Major International Business Headlines Brief::: 07 May 2021

Fri May 7 09:27:00 CAT 2021

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Major International Business Headlines Brief::: 07 May 2021

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ü  China's exports soar as US recovers and India stalls

ü  Juukan Gorge: Rio Tinto investors in pay revolt over sacred cave blast

ü  Holiday costs to jump in summer, warns travel boss

ü  Liberty steel owner in talks over £200m lifeline

ü  Road and rail building plans under review after Covid

ü  Plastic bag charge to double to 10p in all shops in England

ü  UK economy set to grow at fastest rate in more than 70 years

ü  IBM 2nm chip breakthrough claims more power with less energy

ü  U.S. economy likely created nearly a million jobs in April

ü  Tesla tells regulator that full self-driving cars may not be achieved by year-end

ü  British Airways-owner IAG cautious on short term flying recovery

ü  Stocks rally into U.S. jobs report as commodity prices surge

ü  BMW confirms 2021 outlook, but sees volatility ahead

ü  Adidas hikes outlook despite lockdowns, supply chain issues

ü  Holiday Inn owner says U.S. demand picks up ahead of summer

ü  Beyond Meat loss exceeds forecasts on higher costs, slow restaurant sales

ü  Biden willing to accept 25% corporate tax rate to fund spending programs

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China's exports soar as US recovers and India stalls

China's exports unexpectedly surged last month as America's speedy recovery from the pandemic spurred demand.

Stalled factory production in India, as the country struggles with a coronavirus crisis, also helped boost the global market for Chinese goods.

China's exports in dollar terms surged by more than 32% from a year earlier to almost $264bn (£190bn).

In the same month imports grew at the fastest pace in more than a decade, rising by 43% from a year ago.

Despite ongoing trade tensions with the US and other countries, China's exports for the month were almost $43bn more than its imports, a more than threefold increase.

Economists highlight that the figures are heavily skewed as they are compared to the period a year ago when the country was brought to a virtual standstill by strict lockdown measures.

But the recovery of the world's second largest economy still faces some major challenges.

Analysts expect China's gross domestic product growth to slow from the record 18.3% expansion in the January-March quarter.

That comes as the Covid-19 pandemic disrupts supply chains around the world, slowing the movement of goods and pushing up the cost of shipping.

The global shortage of microchips, which are used in everything from cars to phones, is also hurting manufacturers.

Last week, China's official manufacturing purchasing managers' index showed that factory activity growth slowed in April from the previous month.

On Thursday, China "indefinitely" suspended key economic dialogue with Australia, the latest in a growing diplomatic rift between the countries.

Relations have declined since Australia called for a probe into the origins of Covid-19 and banned Chinese telecoms giant Huawei from building its 5G network.

Last year, China imposed sanctions on Australian goods such as wine and beef.

In a statement, a Chinese government commission accused Australia of having a "Cold War mindset".--BBC

Juukan Gorge: Rio Tinto investors in pay revolt over sacred cave blast

Mining giant Rio Tinto has faced a shareholder revolt over a $10m (£7.2m) bonus for its outgoing boss.

In a rare development, 61% of votes cast at its annual meeting opposed the firm's executive remuneration package.

The backlash comes after the company destroyed sacred Aboriginal rock shelters in Western Australia last May.

Rio Tinto blasted the 46,000-year-old rock shelters at Juukan Gorge to expand an iron ore mine, sparking an outcry and leading to several resignations.

The pay package covers $55m earmarked in salary and bonuses for the company's top 14 executives.

Despite the shareholder rebellion, the executives are still expected to receive their payouts, as the vote was advisory only.

In September, chief executive Jean-Sébastien Jacques Jacques and other senior executives, including the heads of its iron ore and corporate relations divisions, said they would be leaving the company.

And earlier this year chairman Simon Thompson and non-executive director Michael L'Estrange also said that they would leave the company.

"I am ultimately accountable for the failings that led to this tragic event," Mr Thompson said in the statement.

Responding to the outcome of the vote, the company said "This constitutes a 'first strike'".

In Australia, if a company's executive pay proposal is rejected by shareholders for two consecutive years, the board could face a vote to be removed.

"The board acknowledges that the executive pay outcomes in relation to the tragic events at Juukan Gorge are sensitive and contentious issues," Rio Tinto said in a statement.

What was at Juukan Gorge?

The caves at Juukan Gorge - seen as one of Australia's most significant archaeological research sites - had shown evidence of continuous human habitation dating back 46,000 years.

Artefacts found at the caves include a 28,000-year-old animal bone tool and a 4,000-year-old belt made of plaited human hair.

DNA testing had directly linked it to the Puutu Kunti Kurrama and Pinikura people - the traditional owners of the land.

The shelters sat above about eight million tonnes of high-grade iron ore, with an estimated value of $104m.

In December, a parliamentary inquiry ordered Rio Tinto to rebuild the cave system, and blasted their destruction as "inexcusable".

In its report - titled Never Again - the inquiry concluded Rio Tinto "knew the value of what they were destroying but blew it up anyway".

It made seven recommendations, including a moratorium on all mining in the local area, and changes to heritage protection laws.--BBC

Holiday costs to jump in summer, warns travel boss

Prices for international travel are set to rise this year due to pent-up demand and fewer aeroplanes in service, a travel boss has warned.

Booking.com's chief executive Glenn Fogel told the BBC that holiday "prices are already going up".

Many airlines have significantly reduced the number of flights they operate due to travel restrictions.

Despite huge demand, uncertainty makes it hard for airlines to plan bringing more planes back into service, he said.

"There's so much pent-up demand," said Mr Fogel. "Everybody wants to go travelling, but we all want to do it safely."

John Grant, an aviation analyst with global travel data provider OAG agrees that this will have a knock-on impact on air fares as travel restrictions are eased.

"That will, in the short term, create a rush of pent-up demand and revenge spending," he said.

"In turn, the airline algorithms will detect an uptick in demand and move prices up accordingly".

A lack of clarity about how governments will go about recognising vaccine and testing statuses from other countries is troubling the travel industry, which has been hit hard by the coronavirus pandemic.

Confusing systems

Mr Fogel believes a single system would be helpful: "So many different people in so many different governments are talking about different programmes, but right now, there is nothing out there that is unified, so it's very confusing.

"I listened to the prime minister of Italy saying how they want to let people into Italy soon and you just have to prove that you have a vaccine and it'd be great.

"And my thinking is, well, I have my vaccine myself, but how do I prove it? Do I just bring my little white card that I got in the US that said I got it, is that going to be good enough? We need some clarifications."

Several systems are being explored, including the International Air Transport Association (IATA)'s travel pass, which is being trialled by a number of airlines.

Meanwhile, the European Union is working on having a digital pass ready in time for the summer holidays.

Split society?

The idea of a scheme that allows passengers who have had the vaccine to travel has proved divisive.

The UK equality watchdog recently warned it could create a "two-tier society, whereby only certain groups are able to fully enjoy their rights".

That's a view supported by the World Health Organization (WHO) but Mr Fogel disagrees.

"It's true that if you're not vaccinated, you may not be able to enter a country under this type of a system," he said.

"But I'm okay with that. Because the alternative is what - nobody gets to go in? That doesn't make a lot of sense to me."

He added that there are countries that people cannot go into if they don't have proof of vaccination against yellow fever, for example.

"There's nothing wrong with using technology to prove you are a safe traveller that can help get the industry up faster," said Mr Fogel.

Financial pain

The lack of clarity has hurt the finances of Booking.com's US owner Booking Holdings, which also owns Kayak and rentalcar.com.

Revenues for the three months to the end of March fell to $1.1bn (£790m) - 50% lower than the same period a year ago.

Figures from the World Travel & Tourism Council (WTTC) reflect a similar picture across the industry, showing tourism's value to the global economy fell from nearly $9.2tn in 2019 to $4.7tn in 2020.

As a share of the global economy that equates to a fall from 10.4% to just 5.5%.

But Mr Fogel, who is chief executive of both the Dutch-based Booking.com and its parent firm Booking Holdings, told investors that there is still reason to be optimistic things will improve.

"While the pace of vaccine distribution remains frustratingly slow in most places around the world, Israel, the UK and the US are benefiting from successful vaccine distribution programs," he said.

"In each of these countries, we have seen encouraging booking trends, which supports our view that vaccine distribution is key to unlocking pent-up travel demand."-BBC

Liberty steel owner in talks over £200m lifeline

The BBC understands that Sanjeev Gupta's beleaguered UK steel business may yet secure a £200m lifeline.

The owner of Liberty Steel is in talks about a loan facility from California-based investment firm White Oak Global Advisors.

The arrangement is at a preliminary stage but a skeleton agreement - a so called "term sheet" has been drafted.

Any loan would need the approval of Gupta Family Group's creditors which include Credit Suisse and Tata Steel.

GFG has been scrambling to raise new financing since its major financial backer Greensill Capital went bust in early March, which threw the future of Liberty Steel and its 3,000 workers into doubt. A further 2,000 people work at other GFG steel sites in the UK.

Mr Gupta has already asked the government for £170m of support which has been rejected.

Sources close to the matter say the injection of new money would increase the chances of Liberty's creditors recovering a greater portion of the cash owed to them, as it would potentially allow Liberty to return to full production and therefore benefit from higher steel prices.

The agreement is still subject to further due diligence by the lender and there is no guarantee the loan will materialise.

White Oak and GFG declined to comment.

The government has pledged to preserve Liberty Steel in some form and says it will consider "all options". In April, Business Secretary Kwasi Kwarteng told the BBC said he wanted to give GFG more "time to find finance".

But Labour has called for it to step in before the firm collapses, not after, to save thousands of supply chain jobs and millions of pounds.

In the meantime, the clock is ticking as "victims" of the Greensill collapse prepare their claims to liquidate some of the assets Gupta pledged to Greensill to keep the cash flowing.

Applications to compel the liquidation (winding up orders) of three Liberty Steel group companies have been filed and were originally due to be heard by a judge this week.

Insolvency experts say winding up orders are the "nuclear option" for creditors trying to get their money back and their very existence will severely hamper Mr Gupta's own attempts to save the business.--BBC

Road and rail building plans under review after Covid

Multi-billion pound plans for roads and railways in the UK are being reviewed, as travel patterns shift in response to the Covid pandemic.

It comes as BBC research suggests 43 of the UK's biggest employers won't bring workers back to the office full-time.

Traffic is expected to be below the long term average.

The BBC has learned that civil servants are studying transport expansion plans to see which are still viable.

Stephen Joseph, a visiting professor at the University of Hertfordshire, told BBC News: "Of course they're going to have to review their investment - the Treasury will be asking them to justify it - and some schemes just can't be justified."

The government has been approached for comment. It hasn't revealed details of any schemes that might potentially be cut.

The Prime Minister has previously re-committed himself to £100bn spending on HS2 rail, which was designed in part to relieve congestion on the Euston to Birmingham route.

But some schemes in the £27bn roads programme may now be facing the axe in the post-Covid world.

It's impossible to forecast traffic demand with certainty, but many previously-congested roads are flowing much more freely out of rush-hour than they were before.

That's because even a small decrease in the number of cars prevents a heavily-congested road from reaching gridlock.

It isn't just transport economists, concerned about a potential waste of public money, who are putting pressure on the roads programme. It's coming from environmentalists too.

They are taking ministers to court, because they say the government's plans for roads are on a collision path with targets to cut carbon emissions.

Even if new stretches of road are increasingly used by electric cars, it would still take decades before they become carbon neutral, because of all the emissions produced to make the cement, steel and tarmac for the roads.

The AA's president Edmund King has argued that as working from home for part of the week becomes ingrained in British society, it's rational for the government to divert some of the roads budget to improving broadband.

This would also increase the number of jobs created, because large highly-mechanised road schemes employ relatively few workers.

Chris Todd from the environmental group Transport Action Network (Tan) told the BBC: "The end of commuting as we know it undermines arguments for road expansion.

"Coming alongside new figures showing that carbon emissions and the economic case for smart motorways are far worse than forecast, the case for a change in direction is overwhelming.

"With the daily commute ending for many and ever more journeys being walked and cycled, giving up a car will make sense for many households."

He added that it was "vital" that the government enable this societal change of habits towards cycling and public transport, by redirecting cash for roads into repairing potholes, creating new cycle lanes, improving bus services and providing long distance options for those who don't own cars.

Supporters of road-building insist that demand will bounce back when the pandemic is over. But Tan believes some road schemes will be judged economically unviable as a result of changing trends.

It says smart motorway schemes, such as the M25, are vulnerable - as the congestion used to justify them is typically restricted to peak hours.

Tan suggests urban schemes, such as A38 widening in Derby, might be being reconsidered, because so much traffic on them is short distance peak hour commuting.

The controversial A27 Arundel bypass may be squeezed out too, because, again, hold-ups are typically caused by commuters.

Pinch point schemes and junction upgrades may face the axe as well, since these are also usually justified in terms of tackling peak hour congestion.

Despite its review of transport spending, the government is preparing to contest a court case over road expansion brought by the environmental group.

Meanwhile, ministers are drawing up the Transport Decarbonisation Strategy promised by the prime minister to help the sector achieve deeper emissions cuts.

While others sectors of the economy have been shrinking their emissions, transport has been doing the opposite.--BBC

Plastic bag charge to double to 10p in all shops in England

The single-use carrier bag charge will rise from 5p to 10p and be extended to all businesses in England from 21 May.

The government said all stores, including corner shops, will now have to apply the charge from that date.

The 5p levy on plastic bags was introduced in England in 2015. Since then their use has fallen by over 95%.

The average person in England now buys just four single-use carrier bags a year from the main supermarkets, compared with 140 in 2014.

"The introduction of the 5p charge has been a phenomenal success," said Environment Minister Rebecca Pow.

By extending the charge to all retailers, the government hopes the use of single-use carrier bags will fall by 70-80% in small and medium-sized businesses.

"We know we must go further to protect our natural environment and oceans, which is why we are now extending this charge to all businesses," said Ms Pow.

"Over the next couple of weeks I urge all retailers of all sizes to make sure they are ready for the changes, as we work together to build back greener and strengthen our world-leading action to combat the scourge of plastic waste."

Association of Convenience Stores chief executive, James Lowman, said: "We strongly welcome the inclusion of local shops and other small businesses into the successful plastic bag charging scheme, which not only helps the environment, but is also a great way for retailers to raise money for local and national charities."

Removing bags

John Lewis said it was trialling the removal of single-use bags from its Cheltenham, Kingston and Leeds stores from 21 May.

Customers will be asked to bring their own bags or buy a reusable bag made from 100% recyclable material costing 50p for a medium size and 75p for a large size.

Marija Rompani, director of ethics and sustainability for the John Lewis Partnership, said: "It has become the norm to take our own bags when we go food shopping but we have a different mindset when shopping for clothes, beauty and home products.

"We expect our customers will be supportive of this change and will be listening to their feedback."

Cutting plastics

"Plastic pollution is one of the most visible symptoms of the environmental crisis, damaging natural habitats and putting precious wildlife at risk," sasid Paula Chin, sustainable materials specialist at the World Wide Fund for Nature (WWF).

"Measures to reduce plastics consumption need to go much further. The UK government must consider a complete ban on single-use bags and make sure this is not undermined by the sale of 'bags for life', which are currently cheaply available and all too often end up as single-use items."

The Co-op became the latest supermarket chain to say it will stop selling plastic "bags for life" last month.

The retailer, which has 2,600 shops, said many people only used the 10p bags once before throwing them away.

The Co-op said its move would take 29.5 million bags for life, or about 870 tonnes of plastic, out of circulation every year.

Earlier last month Morrisons said it would switch from offering plastic "bags for life" to a paper alternative.

In recent years, all supermarkets have tried to cut plastics use.

Waitrose is currently trialling the removal of its 10p bags for life from several of its stores.

Sainsbury's has said its bags for life cost 20p to encourage customers to re-use them and are made from 100% recycled plastic.

Tesco increased the price of its bags for life to 20p in September 2020 and doesn't sell single-use bags.--BBC

UK economy set to grow at fastest rate in more than 70 years

The UK economy will enjoy its fastest growth in more than 70 years in 2021 as Covid-19 restrictions are lifted, according to the Bank of England.

The economy is expected to expand by 7.25% this year, with extra government spending helping to limit job losses.

However, it follows a contraction of 9.9% in 2020, the biggest in 300 years.

Andrew Bailey, the governor of the Bank of England, said the recovery was "strong" but likened it to "more of a bounce back" than a boom.

He added that the surge in growth, while "good news", would only return the UK economy back to its 2019 size.

Mr Bailey told the BBC: "We're going to see a continued strong recovery this year, but let's put that into perspective.

"That's two years passed with no growth in the economy."

His comments came as Bank policymakers held interest rates at a record low of 0.1%.

GDP graphic

The Bank expects the recovery to gather pace as the reopening of high streets paves the way for a mini-spending boom.

The UK's rapid vaccine rollout is also expected to boost consumer confidence.

Growth of more than 7% this year would represent the strongest expansion since official records began in 1949.

Fewer job losses

Chancellor Rishi Sunak announced in the March Budget that the furlough scheme, which subsidises employees' wages, would be extended until the end of September.

Mr Bailey said the extension would limit the rise in unemployment "significantly" by providing a "bridge of support that will last until the recovery is underway".

The Bank now expects the unemployment rate to peak at 5.5% later this year. This is far below the 7.75% it predicted in February.

Mr Bailey added: "Longer term unemployment is one of the most difficult things to deal with. And we think that will be substantially reduced."

Unemployment forecast graphic

The number of people on furlough is expected to fall to 2.75 million in the three months to June, from just under five million at the start of this year.

"Given the expected near‑term recovery in activity, unemployment is projected to increase only slightly," policymakers said in the Bank's latest Monetary Policy Report.

The Bank of England is trying to play down the idea that there is a post pandemic boom, but nonetheless these are very significant increases to the forecast for economic growth this year, and a substantial cut to predicted peak unemployment.

Much of this is "rebound" - the natural and obvious result of large swathes of the economy reopening. But the changes indicate the underpinning of a more sustained recovery too.

The peak in unemployment has been sharply downgraded, from close to 8% to 5.5%, thanks to the furlough scheme extension, a stronger recovery, and an assumption that the long-term damage from the pandemic will be smaller than previously expected.

That means about 700,000 expected job losses not materialising. If this does come to pass, it will far exceed even the most optimistic assumptions from the start of the pandemic crisis.

The Bank also assumes that vaccinated Britons feel safer, more confident and are now spending more of the savings arising from a year of lockdowns.

There are clear uncertainties, relating to virus variants. But the Bank is at least pointing to a summer recovery, with the economic damage from the pandemic repaired by the end of this year.

Households have squirrelled away more than £150bn in extra savings over the past year as more people have worked from home, particularly higher earners.

The Bank expects them to spend about 10% of this extra cash as the economy returns to normal.

However, more than half of those surveyed by the Bank said they would keep the money in savings, suggesting that many households remain cautious about the economic outlook.

Policymakers stressed that the outlook "remains uncertain" and "continues to depend on the evolution of the pandemic".

Non-essential shops, pubs and restaurants started reopening last month as part of a phased easing of restrictions across the UK.

The Bank's survey of businesses showed that "footfall increased rapidly in the first few days of trading", with hairdressers, pubs and restaurants all reporting a surge in bookings.

Anecdotal evidence suggested that many people were also opting to take holidays in the UK instead of overseas, with demand "much higher" than pre-Covid levels.

Pay rises remain subdued

The Bank also suggested that pay rises were likely to remain subdued this year.

While fewer businesses are freezing pay, the Bank said most were awarding increases of between 1.5% and 2%.

It added: "Where bonuses were being paid, these were generally lower than a year ago."

Recent increases in commodity and factory gate prices, combined with record low interest rates, have raised fears of a bigger rise in the price of goods and services.

Interest rate graphic

Inflation, as measured by the consumer prices index (CPI), currently stands at 0.7%.

However, this is expected to increase sharply towards the Bank's target of 2% in the next few months amid a rise in energy prices.

The Monetary Policy Committee (MPC) that sets interest rates was split on Thursday over the size of its latest round of bond buying, as it announced it will slow the pace of purchases.

What is quantitative easing?

What does the governor of the Bank of England do?

Outgoing chief economist Andy Haldane voted for a reduction in the Bank's quantitative easing programme to guard against the risk of the economy overheating.

However, the MPC stressed it would not raise interest rates until there was "clear evidence" that the recovery was sustainable.--BBC

IBM 2nm chip breakthrough claims more power with less energy

IBM says it has made a significant breakthrough in computer processors by creating a 2nm chip in its test lab.

The process used to make computer chips is measured in nanometres (nm) - with a lower number usually signifying a leap forward.

IBM claims its test chip can improve performance by 45% over current 7nm commercially available products.

It is also more energy efficient - using 75% less energy to match current performance, IBM said.

It claims the tech could "quadruple" mobile phone battery life, and phones might only need to be charged every four days.

The computer chip industry used to use nanometres - one billionth of a metre - to measure the physical size of transistors. Today, a lower "nm" number is widely seen as a marketing term to describe new generations of the technology, leading to better performance and lower power.

IBM says its 2nm process can cram 50 billion transistors into "a chip the size of a fingernail" - up from 30 billion when it announced its 5nm breakthrough in 2017.

The end result should be another performance bump for computers in the coming years.

'A breakthrough'

Current high-end desktop chips based on the 7nm process, such as AMD's Ryzen processors, did not become widely available until 2019 - four years after IBM announced it had cracked the 7nm process.

But mainstream commercial chip-makers such as Intel and TSMC - which makes AMD processors - have already said they plan to build ultra-low nm chip plants in the next several years.

"This can be considered as a breakthrough," said Peter Rudden, research director at market intelligence firm IDC.

"We have seen semiconductor manufacturers moving from 14nm to 10nm to 7nm, with 7nm being a real challenge for some," he explained.

He said IBM's new process could be used for AI uses that today need a second piece of tech - such as a powerful graphics card- to handle some tasks. The increased power efficiency could be useful in personal devices, while increased performance would benefit huge datacentres, he added.

"This also sends a message to the IT industry that IBM continues to be a hardware research powerhouse."

Chip wars

IBM said the test chip for its 2nm process was built at its Albany research lab in the United States.

The news comes amid an international shortage of computer chips and a bid to shake up chip manufacturing to rely less on major foundries in China and Taiwan.

Car manufacturers have been forced to suspend production due to the lack of computer parts; smartphone makers have warned product releases could be affected; and high-end computer components such as graphics cards are difficult to find and selling for high prices.

Why iPhone 12 marks dawn of a new chip technology

How will 'chipageddon' affect you?

On Thursday, Nintendo joined the chorus of concerned companies, saying the chip shortage was affecting production of its hugely popular Nintendo Switch console.

The worldwide shortage led US President Joe Biden to convene a special industry summit on the shortage. In the UK, the government has intervened in the acquisition of chip designer Arm by tech giant Nvidia.

And Intel's chief executive has announced a $20bn (£14.6bn) investment in two new plants in the US, telling the BBC that having 80% of the world chip supply in Asia is not a good idea.--BBC

U.S. economy likely created nearly a million jobs in April

U.S. employers likely hired nearly a million workers in April as they rushed to meet a surge in demand, unleashed by the reopening of the economy amid rapidly improving public health and massive financial help from the government.

The Labor Department's closely watched employment report on Friday will be the first to show the impact of the White House's $1.9 trillion COVID-19 pandemic rescue package, which was approved in March. It is likely to show the economy entered the second quarter with even greater momentum, firmly putting it on track this year for its best performance in almost four decades.

"We are looking for a pretty good figure, reflecting the ongoing reopening we have seen," said James Knightley, chief international economist at ING in New York. "With cash in people's pockets, economic activity is looking good and that should lead to more and more hiring right across the economy."

According to a Reuters survey of economists, nonfarm payrolls likely increased by 978,000 jobs last month after rising by 916,000 in March. That would leave employment about 7.5 million jobs below its peak in February 2020.

Twelve months ago, the economy purged a record 20.679 million jobs as it reeled from mandatory closures of nonessential businesses to slow the first wave of COVID-19 infections.

April's payrolls estimates range from as low as 656,000 to as high as 2.1 million jobs. New claims for unemployment benefits have dropped below 500,000 for the first-time since the pandemic started and job cuts announced by U.S.-based employers in April were the lowest in nearly 21 years.

Also arguing for another month of blockbuster job growth, consumers' perceptions of the labor market are the strongest in 13 months. But the pent-up demand, which contributed to the economy's 6.4% annualized growth pace in the first quarter, the second-fastest since the third quarter of 2003, has triggered shortages of labor and raw materials.

>From manufacturing to restaurants, employers are scrambling for workers. A range of factors, including parents still at home caring for children, coronavirus-related retirements and generous unemployment checks, are blamed for the labor shortages.

"While we do not expect that lack of workers will weigh noticeably on April employment, rehiring could become more difficult in coming months before expanded unemployment benefits expire in September," said Veronica Clark, an economist at Citigroup in New York.

Payroll gains were likely led by the leisure and hospitality industry as more high-contact businesses such as restaurants, bars and amusement parks reopen. Americans over the age of 16 are now eligible to receive the COVID-19 vaccine, leading states like New York, New Jersey and Connecticut to lift most of their coronavirus capacity restrictions on businesses.

BROAD EMPLOYMENT GAINS

Solid gains were also expected in manufacturing, despite a global semiconductor chip shortage, which has forced motor vehicle manufacturers to cut production. Strong housing demand likely boosted construction payrolls.

Government employment is also expected to have picked up as school districts hired more teachers following the resumption of in-person learning in many states.

Robust hiring is unlikely to have an impact on President Joe Biden's plan to spend another $4 trillion on education and childcare, middle- and low-income families, infrastructure and jobs. Neither was it expected to influence monetary policy, with the Federal Reserve having signaled it is prepared to let the economy run hotter than it did in previous cycles.

Millions of Americans remain out of work and many have permanently lost jobs because of the pandemic.

"Nobody knows what the economy is going to look like post COVID," said Steven Blitz, chief U.S. economist at TS Lombard in New York. "There is a stubbornly high number of people who have been permanently displaced. The (spending) plans are about giving the economy a higher trajectory of growth so that these people can be hired sooner rather than later."

The unemployment rate is forecast dropping to 5.8% in April from 6.0% in March. The unemployment rate has been understated by people misclassifying themselves as being "employed but absent from work."

To gauge the recovery, economists will focus on the number of people who have been unemployed for more than six months as well as those out of work because of permanent job losses.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, likely improved last month, though it remained below its pre-pandemic level. More than 4 million people, many of them women, dropped out of the labor force during the pandemic.

With the lower-wage leisure and hospitality industry expected to dominate employment gains, average hourly earnings were likely unchanged in April after dipping 0.1% in March. That would lead to a 0.4% drop in wages on a year-on-year basis after a 4.2% increase in March.

"We will be watching average hourly earnings very closely for signs that difficulty in hiring qualified workers is beginning to boost compensation," said David Kelly, chief global strategist at J.P. Morgan Asset Management in New York.

"If tightening labor markets boost wage growth, then the inflation bounce which the Fed is anticipating to be modest and transitory could turn out to be stronger and longer-lasting, leading to earlier Fed tightening."

The anticipated drop in wages will have no impact on consumer spending, with Americans sitting on more than $2 trillion in excess savings. The average workweek was forecast steady at 34.9 hours.-The Thomson Reuters Trust Principles.

Tesla tells regulator that full self-driving cars may not be achieved by year-end

Tesla Inc (TSLA.O) told a California regulator that it may not achieve full self-driving technology by the end of this year, a memo by the California Department of Motor Vehicles (DMV) showed.

Tesla CEO Elon Musk said during an earnings conference call in January that he was "highly confident the car will be able to drive itself with reliability in excess of human this year."

Tesla has also rolled out what it describes as a "beta" version of its "full self-driving" (FSD) program to a limited number of employees and customers since October, and Musk has touted the capability on Twitter.

"Elon's tweet does not match engineering reality per CJ. Tesla is at Level 2 currently," the California DMV said in a memo about its March 9 conference call with Tesla representatives, including autopilot engineer CJ Moore. Level 2 technology refers to a semi-automated driving system, which requires supervision by a human driver.

The memo was released by legal transparency group PlainSite, which obtained it under the Freedom of Information Act (FOIA).

"Tesla indicated that Elon is extrapolating on the rates of improvement when speaking about L5 capabilities. Tesla couldn’t say if the rate of improvement would make it to L5 by end of calendar year," the memo said, referring to level 5 full autonomous technology.

The California DMV, Tesla and Moore were not immediately available for comment.

"Tesla indicated that they are still firmly in L2," California DMV said in the memo. "As Tesla is aware, the public’s misunderstanding about the limits of the technology and its misuse can have tragic consequences."

The California Highway Patrol is investigating why a Tesla vehicle crashed into an overturned truck on a highway near Fontana, California, on Wednesday, killing the Tesla’s driver. The patrol did not say whether the Tesla was operating on Autopilot or not.

Federal highway safety regulators are investigating more than 20 accidents involving Tesla vehicles.- The Thomson Reuters Trust Principles.

British Airways-owner IAG cautious on short term flying recovery

British Airways-owner IAG (ICAG.L)on Friday forecast only a minimal pick-up in capacity to 25% for the April to June quarter, remaining cautious despite hopes that European travel will start to recover from late May onwards.

The rise to 25% of 2019's capacity puts IAG's plans behind those of competitor airlines, and compares to the 19.6% of capacity that it flew in the January to March quarter as the coronavirus pandemic continued to restrict travel.

IAG chief executive Luis Gallego said in a statement the airline was "ready to fly but government action is needed".

He called for travel corridors to open between countries with high vaccination rates, such as the United Kingdom and the United States.

Britain is set to publish later on Friday its "green list" of low risk places where people can travel from May 17 without needing to quarantine on their return home, but reports suggest that just a handful of countries will make the list. read more

IAG's capacity plans put it behind Air France-KLM (AIRF.PA), which said on Thursday it expects to operate 50% of its pre-pandemic flight capacity in the second quarter. Lufthansa last week cut its capacity to forecast to about 40% of its pre-pandemic capacity for 2021. read more

European airlines hope that by July, much of the continent will be open for travel, meaning bookings will rise and they can ramp up capacity to start repairing their COVID-19 battered finances.

Minimal flying in the January to March quarter, resulted in IAG posting an operating loss before exceptional items of 1.14 billion euros, slightly better than the 1.17 billion euro loss forecast by analysts.

IAG, which also owns Iberia and Vueling in Spain and Aer Lingus in Ireland, said it reduced weekly cash burn to 175 million euros, a better performance than the 185 million euros a week it had previously guided for the period.

The group also said it had strong liquidity of 10.5 billion euros at the end of the first quarter. Given the ongoing uncertainty over COVID-19, IAG said it could not provide profit guidance for 2021.-The Thomson Reuters Trust Principles.

Stocks rally into U.S. jobs report as commodity prices surge

Global stocks headed for their first weekly gain in three amid a surge in commodity prices, while traders braced for a key U.S. jobs report later on Friday that could provide clues on when the Federal Reserve will ease back on monetary stimulus.

MSCI's benchmark for global equity markets (.MIWD00000PUS), which tracks stocks in 50 countries, edged up about 0.1%, on course for a 0.4% gain this week.

Its broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose about 0.5% on Friday, while Japan's Nikkei (.N225) gained about 0.2%.

China's blue chips (.CSI300) swung between gains and small losses, despite data Friday showing an unexpected pick-up in the nation's export growth. read more

Futures pointed to a 0.7% rise for Europe's benchmark stock index and a 0.6% gain for Britain's FTSE at the open.

"This will continue for the time being, because the reopening (reflation) trade is still just getting underway," Masahiko Loo, a Tokyo-based portfolio manager at AllianceBernstein, said of rising equity and commodity markets.

Commodity prices may peak soon, but will then consolidate at current high levels, he said.

Aluminum prices approached levels last seen in 2018 and copper flirted with 10-year peaks as investors bet on a rapid global recovery from the pandemic, led by the United States.

Iron ore futures vaulted to a record high on Friday, while crude oil rose. read more

Overnight, Wall Street investors piled into economically-sensitive stocks on the reflation trade, driving the Dow Jones Industrial Average to a record high close on Thursday.

The Dow (.DJI) rose 0.9%, the S&P 500 (.SPX) gained 0.8% and the Nasdaq Composite (.IXIC) added 0.4%.

S&P futures pointed to further gains, edging 0.1% higher on Friday.

Financials and industrials led Thursday's rally in U.S. shares after a report showed the number of Americans filing new claims for unemployment benefits fell below 500,000 last week for the first since the COVID-19 pandemic started, signalling the labour market recovery entered a new phase amid a booming economy. read more

The Russell 1000 Value index (.RLV) gained 0.8%, outpacing the Russell 1000 Growth index (.RLG), which rose 0.5%.

"The rotation theme will probably continue for a while longer," Alliance Bernstein's Loo said.

The focus now shifts to Friday's non-farm payrolls report, with estimates ranging widely between 700,000 and more than 2 million jobs having been created in April.

"Get ready for payrolls, they could be huge," Chris Weston, head of research at broker Pepperstone in Melbourne, wrote in a note for clients.

"The commodity space is the talk," and financials are the "bull play" going into the payrolls report, he said.

So far, Fed Chair Jerome Powell has argued the labour market is far short of where it needs to be to start talking of tapering asset purchases. The central bank has said it will not raise its benchmark Fed funds rate through 2023.

The safe-haven dollar sank to its lowest level this week against a basket of major peers on Friday ahead of the jobs report, as firmness in global stock markets boosted risk appetite.

The dollar index dipped to 90.837, and was on track for a 0.4% decline this week.

Treasury yields hovered near the lowest level this month on Friday, further removing support for the greenback, after bond traders largely shrugged off the better-than-expected initial jobless claims data and waited for the non-farm payrolls report to provide market direction.

The 10-year Treasury note yielded 1.5682% in Asia.

Gold headed for a 2.5% weekly gain, the most since December, as the weaker dollar and easing Treasury yields propelled the precious metal, an inflation hedge, above the psychological $1,800-an-ounce level to last trade at around $1,818.-The Thomson Reuters Trust Principles.

BMW confirms 2021 outlook, but sees volatility ahead

BMW (BMWG.DE)remains on course to meet its profit targets for 2021 despite rising raw material costs, the German carmaker said on Friday, having largely steered clear of the semiconductor chip shortage battering rivals like Volkswagen (VOWG_p.DE).

Volkswagen boss Herbert Diess had said on Thursday that Europe's top carmaker was in "crisis mode" over the chip shortage, which would hit profits in the second quarter, while Ford Motor Co (F.N) last week said the lack of chips could halve its second-quarter vehicle production. read more

BMW is known for its strong relations with suppliers and has been working with them to avoid disruptions. Aside from a temporary shutdowns of MINI production in the United Kingdom, the carmaker has not been affected.

BMW said that sales of its electrified vehicle models more than doubled in the first quarter, when it also benefited from higher prices and strong demand in China.

BMW had already reported a 370% jump in pre-tax profit as it bounced back more strongly than expected from a pandemic-ravaged first quarter last year. read more

Sales in China almost doubled in the first quarter versus the same period in 2020, the company said.

Rebounding demand from consumers in China in the second half of last year helped BMW and its German rivals Volkswagen AG and Daimler AG (DAIGn.DE) post solid profits for 2020 despite the global coronavirus pandemic.

BMW also saw solid first-quarter growth in other regions, including a 17.4% jump in sales in North America, driven by strong demand from U.S. drivers.

"The first quarter shows that our global business model is a successful one, even in times of crisis," Chief Executive Officer Oliver Zipse said in a statement. "We remain firmly on track for continued sustainable, profitable growth."

Most of the auto industry has been hit by a global semiconductor chip shortage, shuttering many assembly plants, driving down inventories and pushing up prices for both new and used vehicles.

The German carmaker said that its first-quarter results also received a boost from the sale of previously leased vehicles, in particular in the U.S. market.

The carmaker said that it expects to have 2 million fully-electric cars on the road by 2025.

BMW said it expects the pre-tax margin for its core autos business to come in at the upper end of its previous forecast of between 6% and 8%.-The Thomson Reuters Trust Principles.

Adidas hikes outlook despite lockdowns, supply chain issues

German sportswear company Adidas (ADSGn.DE) raised its 2021 sales outlook on Friday, saying it expects strong demand for new products despite ongoing lockdowns in Europe, supply chain challenges and political tensions.

Adidas said it now expects sales to grow at a high-teens percentage rate in 2021, compared to the forecast it gave in March for growth of a mid to high teens rate, with a jump of around 50% expected in the second quarter.

It said the acceleration would be driven by new products as well as big sports events like the European soccer championship and the Copa America.

Shares in Adidas were up 3.2% in pre-market trade at brokerage Lang & Schwarz.

Brands including Adidas and rivals Nike (NKE.N) and Puma (PUMG.DE) faced online attacks in China in March over statements about their sourcing of cotton from Xinjiang after reports of human rights abuses against Uyghur Muslims. read more

Adidas did not directly mention that issue, beyond saying its new outlook took into account the geo-political situation as well as the impact of prolonged lockdowns in Europe and industry-wide supply chain challenges.

However, it did say that it had seen sales jump 156% in greater China in the first quarter, a year after the coronavirus pandemic hit there. At the end of the first quarter, 89% of the company's stores had reopened.

Puma said last month it expects a consumer backlash against Western brands in China and congestion at ports to hit its sales though it gave an upbeat outlook for 2021. read more

Adidas said first-quarter sales rose 20% to 5.268 billion euros ($6.35 billion), ahead of average analyst consensus for 5 billion, while net income from continuing operations jumped to 502 million euros.

The company stuck to its forecast for 2021 net income from continuing operations to rise to between 1.25 billion and 1.45 billion euros.

($1 = 0.8290 euros)-The Thomson Reuters Trust Principles.

Holiday Inn owner says U.S. demand picks up ahead of summer

Holiday Inn owner InterContinental Hotels (IHG.L) said on Friday U.S. demand was gathering pace ahead of the summer season and reported strong revenue for March, adding that forward-bookings indicate further pick-up in the coming months.

The rebound comes after IHG sunk to an annual loss for 2020 and called it the most challenging year in its 200-year history, as the health crisis saw countries across the world impose months-long lockdowns and travel curbs to contain the outbreak.

"While the risk of volatility remains for the balance of the year, there is clear evidence from forward-bookings data of further improvement as we look to the months ahead," Chief Executive Officer Keith Barr said.

While IHG's revenue per available room (RevPAR), a key performance indicator for the industry, was down 50.6% in the first quarter ended March, the company notched an improvement from the previous quarter when it was down 53.2%.

Its RevPAR was up 20.8% in March, with Greater China region recording a surge of 288.6% from a year earlier.

Steady COVID-19 vaccine rollouts and the easing of lockdown curbs in most regions including the United States, IHG's biggest market, have offered respite after a painful 2020 for the industry, as has the popularity of staycations.

The FTSE-listed company, which owns the Crowne Plaza brand, said there was a notable pick-up in demand in March, particularly in the United States and China, which continued into April.

The company also said it has repaid 600 million pounds ($834.30 million) it had taken under the government's lending scheme introduced last year in light of the pandemic.

($1 = 0.7192 pounds)-The Thomson Reuters Trust Principles.

Beyond Meat loss exceeds forecasts on higher costs, slow restaurant sales

Beyond Meat Inc (BYND.O) on Thursday reported a wider quarterly loss than expected, as the plant-based meat maker incurred higher freight costs, spent heavily on testing new product launches, and sold less to pandemic-hit restaurants.

Shares of the California-based company fell nearly 7% in extended trading.

The company, which sells faux meat in over 100,000 outlets worldwide, last year benefited from consumers stockpiling their freezers with bulk packages of its "burgers" during stay-at-home orders across the United States.

However, sales to restaurants took a hit as many closed. Chief Executive Officer Ethan Brown said during a call with analysts that he was seeing a "slow thaw" of that trend.

Even so, Beyond Meat expects the recovery in its food service business to lag the broader restaurant sector because it sells in many places where capacity is recovering more slowly, including sports venues.

As restaurant sales fell, the company accumulated more pea protein, leading to higher costs for warehousing, it said.

RIVALS CHOMPING

Competition is rising among plant-based protein makers. In 2020, U.S. plant-based retail sales reached $7 billion, up 27% year on year, according to the Good Food Institute and the Plant-Based Foods Association (PBFA).

Impossible Foods Inc, Beyond Meat's biggest rival, is preparing for a public listing which could value the company at around $10 billion or more, Reuters reported in April. read more

Brown said Beyond Meat's "main competitor" was discounting two-thirds of its sales and said he was "not going to react and get into some sort of discounting war with them."

Beyond Meat expects second-quarter revenue in the range of $135 million to $150 million, a rise of 19% to 32%. Analysts had forecast revenue of $142.8 million, according to IBES data from Refinitiv.

In the first quarter ended April 3, net revenue rose about 11% to $108.2 million, missing estimates of $113.7 million.

Excluding one-time items, it lost 42 cents per share - wider than analysts' expectations of 19 cents.

Its bottom line swung to a net loss of $26.8 million from a profit of $1.8 million a year ago.-The Thomson Reuters Trust Principles.

Biden willing to accept 25% corporate tax rate to fund spending programs

U.S. President Joe Biden said a corporate tax rate between 25% and 28% could help pay for badly needed infrastructure, suggesting he could accept a lower rate than what he has proposed in his search for Republican support for the funding.

"The way I can pay for this, is making sure that the largest companies don't pay zero, and reducing the (2017 corporate) tax cut to between 25 and 28" percent, Biden said during a visit to Lake Charles, Louisiana.

In his $2.3 trillion infrastructure plan, the Democratic president initially proposed raising the corporate tax rate from 21% to 28%. Tax experts and congressional aides told Reuters in April that a 25% rate would be a likely compromise.

"What I'm proposing is badly needed" and will be paid for, said Biden, dismissing the "trickle down" theory that helping businesses and the wealthy will benefit those farther down the economic ladder. "We've got to build from the bottom up and the middle out."

Behind Biden as he spoke was the Calcasieu River Bridge, a structure built in 1952, which he said was 20 years past its expiration date. Bumper-to-bumper traffic crawled across it.

"That’s a recipe for disaster," Biden said of the crowded bridge.

Later, he stopped in New Orleans to tour the Sewerage & Water Board's Carrollton Water Plant and discuss the need for spending on water infrastructure.

The U.S. corporate tax rate dropped to 21% from 35% after the 2017 tax cut pushed by then-President Donald Trump and his fellow Republicans, but many big U.S. companies pay much less.

Increasing what companies pay into the more than $4 trillion federal budget is an important part of Biden’s plan to restructure the U.S. economy to reduce inequality and to try to counter China’s rise.

Biden's visit to storm-battered Louisiana, which has backed Republican presidential candidates for the past 20 years, is part of his "Getting America Back on Track Tour" to promote a $2.25 trillion infrastructure spending plan and a $1.8 billion education and childcare proposal.

His push to spend more federal money on schools, roads, job training and other public works, and to tax the wealthiest Americans and companies to pay for it, is popular with voters of both parties. But the plans face stiff opposition from Republican lawmakers.

See graphic: Biden approval tracker: https://graphics.reuters.com/USA-BIDEN/POLL/nmopagnqapa/index.html

The White House is betting trips like this will build public support for Biden and his spending proposals, even among Republican voters who backed Trump, who continues to hold enormous sway over his party.

Congressional Republicans oppose Biden’s proposed $2.25 trillion in infrastructure spending over a decade, saying the higher taxes that would be levied on corporations to fund it would cost jobs and slow the economy.

Trump has said increasing taxes on corporations could prompt some to relocate overseas in search of a better tax environment.

The U.S. economy has boomed under higher levels of corporate taxation, such as in the 1960s and the 1990s.

In the closely divided Senate, Biden would need every Democratic vote if no Republicans support the bill. Biden said in Lake Charles he was meeting with Republicans in Congress to see "how much they’re willing to go for, what they think are the priorities, and what compromises" they can offer.

"I’m ready to compromise," Biden said. "I’m not ready to have another period where America has another ‘Infrastructure Month’ and doesn’t change a damn thing."

Some Republicans have offered a far smaller package: $568 billion, focused on roads, bridges, broadband access and drinking water improvements. However, much of that reflects money the federal government is already expected to spend for that infrastructure.

U.S. Senate Minority Leader Mitch McConnell predicted last week that Biden’s infrastructure and jobs plan would not get support from Republican lawmakers.

“I’m going to fight them every step of the way, because I think this is the wrong prescription for America,” McConnell said at an event in his home state of Kentucky last month.-The Thomson Reuters Trust Principles.

INVESTORS DIARY 2021

Company

Event

Venue

Date & Time

FCB

AGM 

virtual

06/05/21 : 3pm

NMB

AGM

virtual

1205/21 :  3:30pm

Africa Day

25/05/21

Companies under Cautionary

ART

PPC

Dairibord

Starafrica

Fidelity

Turnall

Medtech

Zimre

Nampak Zimbabwe

 <mailto:info at bulls.co.zw> 

DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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