The Bank of England has now been joined by the Banque de France with the assertion that the French economy too is performing more strongly than expected and is pulling out of the economic trough more quickly than anticipated. The markets are totting up the increase in savings as more prudent people reserve funds against a further downturn and are now fretting that what matters is spending and injecting life into the global economies. Employment releases are confusing as patently jobs are disappearing(see below) and the Furlough Schemes in all countries will shortly be ending but despite this we saw those hugely encouraging US figures last week with that jump in jobs. Oil WTI at $40, gold at $1784, FTSE at 6157, Dow at 25,827 and USD and currency markets in a tight range for the past month. Normally summer months plus a narrow range in currency markets equals choppy times ahead: SGM-FX is helping many of our clients put some cover in place and establish some protection levels.
Pret a Manger the sandwich and coffee provider of choice of so many office workers is contemplating the closure of 10% of its shops. Without those office workers, sales have cratered and the business model has to be altered to take account of many fewer customers for the next few months. In the UK alone Pret employ 8000 staff of 100 different nationalities and within 100 meters of SGM-FX headquarters alone, there are 3 different shops which suggests that at least one of them will not survive.
Further east at Canary Wharf, the normally bustling multi floored shopping arcade beneath Canada Square is largely shuttered and many stores have signs announcing closure including Charbonnel and Walker, purveyors of the very best chocolates which are now only available on line, as are T.M.Lewin’s fine Jeremy Street quality shirts. That shift has been exacerbated and now confirmed by the LockDown-shopping will in future be largely on line and especially for non supermarket shops.
Anecdotally the prevalence of Eastern Europeans in East London and especially in the car wash sector has largely disappeared in the past few weeks. Until LockDown the nearby Texaco garage had a fearsome looking but friendly dentally challenged but first class car hand washing team ruled by an even more terrifying looking 2 meter tattooed shaven headed boss who led the others by example and who could reach all parts of taller, wider cars. Out of LockDown, prices have remained steady(no inflationary pressure there yet) but the Bulgarians have been replaced by a team of smiling, shorter but far less effective Bangladeshis who are leaderless-we are all equal hmm-and despite some spirited jumping, left my car uncleaned in parts they wanted to but could not get to, and in the fleeting amount of sunlight this weekend, streaky. So the Bulgarians have gone home leaving the Bangladeshis the victors for now in the CarWash war in East London.
Rose Royce presciently got it almost right on their 1976 song CarWash:
You might not ever get rich
But let me tell you it’s better than digging a ditch
There ain’t no telling who you might meet
A moviestar or maybe even an Indian chief
Working at the car wash
Working at the car wash, yeah
Come on and sing it with me, car wash
Sing it with the feeling now, car wash yeah
Discussion and Analysis by Humphrey Percy, Chairman and Founder