Amazon, Microsoft, Facebook and Tesla are notable beneficiaries of the accelerating trend towards a digitalized economy. This week it was announced that the world’s richest man is now also the world’s first $200 billionaire. Amazon CEO Jeff Bezos broke the wealth barrier on Wednesday as the shares of his company continued to surge on skyrocketing demand for online shopping. He is followed by Bill Gates in second place, Mark Zuckerberg in third, and Elon Musk in fourth.
Without exception, these executives have been strong innovators, and consequent agents for change in both consumer and business behaviour patterns.
- The Dow Jones Industrial Average has had its biggest reshuffling in seven years. Exxon Mobil Corp., Pfizer Inc., and Raytheon Technologies Corp. have been removed and replaced by Salesforce.com, Amgen Inc., and Honeywell International. This is a striking fall for Exxon, which was the world’s biggest company in 2011. Its rejection reflects the decline of commodity companies in the American economy.
- Fed Chair Jerome Powell has set a new approach to US monetary policy, letting inflation and employment run higher, but in an era that will likely keep interest rates low for years to come. US stocks neared record highs and the dollar weakened as the Federal Reserve’s changed policy rippled through global markets.
- Government programs in Europe have managed to protect European workers from mass unemployment due to the economic impact of Covid-19, but now tens of millions of jobs will be cut in the transportation, retail, and other industries around the continent. As companies downsize, 59 million people may face reduced hours or job losses, this being according to a study done by McKinsey & Company. Some companies that are already set for job cuts are: Airbus, BP, Renault, Lufthansa, Air France, the Debenhams department store chain, the Bank of Ireland, the retailer W.H. Smith, and even the McLaren Group and its Formula One racing team, along with countless other smaller businesses.
- Much of our nation is desperately calling for change within the ANC. In the context of this weekend’s ANC National Executive Committee meeting, we have commissioned an opinion piece by our consulting political analyst, Professor Ivor Sarakinsky. In his article entitled “The ANC’s Mexican Standoff’, Ivor anticipates that the meeting will be one of long knives, with battle lines drawn between the different factional party interests. No clear or positive outcome is likely in the short-term. More disturbingly, Ivor laments that the most powerful driver of ANC reform will be economic and social decline, under which the room for manouvre by the government narrows. He concludes by stating that if one is to draw positive conclusions at all, it is this pincer-like effect that really is, ironically, the silver lining that emerges out of all the clouds.
- The global wellness and fitness group, Virgin Active, is in poor health. Hilton Tarrant, from Moneyweb, has written an article analysing the resilience of the company. The perception that Virgin Active is too big to fail is brought into question through rigorous analysis. Follow this link for the article.
- Discovery Limited, well known as an innovator, has to date been a victim of Covid-19. The share price of insurer Discovery was on track for its worst day in more than a month on Friday, after it warned of an extra R1.3 billion hit from volatility in interest rates in the UK and SA. Discovery has said previously that low interest rates in the UK were weighing on its business there, with VitalityLife having to re-engineer itself for this new environment. Headline earnings, including the effect of long-term interest rates, are expected to fall by between 90% and 100% in its year to end-June.
- Distell, which owns brands like Hunter’s, Savanna, Amarula, and Durbanville Hills, has experienced a massive drop-off in its headline profit of 64%. The group lost 100 million litres in sales volumes and its contribution to excise duty fell 11% due to the Covid-19 alcohol ban. In a statement earlier this week, Distell said that it has adapted its business model to cater for increased demand in non-alcoholic wine and beer, and that the company will remain alert to other changes in consumer behaviour.
- Cell C expects to close an estimated 128 stores across South Africa and cut 546 jobs. The company has said that, “the retail environment has changed and this has been fast-tracked by the impact of Covid-19 and the evolving purchasing habits of consumers.”
Sources: Dynasty, Reuters, Bloomberg Markets, The New York Times, Daily Maverick, and Moneyweb, etc