Powerscourt

By Powerscourt on 17/09/2020

Powerscourt Coronavirus Briefing – 17 September 2020

ANALYSIS

The UK government’s COVID-19 testing programme has been a target of carping and low-level derision for months but this week it became a very serious political and economic problem.

The economy, just as it should be limbering back up to normality, is facing further damage as the inability to screen for the virus threatens to eliminate millions from the workforce.

Workers are caught in a Catch-22 which ministers apparently failed to foresee: the first sign of any COVID-like symptoms in a household should theoretically trigger a COVID test. With schoolchildren back in schools, respiratory bugs are everywhere so citizens are increasingly seeking reassurance that every cough and sniffle is not COVID-19. Without comfort that these viruses are not COVID-19, workers and children are not welcome in workplaces and schools. Acute shortage of COVID tests around the UK now means it is next to impossible for citizens to get the reassurance they need to go safely back to work, forcing hundreds of thousands to self-isolate for no reason – remember that the overwhelming majority of Covid-19 tests are negative. By Powerscourt’s calculations, less than 2% of people tested in the UK from late June to early September were positive.

Problems with the programme are closing schools and increasing pressure on hospital A&E departments, according to warnings from teachers, doctors and hospital chiefs yesterday.

Prime Minister Boris Johnson, having touted the tests as a way to get people safely back to work, has now been forced to urge people not to book tests unless they had symptoms, citing a “colossal spike” in demand. Meanwhile, education secretary Gavin Williamson has advised parents that they should not get a child tested, even if there had been a suspected or confirmed COVID-19 case in school.

The British Chambers of Commerce has issued an unusually strong rebuke, warning the government that the failure of the testing system could cripple economic recovery in the UK and warning it to get its act together on testing. “A truly comprehensive test and trace programme is essential if the UK is to manage the virus without further lockdowns which will cripple business,” Adam Marshall, director general, said in a statement.

The Daily Telegraph reported that the government is now planning to ration testing and that people will be refused coronavirus tests even if they have symptoms.

Across the pond, coronavirus continues to torpedo the best-laid plans of the US President.

Ahead of the forthcoming November US election, President Trump has staked much of his political capital on having a COVID-19 vaccine ready and has said this will be ready this year. Yesterday scientists took the wind out of his sails.

The director of the US Centers for Disease Control and Prevention, Robert Redfield, Wednesday told a Senate hearing on the US response to the pandemic he believes a vaccine will be available to the general public in the late second quarter or third quarter of 2021, much later than the US President has suggested.

Trump immediately disputed the timing, telling reporters Dr Redfield was confused. Redfield, on his side, indicated that Trump’s obsession with getting a vaccine past the finishing post may be clouding the issue, when he told the Senate that face-coverings are “the most important, powerful public health tool we have”.

There is some good news on the virus development front however. US drugmaker Eli Lilly said a new antibody drug – which has not yet been peer reviewed — had significantly reduced hospital admissions in a mid-stage trial of 300 patients with coronavirus.

In China, where it all started, there were nine new cases yesterday – all imported, according to the government. In India, they had almost 100,000 new cases.

Asian shares were trading lower Thursday ahead of the European open. 

 

WHAT ARE COMPANIES SAYING?

 

Retail & Consumer

Next
Fashion retailer Next upgraded its profit forecast for the second time this year after reporting more resilient sales than it expected. It now expects full-year pre-tax profit of around £300m, up from an estimate of £195m given at the end of July. However, the company still expects full year sales to fall 12 per cent, citing the end of the government’s furlough scheme and uncertainty over the trajectory of the pandemic. 

Waitrose
Waitrose are dropping four more stores, putting 124 jobs at risk. The retailer said that it would shut its shops in Caldicot, south Wales, at the Ipswich Corn Exchange and in Shrewsbury on December 6. Waitrose is also selling its store in Wolverhampton to Tesco, with all 140 staff roles being transferred. “We have found trading challenging in these four shops and, despite the best efforts of partners, we have not been able to find a way to make them profitable in the long term”, the retailer said.

 

Industrials 

British Airways
British Airways chief executive Alex Cruz said the airline expects to drop its plan to “fire and rehire” thousands of staff following negotiations with unions. Mr Cruz told MPs that BA still plans to cut about 10,000 jobs, roughly a third of the workforce. “I am pleased that we have reached a point at which it appears that we may have a solution that does not require the need to issue new contracts,” Mr Cruz told the House of Commons transport select committee.

Qantas
Qantas said it will offer a seven-hour scenic tour of Australia from the skies in the latest move to boost sales after the hit from the pandemic.The flight on a Qantas 787 Dreamliner will take off from Sydney’s domestic airport on October 10 before taking in Uluru, Byron Bay and the Great Barrier Reef. Prices for the flight begin at A$787 for economy class rising to $3,787, include a set of the distinctive kangaroo pyjamas and also allow passengers to collect air miles.

Cornish Lithium
Cornish Lithium, an exploration company, plans to extract lithium from brine heated by the earth’s core to meet the expected boom in demand for electric vehicles. The company said that it found high grades of lithium in geothermal waters that can be produced sustainably from a project aimed at becoming the country’s key source of the battery material.

 

Financials & Real Estate 

NatWest
Aquarius International Development, owned by US-based Norcal Venture Capital Group, said it would build resorts, residences, yacht charters, stores and online travel services over the next five years as part of a $250m investment plan for Thailand’s post pandemic tourist sector. We firmly believe in the long-term vitality of the Asian travel and tourism industry, especially at the top end, and at the heart of this prosperity is Thailand,” said Nixon Chung, Aquarius’s chief operations officer.

VG Acquisition Corp
VG Acquisition Corp, a blank-check company founded by Richard Branson, filed for an initial public offering on Wednesday. VG Acquisition said it plans to sell 40 million units, made up of shares and warrants, on the New York Stock Exchange. It set a placeholder price of $10 per unit.

IG Group
IG Group,  UK-based company providing trading in financial derivatives, saw elevated demands in Q1. Revenues jumped to £209m in the three months to August 31, up 62 per cent compared with a year earlier. June Felix, chief executive, said, “this was a great start to the year… Although there was some moderation from the exceptional performance in the fourth quarter.”

 

TMT

Playtech
Gambling software maker Playtech posted lower first-half profit citing store closures and sports events cancellations related to the pandemic. The company said that  first-half adjusted core earnings fell 15% to 162.3 million euros (147.70 million pounds) for the six months ended June 30.

Spotify
Music streaming leader, Spotify says Apple’s new subscription package which bundles music, television and video services into one monthly deal for £15, is anti-competitive. “We call on competition authorities to act urgently to restrict Apple’s anti-competitive behaviour, which if left unchecked will cause irreparable harm to the developer community and will threaten our collective freedoms to listen, learn, create and connect,” the company said. An Apple spokesman said: “Customers can discover and enjoy alternatives to every one of Apple’s services. We’re introducing Apple One because it is great value for customers and a simple way to access the full range of Apple’s subscription services.”

Swimmy
Swimmy, the app nicknamed the Airbnb of swimming pools, said that it expected revenue of €1.5 million this year, compared to about €400,000 in 2019. Founded in 2017, it is said to have about 3,000 pools available for hire in France and began operating in Spain last year. It is planning to move into the American market.

Trainline
Trainline, the leading independent rail and coach travel platform provided a trading update noting that monthly cash outflow is lower than guidance and that its liquidity position improved. The company is phasing back to normal operations as “the industry now on a path to recovery, albeit more slowly than previously expected”. Clare Gilmartin, CEO, said “By acting quickly and remaining agile, we continue to successfully navigate through the significant disruption COVID-19 has caused to the rail and coach industry.”

 

IN THE NEWS

Fed fleshes out new monetary policy — to mixed reviews – Financial Times

Business warns testing failures risk crippling the UK economy Financial Times

Bank of England gears up for next stimulus push – Reuters

Swathes of public to be refused coronavirus tests under rationing plans – The Telegraph




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