Logistics Robotics and Automation with GXO’s Mark Manduca

UK Investor Magazine
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Logistics Robotics and Automation with GXO’s Mark Manduca

The UK Investor Magazine Podcast is joined by the Chief Investment Officer of GXO, a company spun-out from XPO Logistics.

GXO is set to list on the NYSE in the third quarter 2021 and drive forward with the Contract Logistics division of the business.

Having invested heavily in technology for years, GXO accounted for 38% of overall XPO Logistics revenue in 2020 and will be a logistics power house in its own right on completion of the spin-out.

Mark Manduca discusses the drive behind the spin-out as well as the adoption of automation and robotics within logistics.

GXO are heavily focused on ecommerce and the requirement to provide efficiencies to their clients has pushed GXO to innovate their processes through automation.

XPO Logistics in conjunction with Nestle built the UK’s first fully digital warehouse harnessing robotics and automation.

Stock markets in US and Asia rise after Biden announces infrastructure deal

Liam Roche
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Stock markets in US and Asia rise after Biden announces infrastructure deal

Biden’s deal includes an eight-year plan to invest in roads, bridges, the power grid, the internet and public transport

As President Joe Biden confirmed a bipartisan deal had been reached on an infrastructure plan on Thursday, markets in the US closed higher.

The Dow Jones Industrial Average pushed up, while the S&P 500 and Nasdaq Composite closed in record territory.

In Asia, Japan’s Nikkei was up by 0.66% while Hong Kong’s Hang Seng jumped 1.4% and the Australian stock market gained 0.5%.

The US Senate eventually agreed on a $1.2trn infrastructure bill, after Biden was forced to come down from his initial pitch which surpassed $2trn.

The deal includes an eight-year plan to invest in roads, bridges, the power grid, the internet and public transport.

Biden said that investment would create millions of jobs. “We’re in a race with China and the rest of the world for the 21st Century,” he added. “This agreement signals to the world that we can function, deliver and do significant things.”

Michael Hewson, chief market analyst at CMC Markets UK, told The Guardian:

“Last night’s gains [on Wall Street] were helped by the bipartisan agreement of an infrastructure bill, much less than the Democrats would have liked, but still a fairly decent addition to all of the other stimulus packages seen in the past six months. The new spending would include money for roads, bridges, rail and public transit, all areas that have been sorely neglected over the years. While the agreement is welcome it still faces a high bar in passing into law given the Democrats narrow majorities on Capitol Hill.”

“As a consequence of last night’s strong US finish, markets here in Europe look set to open higher, with travel stocks likely to be in focus after the government added Malta, Madeira and the Balearics to the green list, as well as indicating that it would look at dropping quarantine rules for fully vaccinated UK residents returning home from amber list countries later in the summer.”

Jobless claims jumped last week against expectations as the US employment market is undergoing a recovery, the US Labor Department said this month.

First-time requests for unemployment insurance reached 412,000, up by 37,000 from the week before. It is the highest number recorded since May 15.

BuzzFeed confirms plan to list on the New York Stock Exchange

Liam Roche
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BuzzFeed confirms plan to list on the New York Stock Exchange

Buzzfeed to acquire youth entertainment business Complex Networks for $300m

BuzzFeed is set to list on the New York Stock Exchange through a Special Purpose Acquisition Company (SPAC), valuing the media company at $1.5bn.

The deal, which includes a $150m convertible note financing led by Redwood Capital Management, is expected to go through in Q4 of 2021.

Other institutional investors, including CrossingBridge Advisors, Cohanzick Management and Silver Rock Financial, are involved.

BuzzFeed was previously valued at $1.7bn in 2016, when NBC Universal invested $200m in the company.

Towards the end of last year, BuzzFeed acquired HuffPost, a similar news platform, for an undisclosed figure.

The digital platform also announced it reached an agreement with Hearst and Verizon to acquire youth entertainment business Complex Networks for $300m.

The management team will remain the same with founder and chief executive officer Jonah Peretti and chief financial officer Felicia DellaFortuna staying in their positions.

“BuzzFeed is now the undeniable leader for the next generation of media. We’ve built a slate of essential brands, loved by the most diverse, engaged, and loyal audience on the Internet,” said Jonah Peretti. “With today’s announcement, we’re taking the next step in BuzzFeed’s evolution, bringing capital and additional experience to our business. I am thrilled to have Adam join our team as we work towards becoming the world’s preeminent digital media company.”

Peretti added, “the acquisition of Complex Networks will expand our reach into new audiences, complement our entertainment, news, and lifestyle brands, and open the door to even more revenue opportunities.”

Special purpose acquisition vehicles, known as SPACs, are shell companies that raise funds through an IPO to take a private company public through a merger at a later point in time.

BuzzFeed will be listed on a public exchange under the ticker symbol “BZFD”.

Deliveroo share price surges as court rules its riders are not workers

Liam Roche
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Deliveroo share price surges as court rules its riders are not workers

Deliveroo said its riders are self-employed and therefore not entitled to the rights of “workers”

Deliveroo came out victorious following a legal battle over the employment status of its riders as judges dismissed a trade union’s appeal.

The London-listed food delivery company made the case that the riders are self-employed and therefore not entitled to the rights of “workers”.

The fact that Deliveroo successfully defended its business model also cheered investors with the Deliveroo share price climbing rapidly, up by 8.5% in afternoon trading.

The legal case dates back to 2017, and was brought by the Independent Workers Union of Great Britain (IWGB), which represents gig economy workers.

However, a number of rulings, held up by a trio of Court of Appeal judges, have found that they cannot be considered “workers” under trade union law.

“Deliveroo has consistently argued in court that the way it engages with its riders means that they are self-employed and so should not be classed as workers,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “Now the company has won the latest skirmish in its legal fight with judges dismissing an appeal, ruling that because riders are not in an employment relationship with the company, they could not form a collective bargaining unit.”

“The company’s success appeared to hinge on the fact riders are able to ask another person to take on a job for them. This was the crunch factor which led to the UK Supreme court ruling that because of the lack of substitution rights, Uber drivers should be classed as workers.”

“Concern about the company’s reliance on the gig economy model was one of the factors which contributed to its disastrous IPO in March,” Streeter added.

Since the end of March, the Deliveroo share price is down by over 5%, following a disastrous IPO.

The battle for improved working rights being fought by contractors is far from over with a European Commission review of how the gig economy operates still underway.

Job adverts rise as Brits on furlough falls to record low

Liam Roche
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Job adverts rise as Brits on furlough falls to record low

Number of UK job vacancies posted online is up by 2% compared to a week ago

The number of people on the furlough scheme in the UK fell to the lowest level since the beginning of the pandemic as more businesses are reopening.

Around 1.5m Brits are still on the furlough scheme, significantly down from the 3.4m people who made use of the scheme during March and April.

The figures released by the Office for National Statistics (ONS) show a 1% fall in the number of people on the furlough scheme compared to the month before.

Additionally, the number of UK job vacancies posted online is up by 2% compared to a week ago. This is according to job search engine Adzuna.

The total number of adverts is above levels seen before the beginning of the pandemic.

The categories that saw the biggest increase in the number of adverts were for legal and graduate jobs, up by 7% and 6% respectively.

Rishi Sunak rejected calls for an extension of the furlough scheme and business rates this month, despite the month-long delay in the easing of restrictions, which were previously set for 21 June.

Bank of England holds UK interest rates at a record low 0.1%

Liam Roche
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Bank of England holds UK interest rates at a record low 0.1%

The Bank of England voted across the board to keep borrowing rates the same

The Bank of England held its main interest rate at 0.1% on Thursday, a record low, despite the central bank warning of inflation pressures as the UK economy continues its recovery.

Susannah Streeter, senior investment and markets analyst Hargreaves Lansdown, commented on the bank’s decision:

“The Bank of England isn’t ripping up the party rule book yet, content to let the economy feast on record-low rates and ultra-loose monetary policy. It is on alert, ready to change the game if the inflationary guest starts acting up, but right now it’s not changing the mood music,” said Streeter.

The monetary policy committee retained an upbeat outlook around the UK economy. As restrictions on economic activity have eased, the Bank of England has revised its Q2 estimate for growth by 1.5%. The central bank expects output for this month to be a mere 2.5% below its level in Q4 of 2019, just prior to the beginning of the pandemic.

“The UK economy is still dancing to the tune of consumer confidence, helped by a bouncy castle of a housing market and the jump in activity since the re-opening of shops, pubs and restaurants in April hasn’t lost much energy. Current economic activity is even stronger than in May, with supply bottlenecks pushing up prices at a time of strong demand for goods,” Streeter added.

While the recovery continues, inflation is expected to blow past the BoE’s target, exceeding 3%. However, it is then expected to retreat, “with the balloon of higher prices losing air”, said Streeter.

“Already there are party pooper signs. Companies are having to reduce services, due to the lack of staff. The Bank of England identifies that there are now recruitment difficulties across sectors and regions, and this could be a drag on growth,” Streeter said.

“The Bank of England knows that the sugar rush of cheap money needs to be withdrawn. But right now it’s judging that the guests at the party aren’t yet robust enough to cope with their treats being taken away.”

A significant portion of the UK economy, which shrank by 10% during 2020, is now open although social distancing requirements are still being enforced.

Sterling falls as BoE expects inflation to pass 3%

Liam Roche
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Sterling falls as BoE expects inflation to pass 3%

The FTSE 100, which features companies that benefit from a weaker pound, is up by 0.47%

Sterling fell on Thursday, down from its strongest position against the euro in over two months, as the Bank of England predicted inflation would exceed 3%.

The central bank’s forecast of inflation is above its target for a “temporary period”.

GBP, having traded at €1.17 prior to the Bank of England meeting on Thursday, fell by 0.5% against the euro to €1.165. Cable fell by the same amount to $1.3894.

The news has not motivated the BoE to urgently act by tightening its policy.

“The economy will experience a temporary period of strong GDP growth and above-target CPI inflation, after which growth and inflation will fall back,” the monetary policy committee said.

The FTSE 100, which features a number of companies that export goods and services that could benefit from a weaker pound, is up by 0.47%.

Commenting on sterling falling as the Bank of England expects inflation in excess of 3%, Olivier Konzeoue, FX Sales Trader at Saxo Markets, said: “The BoE chose to maintain accommodative measures in place, keeping the Benchmark Interest Rate at 0.1% and holding government asset purchases at GBP 875Bln, whilst outgoing chief economist Haldane was the only dissenter voting against keeping the bond-buying program unchanged (8-1 split on the topic).”

“The MPC used similar rhetoric to that used by the US Fed of late, describing an expected peak in inflation in excess of 3% (versus 2.47% previously) as likely temporary in nature and flagged the uncertainty around the labor market outlook with close to 1.5 Million people still receiving wages through the furlough scheme. This justifies pushing back a potential 15Bps rate hike to August 2022, instead of June 2022, in order to avoid undermining recovery by a “premature tightening in monetary conditions.”

“GBP fell to session lows around 1.3906 after the announcement and hovers around the 1.3920 mark, whilst UK 10-year yields dropped 3Bps to 0.75% from 0.78%.”

Central banks increase pressure on cryptocurrencies

Liam Roche
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Central banks increase pressure on cryptocurrencies

The Bank for International Settlements says cryptos ‘all tend to work against the public good’

Central banks are increasing the pressure on cryptocurrencies, warning that they are not in the public interest, as they continue to strive to be the future of finance.

Cryptocurrencies established within the private sector “all tend to work against the public good,” according to the Bank for International Settlements (BIS), the Switzerland-based bank for the world’s central banks.

The BIS made bitcoin the target of its criticism, suggesting its carbon footprint is wasteful, and that it is a highly speculative asset used to facilitate crime.

The comments come as bitcoin has made recent leaps to establishing its future as an alternative means of payment for goods and services, including becoming legal tender in El Salvador, despite its market price crashing in recent months.

The price of bitcoin fell to below $30,000 earlier this week for the first time since January but then bounced back a bit. In April it peaked at over $63,000.

In the UK, the Bank of England is still looking at lunching its own digital currency. The governor, Andrew Bailey, said earlier in June that it would be a step to move the country into a new era.

China has been developing a digital yuan, while the US Treasury secretary, Janet Yellen, has expressed support for a digital dollar.

Starlink to go public once cash flow is more predictable Musk says

Liam Roche
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Starlink to go public once cash flow is more predictable Musk says

Elon Musk confirmed on Wednesday that he intends to list Starlink once its cash flow becomes more predictable.

“Going public sooner than that would be very painful,” Musk said in a tweet. “Will do my best to give long-term Tesla shareholders preference.”

The idea of separating Starlink from SpaceX for an initial public offering was first touted last year by Gwynne Shotwell, president of SpaceX.

Starlink’s mission is to offer high speed internet across the world, using a network of thousands of satelites in low-earth orbit.

Tesla chief Musk believes that Starlink will play an important role in getting resources for his grander plans of bringing consumer passengers to the moon and colonising Mars.

Over 5m people became millionaires during pandemic

Liam Roche
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Over 5m people became millionaires during pandemic

More than 1% of adults globally were millionaires in 2020

Over five million people entered millionaire status worldwide during 2020 as the world reeled from the coronavirus pandemic.

The number of millionaires across the world grew by 5.2m to 56.1m , while many people became poorer, according to research by Credit Suisse.

For the first time ever, more than 1% of adults globally were millionaires in 2020.

As stock markets recovered and house prices rose, owners of said assets do the same.

Low interest rates and government programmes resulted in a massive transfer of wealth from the public sector to homeowners.

This brought about a rise in household saving, reducing household debts and “inflated household financial assets”.

“The contrast between what has happened to household wealth and what is happening in the wider economy can never have been more stark,” the Credit Suisse report said.

The combined with of people worth at least $1m had increased fourfold since 2000 to $191.6tn, as their share of global wealth increased from 35% to 46%.

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