UK Hospitality Suffers ‘lost Christmas’ As Cash Reserves Dwindle; US Jobless Claims Rise – Business Live

Technology stocks are having a choppy day in New York, where the Nasdaq Composite index is now down 1% or 145 points at 15,043.

The selloff comes as average long-term U.S. mortgage rates jump to their highest level since March 2020, as lenders anticipate faster than expected tightening of monetary policy to combat US inflation.

Rob Davies

The reality TV star Kim Kardashian and boxing champion Floyd Mayweather Jr are among celebrities being sued over their promotion of an alleged “pump and dump” cryptocurrency scheme that investors say caused them to lose money.

According to a class action lawsuit filed in a California court, executives of EthereumMax, in collaboration with Kardashian, Mayweather Jr and the basketball player Paul Pierce, sought to enrich themselves by making “false and misleading” statements to investors.

Promotions by the company included an Instagram post to Kardashian’s 250 million followers that the head of the UK’s Financial Conduct Authority, Charles Randell, said may have had “the single biggest audience reach in history” for a financial product.

The value of the company’s EMAX tokens increased by as much as 1,370% after the media marketing blitz before crashing to an all-time low, the suit claims.

By using celebrity endorsements, the claimants say, EthereumMax’s executives, “touted the prospects of the company and the ability for investors to make significant returns due to the favourable ‘tokenomics’ of the EMAX Tokens”. More here.

The episode shows the importance of vigilance in promotions involving cryptoassets, as Sushil Kuner, principal associate at the law firm Gowling WLG says:

This reflects recent concerns in the UK, with our Advertising Standards Authority (ASA) stating that monitoring cryptoassets, like Bitcoin, is a “red-alert priority”.

Back in London, shares in fashion retailer JD Sports have dropped 6% after it reported that chairman Peter Cowgill has sold 10m shares.

The sale leaves Cowgill holding over 9.7, shares in JD Sports, which yesterday lifted its profit outlook after a strong performance over Black Friday and Christmas.

Its US sales were also boosted by Americans spending their Covid fiscal stimulus cheques on items such as trainers and athleisure kit, adding up to £100m to profits.

Wall Street has opened higher, as traders welcome the easing in producer price inflation in December (see last post)

The Dow Jones industrial average of 30 leading US firms has gained 114 points, or 0.3%, to 36,404 points, approaching last week’s record high.

Aerospace manufacturer Boeing is the top riser (+2.6%), followed by Visa (+2%), Goldman Sachs (+1.4%) and Nike (+0.8%).

US producers hiked their prices last year at the fastest rate in at least a decade, but the inflationary surge may be easing.

The Producer Price Index for final demand surged by 9.7% in 2021, the largest calendar-year increase since data were first calculated in 2010, the U.S. Bureau of Labor Statistics reported today.

In December alone, goods and services providers lifted prices by 0.2%, a slowdown on November’s 1.0%, and October’s 0.6%.

PPI eased in December thanks to a 6.1% drop in gasoline prices, with prices for meats, gas fuels, fresh and dry vegetables, diesel fuel, and primary basic organic chemicals also dipping.

These producer prices are passed onto consumers, who saw inflation rise at the fastest pace in 40 years last month.

Here’s Robert Frick, corporate economist at Navy Federal Credit Union, on the rise in weekly US jobless claims:

“Especially given the large adjustments in the post-holiday period, we can’t chalk up the increase in weekly unemployment claims to Omicron.

The level still remains near the historical average, and while that could change in the next month, with Omicron cases expected to peak in a couple weeks, it’s unlikely any increase would last long.”

The number of Americans applying for unemployment benefits rose last week to the highest level since mid-November, but still low by historic standards, Associated Press says.

U.S. jobless claims climbed by 23,000 last week to 230,000. The four-week moving average, which smooths out week-to-week blips, was up nearly 6,300 to almost 211,000.

The weekly applications, a proxy for layoffs, have now risen four of the last five weeks, possibly a sign that the omicron variant is having an impact on the job market, which has bounced strongly from last year’s coronavirus recession.

Altogether, 1.6 million people were collecting jobless aid the week that ended January 1st.

Companies are holding onto workers at a time when it’s difficult to find replacements. Employers posted 10.6 million job openings in November, the fifth-highest monthly total in records going back to 2000. A record 4.5 million workers quit their jobs in November — a sign that they are confident enough to look something better.

The number of Americans filing new claims for unemployment benefit rose last week, suggesting that Omicron is leading to a rise in layoffs.

There were 230,000 new initial claims for jobless support in the week to Saturday 8th January, an increase of 23,000 from the previous week, on a seasonally adjusted basis.

Ignoring seasonal adjustments, the actual number of initial claims rose by 103,693 to 419,446.

However, the number of people who were already receiving support (the ‘continued claims’ total) dropped to 1.559m, the lowest level for insured unemployment since June 2, 1973.

Despite rising, the initial jobless claims total is still around pre-pandemic levels, as this chart shows:

The health secretary, Sajid Javid, has confirmed that the time people with Covid in England have to spend in self-isolation is to be cut to five full days.

From Monday people would be able to leave isolation if they tested negative on day six, Javid told the Commons, a move which could cut the staff absences seen at the end of December.

Stocks of painkillers at UK stores ran lower last week, amid record Covid-19 infections and winter bugs.

Paracetamol was out of stock at 8% of stores surveyed by market researchers Kantar between Friday 7th and Monday 10th January, with another 21% of shelves running low.

Ibuprofen was either low, or out of stock, at a fifth of stores, after employee absence rates rose sharply at the end of December.

That’s slightly worse than in the run-up to Christmas, when 25% of stores were low or out of paracetamol.

Toilet rolls, fresh fish and frozen chips also ranked highly on the shortages list.

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, says the data shows the impact of illness:

“The latest ONS data paints a picture of sick Britain as shoppers have stocked up on paracetamol, ibuprofen and toilet rolls as Covid cases surged.

Aches and pains, upset stomachs and runny noses saw demand for loo paper and pain relief soar, with the products in shorter supply.

UK pubs, bars and restaurants sectors suffered poor trading over the crucial festive period, new data shows.

Trading at hospitality venues slumped by 60% on Christmas Day, 31% on Boxing Day and 27% on New Year’s Eve, compared to 2019’s pre-pandemic levels.

The figures, from trade body UKHospitality and consultancy CGA, show that the sector suffered a ‘lost Christmas’ and cap off a devastating December in which the omicron variant hit takings hard.

That explains clearly why so many hospitality firms have few cash reserves at the start of 2022 (see 10.09am post), and some have little confidence of keeping afloat.

Venues in Scotland and Wales, where restrictions were tightened, saw the sharpest falls in trading.

UKHospitality CEO Kate Nicholls, said many firms racked up losses during December, rather than the usual profits they relied on, which will hit job creation and growth.

“December is a vital period for hospitality businesses, equal to three months’ worth of trading for many. These new figures are crippling for an industry already struggling but also spell disaster for the wider UK economic recovery, as ONS figures showed that overall growth in Q3 was driven by hospitality.

“These sales drops versus 2019, and also against our members’ projections before the onset of the new Omicron variant, will have taken most businesses from healthy trading for the month to painful losses, delaying the sector’s recovery and extending hospitality’s long covid. Cash reserves are severely depleted, and some businesses will struggle to survive the first quarter of 2022.

“This dreadfully disappointing December has further stymied our ability to deliver jobs, growth and investment at pace, which we all know is so crucial to the recovery of our economy overall.”