still much for the firm to do .
For example , as CMC Markets ’ Michael Hewson points out , the commitment to a ten-fold increase in low-carbon investment over @ @ @ @ @ @ @ but is just half what the company paid for BHP ’ s shale assets in 2018 .
And van Baal said that though the decision to end exploration activity in new markets was a positive one , it still allows the company to continue its exploration operations in countries all over the world .
Under the 2050 Paris climate agreement , all exploration must cease , he pointed out .
“ BP must go further , and needs to account for or ditch its share in Russian oil company , Rosneft ” , @ @ @ @ @ @ @ to write off up to $ 17.5bn after oil price crash But it has now taken a clear lead over its competitors , many of whom are yet to announce how exactly they will begin to fulfil the raft of commitments they have made for the next 30 years .
The much-derided “ Beyond Petroleum ” moniker at last feels a little bit less like fantasy .

BP looks to a low carbon future after coronavirus oil carnage
It’s not every day that an oil giant gets a slap on the back from Greenpeace. But that’s exactly what BP achieved this morning when it slipped out plans to produce 40 per cent less oil by the end of this decade.
Alongside its second quarter results – which made ugly reading for investors, as the firm booked a record $6.7bn loss – BP unveiled its “strategic reset” as it seeks to pivot from oil producer to “integrated energy company”.
Although the cut in oil production will attract the most attention, the full list of BP’s targets for the next decade underscores just how serious the firm is about this transition.
By 2030, it will invest ten times as much in low carbon energy, increasing expenditure from $500m to $5bn. It will also build as much renewable energy capacity – 50 gigawatts – in 10 years than currently exists in the UK.
Beyond that, it will also expand hydrogen business to 10 per cent share of core markets business, while aiming to rollout 70,000 electric vehicle charging points by 2030. It currently has 7,500.
It takes a lot to impress environmentalists, but even Greenpeace campaigner Mel Evans accepted that the list of actions were a “necessary and encouraging start”.
Mark van Baal of investor group Free Now agreed, saying that “BP is the first oil major that walks the walk instead of just offering ambitions for 2050, like its peers.
“BP shows sense of urgency and imagination beyond oil and gas. It seems that other oil majors want to stay oil and gas companies, only don’t look like one.”
‘Massive change of direction’ for BP
When in February chief executive Bernard Looney pledged that BP would be a net zero oil company by 2050, no one could have predicted the firm would have made such substantial changes so fast.
But of course, that was before the coronavirus pandemic sent global oil markets into meltdown, leading BP to writedown billions of dollars of upstream assets, and reduce its long-term oil price forecasts.
For the Economist Intelligence Unit’s Cailin Birch, BP’s decision to revise down its asset valuation and slash dividends by 50 per cent “illustrates both the speed and the extent to which the outlook for the global oil industry has deteriorated compared with the start of 2020”.
With oil prices now set to hover between $50 and $60 for the next 30 years, BP’s focus is now on getting the most out of its current assets while preparing for the net zero future, says Hargreaves Lansdown’s Nicholas Hyett.
Even so, he added, it’s a “massive change” of direction for the company, and suggests that BP “feels there’s a real risk it’s left holding what are sometimes called stranded assets.”
It looks like bad news for shareholders, however, with any future surpluses to be put towards share buybacks rather than payouts for investors.
“It’s probably a necessary move to preserve cash and fund the strategic shift that’s underway, but it’s a further blow to income investors who have already seen their dividend cheques slashed”, said Hyett.
‘BP must go further’
Though today’s announcement will likely garner Looney plaudits among those concerned about the impact of the oil industry on the environment, there is still much for the firm to do.
For example, as CMC Markets’ Michael Hewson points out, the commitment to a ten-fold increase in low-carbon investment over the next 10 years sounds laudable, but is just half what the company paid for BHP’s shale assets in 2018.
And van Baal said that though the decision to end exploration activity in new markets was a positive one, it still allows the company to continue its exploration operations in countries all over the world.
Under the 2050 Paris climate agreement, all exploration must cease, he pointed out.
“BP must go further, and needs to account for or ditch its share in Russian oil company, Rosneft”, Evans added.
But it has now taken a clear lead over its competitors, many of whom are yet to announce how exactly they will begin to fulfil the raft of commitments they have made for the next 30 years.
The much-derided “Beyond Petroleum” moniker at last feels a little bit less like fantasy.


cityam--2020-08-04--FTSE 100 flatlines as companies reveal mixed earnings

The FTSE 100 closed flat on a choppy day of trading as investors mulled company earnings , the chances of more economic stimulus and rising coronavirus cases around the world .
London ’ s blue chip index closed marginally lower at 6,027 points .
The FTSE 250 index of slightly smaller , domestically focused firms ended the session up 0.73 per cent .
Read more : BP halves dividend after record loss in coronavirus quarter In Europe , Germany ’ s Dax was 0.37 per cent lower .
France ’ s CAC 40 was up 0.29 per cent and the @ @ @ @ @ @ @ .
Overnight in Asia , China ’ s SSE Composite index rose 0.1 per cent .
Hong Kong ’ s Hang Seng jumped two per cent and Japan ’ s Nikkei climbed 1.7 per cent .
Gold continued to tread water at $ 1,977 an ounce .
It hit an all time high of more than $ 1,980 an ounce last week as investors sought returns amid depressed real bond yields and a falling dollar .
“ UK stocks are flat today , despite an overwhelmingly positive session throughout Asia , ” said @ @ @ @ @ @ @ trading platform IG .
“ While the PMI data released yesterday has helped boost sentiment around the July recovery , we are seeing ongoing fears of a less fiscally accommodative environment hamper that optimism.
” “ With major differences in opinion over exactly what any fiscal accommodation should look like , the ultimate decision from Congress will be a major determinant of market sentiment as we move forward , ” he added .
Earnings season rumbled on , with FTSE 100 firms revealing the heavy hits they took at the height of the @ @ @ @ @ @ @ shares slumped 10.23 per cent after it said its underlying profit tumbled by 40 per cent in the first three months of the year .
Drink-maker Diageo ’ s shares dropped 5.55 per cent .
The world ’ s largest spirits-maker reported a bigger-than-expected drop in sales as demand evaporated during the coronavirus pandemic .
Oil giant BP slashed its dividend for the first time since 2010 as it tries to steady its finances .
However , its shares shot up 7.4 per cent in morning trading , before closing 3.4 per cent @ @ @ @ @ @ @ underlying replacement cost losses of $ 6.7bn ( £5.1bn ) were slightly better than analysts had been expecting .
Read more : Diageo shares drop as profit almost halves amid coronavirus crisis Airline Easyjet ’ s shares took off , jumping 8.8 per cent , after a third-quarter trading update .
It plans to fly at around 40 per cent of capacity for the rest of the summer , a higher number than anticipated .
“ The numbers for the third quarter were terrible , ” said David Madden , market analyst at @ @ @ @ @ @ @ added that “ the group is performing ahead of expectations ” .
US stocks were subdued on Tuesday as tensions with China escalated following President Donald Trump ’ s moves to force a sale of TikTok ’ s US operations .
Disappointing corporate earnings also did little to help optimism , as Ralph Lauren slumped 6.8 per cent after quarterly revenue plunged by nearly $ 1bn .
The Dow Jones is up 0.5 per cent while the benchmark S & P 500 traded 0.25 per cent higher .
The tech-heavy Nasdaq opened lower @ @ @ @ @ @ @ Yesterday the index hit a new record high but investors remain worried that Congress will continue to disagree over the next round of stimulus .
There are currently “ major differences in opinion ” between the Republicans and Democrats , Mahony said .
“ The ultimate decision from Congress will be a major determinant of market sentiment as we move forward.
” FTSE 100 and global investors will keep a wary eye on the talks .
On the virus front , there are encouraging signs emerging as many hotspots start to show small @ @ @ @ @ @ @ are declining in most second wave states , but this will need to improve more strongly for optimism to grow schools to have a successful school opening in September , ” said Edward Moya , senior analyst at Oanda .
Yesterday it was reported that California and Georgia reported the smallest rise in coronavirus cases in nearly a month .
Read more : Easyjet to expand flight schedule due to demand for holidays The dollar slipped 0.2 per cent against a basket of other currencies .
It is trading at two-year lows as @ @ @ @ @ @ @ .
That helped the euro continue its stellar rise .
The single currency gained 0.3 per cent against the greenback to buy $ 1.179 .
It is trading close to two-year highs after the EU agreed on a €750bn ( £680bn ) bailout fund .

FTSE 100 flatlines as companies reveal mixed earnings
The FTSE 100 closed flat on a choppy day of trading as investors mulled company earnings, the chances of more economic stimulus and rising coronavirus cases around the world.
London’s blue chip index closed marginally lower at 6,027 points. The FTSE 250 index of slightly smaller, domestically focused firms ended the session up 0.73 per cent.
Read more: BP halves dividend after record loss in coronavirus quarter
In Europe, Germany’s Dax was 0.37 per cent lower. France’s CAC 40 was up 0.29 per cent and the continent-wide Stoxx 600 slipped 0.1 per cent.
Overnight in Asia, China’s SSE Composite index rose 0.1 per cent. Hong Kong’s Hang Seng jumped two per cent and Japan’s Nikkei climbed 1.7 per cent.
Gold continued to tread water at $1,977 an ounce. It hit an all time high of more than $1,980 an ounce last week as investors sought returns amid depressed real bond yields and a falling dollar.
“UK stocks are flat today, despite an overwhelmingly positive session throughout Asia,” said Joshua Majony, senior market analyst at trading platform IG.
“While the PMI data released yesterday has helped boost sentiment around the July recovery, we are seeing ongoing fears of a less fiscally accommodative environment hamper that optimism.”
“With major differences in opinion over exactly what any fiscal accommodation should look like, the ultimate decision from Congress will be a major determinant of market sentiment as we move forward,” he added.
Diageo weighs down FTSE 100
Earnings season rumbled on, with FTSE 100 firms revealing the heavy hits they took at the height of the pandemic.
Engineering group Babcock’s shares slumped 10.23 per cent after it said its underlying profit tumbled by 40 per cent in the first three months of the year.
Drink-maker Diageo’s shares dropped 5.55 per cent. The world’s largest spirits-maker reported a bigger-than-expected drop in sales as demand evaporated during the coronavirus pandemic.
Oil giant BP slashed its dividend for the first time since 2010 as it tries to steady its finances.
However, its shares shot up 7.4 per cent in morning trading, before closing 3.4 per cent higher. This was partly because its underlying replacement cost losses of $6.7bn (£5.1bn) were slightly better than analysts had been expecting.
Airline Easyjet’s shares took off, jumping 8.8 per cent, after a third-quarter trading update. It plans to fly at around 40 per cent of capacity for the rest of the summer, a higher number than anticipated.
“The numbers for the third quarter were terrible,” said David Madden, market analyst at trading platform CMC Markets. But he added that “the group is performing ahead of expectations”.
US stocks mixed amid escalating Sino-US tensions
US stocks were subdued on Tuesday as tensions with China escalated following President Donald Trump’s moves to force a sale of TikTok’s US operations.
Disappointing corporate earnings also did little to help optimism, as Ralph Lauren slumped 6.8 per cent after quarterly revenue plunged by nearly $1bn.
The Dow Jones is up 0.5 per cent while the benchmark S&P 500 traded 0.25 per cent higher. The tech-heavy Nasdaq opened lower before edging 0.02 per cent higher. Yesterday the index hit a new record high but investors remain worried that Congress will continue to disagree over the next round of stimulus.
There are currently “major differences in opinion” between the Republicans and Democrats, Mahony said.
“The ultimate decision from Congress will be a major determinant of market sentiment as we move forward.” FTSE 100 and global investors will keep a wary eye on the talks.
On the virus front, there are encouraging signs emerging as many hotspots start to show small improvements.
“New cases and hospitalizations are declining in most second wave states, but this will need to improve more strongly for optimism to grow schools to have a successful school opening in September,” said Edward Moya, senior analyst at Oanda.
Yesterday it was reported that California and Georgia reported the smallest rise in coronavirus cases in nearly a month.
Read more: Easyjet to expand flight schedule due to demand for holidays
The dollar slipped 0.2 per cent against a basket of other currencies. It is trading at two-year lows as the US struggles to deal with coronavirus.
That helped the euro continue its stellar rise. The single currency gained 0.3 per cent against the greenback to buy $1.179. It is trading close to two-year highs after the EU agreed on a €750bn (£680bn) bailout fund.