By Powerscourt on 02/11/2020
Powerscourt Coronavirus Briefing – 02 November 2020
UK Prime Minister Boris Johnson’s chaotic announcement on Saturday evening that England would go into a second lockdown was redeemed by the hope of release on December 2 with citizens and businesses able to celebrate Christmas, Chanukah, Diwali and various other forms of seasonal togetherness after the four week lockdown elapsed.
Reports on Monday suggest that may have been an optimistic gloss. The Times reported that Cabinet ministers have said it would be “very difficult” to end the lockdown if deaths and hospital admissions are still rising. One minister told the Times that if transmission remained high “all bets are off”. Government may allow for a mild relaxation of restrictions for the festive season itself, but several sources have told the newspaper that restrictions are likely to remain in place into the New Year.
Meanwhile, inconsistency in the UK government’s message around the second lockdown, against a background of multiple policy fumbles throughout the year, has left the government exposed and facing fury primarily from its own MPs.
The FT reports a darkening mood in Johnson’s own Conservative party, with the Prime Minister expected to face another rebellion from backbench MPs who believe he is sacrificing the economy through the continued waves of restrictions.
Ominously for Johnson, the Daily Telegraph, once a Johnson “fanzine”, leads on the plans of one of the figureheads of the pro-Leave movement, Nigel Farage, to form a new party called Reform UK, centred around the idea that lockdowns and restrictions on freedoms don’t protect citizens or the economy against coronavirus.
Farage formerly headed the Brexit Party, which won 29 seats in last year’s European Parliament election and has been a thorn in the government’s side for years as a lightning rod for people who wanted the UK to leave the European Union. He and his partner, former Brexit party Chairman Richard Tice, are beginning to attract support from those people who believe that coronavirus strategy should be driven by protecting the most vulnerable, allowing those with modest risk from the virus to continue as normal, thereby protecting the economy.
The head of the UK vaccines taskforce, Kate Bingham, told a private meeting of investors at the weekend that every person in the UK who needs a COVID vaccine over the age of 50 will have it by Easter.
Bingham said a recent vaccine “dress rehearsal” had been “quick and efficient”. Data readouts are expected from several of the leading vaccine candidates in late stage studies by the end of December.
On the eve of what could be a seismic and highly divisive US Presidential Election, voters and markets alike are both braced for anything, with coronavirus driving much of the political narrative.
With stand-offs reported between groups of Trump and Biden supporters in New Jersey, North Carolina and Texas, Dr Anthony Fauci, the Director of the National Institute of Allergy and Infectious Disease has yet again become the focus of Trump supporters’ ire.
At one of a flurry of pre-election rallies by the President, in Florida, a crowd chanted “Fire Fauci”, tacitly encouraged by the President, who told his supporters “let me wait until a little bit after the election”. Fauci, a leading immunologist, told the Washington Post over the weekend the US should prepare for a “whole lot of hurt” with a rising death toll from the virus through the winter.
Meanwhile, the Wall Street Journal reports that doctors are now beginning to get to grips with the reason why COVID-19 has the potential to generate long-lasting symptoms affecting multiple organs, including gastrointestinal issues and memory loss, in some patients.
Theories explaining the persistence of coronavirus symptoms – called “long-COVID” – long after the end of the acute disease phase include the possibility that the virus may cause the immune system to attack its own organs. Researchers are also exploring the possibility that COVID-19 could damage the so-called “vagus nerve”, an interface between the brain and the heart, lungs and digestive tract.
US shares ended lower on Friday but Asian equities were cautiously upbeat into Monday despite gloom in Europe and apprehension about the US election.
WHAT ARE COMPANIES SAYING?
The airliner announced results this morning, revealing a loss of €197m in the first half of the year. Passenger number fell to 17.1m due to COVID-19, down 80%. Annual revenue also fell 78% to €1.18bn. Their statement attached to the release read: “The group expects to carry approximately 38 million passengers in FY21, although this guidance could be further revised downwards if EU governments continue to mismanage air travel and impose more uncoordinated travel restrictions or lock downs this winter.”
Financials & Real Estate
The international specialist insurer, has issued a trading statement for the first nine months of the year to 30 September 2020. Gross written premiums grew by 2% to $3,262.4 million, driven by rate improvement and growth in customer numbers across the business. Hiscox’s exposure to claims arising from COVID-19 has been running off at approximately 8% per month from June 2020, with residual exposure to be fully run off by the end of June 2021. Bronek Masojada, Chief Executive Officer, commented: “Our year-to-date performance demonstrates the resilience of the Group, as we delivered good growth in every target area, including in all of our Retail businesses.”
Retail & Consumer
Ocado Group has announced that trading at Ocado Retail Ltd, a joint venture between Ocado Group plc and Marks & Spencer Group plc, has remained strong through the fourth quarter of the current financial year. Ocado continues to see high demand as consumers migrate to online grocery in record numbers due to COVID-19. As a result of this strong performance, Ocado Group today announces that it expects full year EBITDA for the group to be over £60m, versus previous guidance of over £40m
Howden Joinery Group
The parent company for the Howdens Joinery business, a supplier of kitchens and joinery products to the building trade, today announced a trading update for the period 14 June 2020 to 31 October 2020. The company expects to repay the £22m it received from the UK Government’s Job Retention Scheme. Despite significant disruption caused by lockdown in the second quarter, all of their sites have re-opened. However, year-on-year revenue is down 6.8%. Chief Executive Officer, Andrew Livingston, said: “I am very pleased with Howdens trading performance in the second half to date with sales in Periods 7 to 11 being particularly strong.
Associated British Foods
The multinational food processing and retailing company has issued an update in light of the latest movement restrictions imposed by the UK government. The company, who own Primark, announced that as of today all Primark stores in the Republic of Ireland, France, Belgium, Wales, Catalonia in Spain and Slovenia are temporarily closed, which represent 19% of their total retail selling space. The group estimate loss of sales for these stores, including the stores in England, to be £375m.
The global sports betting and gaming group, has provided an update regarding the impact of enforced store closures across UK and European retail as a result of further restrictions due to Covid-19. The business estimates losses of £27m to UK retail due to currently required closures. If restrictions were to extend further, GVC estimate that losses could top £43m. These estimates include government support where available.
IN THE NEWS
Lockdown could last to next year, ministers warn – THE TIMES
Lockdown delivers blow to hopes of UK recovery – FINANCIAL TIMES
Boris Johnson faces biggest rebellion of his premiership over plans for a second national lockdown – THE TELEGRAPH