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Post-Brexit, Britain Is Going Its Own Way. That Way Looks Expensive.



ROWLEY REGIS, England — Except for protracted uncertainty over Britain’s future relationship with Europe, these are promising days at Cube Precision, a factory in the Black Country of England.

The company manufactures tools used to make parts for airplanes and cars. Some of those parts eventually wind up in jets made by Airbus, a company now overwhelmed with orders as a safety scandal engulfs its primary competitor, Boeing. Another catastrophe is also increasing its sales: Companies that had been hiring Chinese factories to make their tools are shifting orders to Cube Precision to avoid the chaos of the coronavirus epidemic.

But Brexit threatens revenue-destroying disruption.

Like most of British industry, Cube Precision is intimately intertwined with Europe, selling its wares to companies that send exports there. Last month, Britain officially left the ranks of the European Union. In the next few weeks, negotiators plan to begin hashing out a deal governing future trade across the English Channel. The positions staked out by the British government pose perils for businesses that depend on Europe for sales and parts.

Prime Minister Boris Johnson and his Conservative Party owe their commanding parliamentary majority to nationalist sloganeering that promises to “Get Brexit Done” and “Take Back Control.” As the government prepares for trade talks, it is asserting the right to diverge from European rules governing a host of commercial concerns — from fishing access and financial regulations to product safety, labor and environmental standards.

Britain might diverge, or might not, officials keep saying — a careful dance designed to limit the damage for British exporters while delivering on the political imperative to declare that Brexit has been achieved.

The negotiations amount to an extraordinary historical anomaly: After decades of trade liberalization around the world, the governments of two major economies are sitting down to determine the extent of barriers they will place in the way of existing commerce.

If Britain is serious about writing its own rules, its factories could lose orders from European companies that now pay them to make parts and tools. Those companies might shift orders to suppliers on the Continent to ensure that their finished goods comply with European rules.

“We need to make sure that the trade deals are still in place so that we can supply our European customers, so that they can build their aircraft and build their cars,” says Cube Precision’s managing director, Neil Clifton. “In the worst-case scenario, there could be a lot of trouble.”

Studiously optimistic, he expresses confidence that, after the inevitable political brinkmanship, the politicians will strike a deal allowing business to carry on.

“I like to believe that the deals that we will get will be roughly broadly in line with what we have at the moment,” Mr. Clifton says. “Both sides have far too much to lose.”

But if three-plus years of tangled debate over Brexit has produced any clarity, it is this: What makes sense for business and what actually happens are frequently two different things.

While Britain has been part of the European Union, its companies have been able to do business with counterparts from Greece to Ireland as if this vast territory of 500 million people were a single nation, free of borders, tariffs and hindrances like customs checks.

Even by the standards of the typical trade deal, negotiations will be fraught, filling conference rooms in Brussels and London with armies of lawyers, accountants, bureaucrats and experts in the arcana of fishing, pharmaceuticals, farming, banking and manufacturing for months, and probably years.

British law reflects the country’s decades of inclusion in the European trading bloc. Disentangling itself while determining new rules is a process that has been likened to unscrambling an omelet.

Mr. Johnson and his senior officials have oozed confidence that they can break from European rules and still maintain largely uninterrupted access to the European marketplace. His counterparts in Brussels have consistently said this is nonsense.

“The truly difficult choices still lie ahead,” says Phil Hogan, the European commissioner for trade. “The further the U.K. chooses to diverge from the European standards and rules and regulations, the less it can benefit from the protections and economic strengths of the E.U. single market.”

European officials are adamant that Britain respect rules governing a so-called level playing field, including labor, tax and environmental standards, along with prohibitions on subsidizing industry.

Mr. Johnson aims for a deal that avoids tariffs and quotas on products, similar to the arrangement that Europe forged with Canada in 2016. That deal took seven years to negotiate. Mr. Johnson insists Britain will complete a deal with Europe by the end of this year — a stance that experts assume will give way to a euphemism for an extension.

If talks break down, Mr. Johnson says, Britain can trade under the terms laid down at the World Trade Organization. That would entail tariffs on British exports to the Continent averaging a modest 3 percent.

But trade experts say that position is either a bluff or foolhardy. If Britain crashes out of the European bloc without a deal, that invites expensive disruption at ports.

And tariffs are not the primary concern. A departure from European regulations could prompt global companies to put new operations in Europe while avoiding Britain.

Between the middle of 2016 — when Britain voted to leave the European Union — and the end of last year, business investment increased only 1 percent, according to government data. Over the three previous years, business investment expanded by a total of 16 percent. If Britain diverges from European regulations, the slowdown could worsen.

“The real cost is lack of investment,” says Charles Grant, director of the Center for European Reform, a research institution in London. “Food, manufacturing, cars, aerospace, chemicals will all have big problems.”

Part of Mr. Johnson’s motivation to diverge from European rules is his eagerness to negotiate a trade deal with the United States, affirming his oft-repeated claim that Brexit is an opportunity for Britain to look beyond Europe.

The Trump administration is likely to demand that Britain break from European food safety standards, allowing American companies to export chlorinated chicken and genetically modified crops.

Accepting such products would provoke public anger in Britain. Whatever the gains from a trade deal with the United States, they would not compensate for the likely loss of sales to Europe.

“The E.U. is a big market, it’s very close, and we are completely integrated with it,” says Andrew Goodwin, chief United Kingdom economist for Oxford Economics in London.

Britain’s auto industry generates annual revenue of 82 billion pounds (about $107 billion) and employs about 800,000 people, according to Deloitte, the global accounting firm. Those jobs are highly dependent on unimpeded trade across the English Channel.

Some 60 percent of car parts and accessories made in British factories are exported to Europe, while plants on the Continent are the source of 80 percent of imported car parts in Britain. Eight out of every 10 cars made in Britain are exported, according to the European Automobile Manufacturers Association, a trade group.

Inside a factory in Shrewsbury, a town famed for its medieval streets, SDE Technology operates towering presses that pound metal into desired shapes, deriving 70 percent of its revenue from making auto parts.

As the company’s chief commercial officer, Christopher Greenough, walks the concrete floors of the plant, he stops at a crate full of curved pieces of stainless steel, part of a car exhaust pipe. The factory sells this product to a company in Germany that supplies BMW.

That part alone generates annual revenue of about £500,000 (about $651,000), or 4 percent of SDE’s sales. “If there are tariffs, that would affect this product,” Mr. Greenough says.

Still, he and the company’s chief executive officer, Richard Homden, echo the traditional justification for Brexit.

“Going forward, we should have our own destiny,” Mr. Homden says. “We shouldn’t have to look to Europe to set the standards.”

When pressed to provide an example of a European rule that impedes their business, both men come up empty.

“I can’t think of any,” Mr. Greenough says.

They express confidence that Mr. Johnson will extract a favorable deal. Still, they acknowledge risks, prompting them to distinguish their business with new products.

The company is investing some £6 million (about $7.8 million) for new technology that can produce especially light car bodies — a promising feature as the industry shifts toward higher fuel efficiency standards and electric vehicles.

One major source of uncertainty is now gone, factory managers say. After three-plus years of agonizing political debate over whether Brexit would actually happen, Mr. Johnson has resolved that question.

In the town of Telford in the English Midlands, Advanced Chemical Etching makes metal components for cars, jets, drones, satellites and medical devices, with many of these wares destined for Europe.

January was the company’s best month ever, the chief executive, Chris Ball, says. Sales grew more than 40 percent from a year earlier.

He hopes the politicians will not derail those gains.

“Similar trading terms as it is now,” he says. “That would be the ideal thing.”

Geneva Abdul contributed reporting.


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Multani Mitti business Idea in Pakistan | Small Business Ideas In Pakistan 2020



Multani Mitti business Idea in Pakistan | Small Business Ideas In Pakistan 2020

#MultaniMittiBusiness #SmallBusinessideas #Businessideas


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In an unusual moment, the stock market’s ability to sniff out the future is severely impaired




A masked pedestrian carrying water bottles walks past the Charging Bull statue in lower Manhattan on April 02, 2020 in New York City.

Bruce Bennett | Getty Images

Tom Petty sang it 40 years ago and investors are living it now: The waiting is the hardest part.

Waiting for enough data on coronavirus-infection trajectories to form a trackable metric for a shutdown timetable. Waiting to gauge how much erosion of corporate balance sheets occurs as the commercial halt carries on – which will also dictate how many further layoffs and defaults will test the economy. Waiting for a sense of whether the stock market has priced in anything like a plausible path for business ahead.

With even month-old economic numbers of scant relevance in a post-lockdown world, attention has turned to how the market’s dramatic repricing stacks up to recessions past, and how the market reacts to its own extremes in terms of technical behavior.

The S&P 500’s heartbreaker of a 34% decline in about a month, culminating two weeks ago, matches up roughly with the sort of setback that accompanied “typical” recessions of the past.

The near-20% rebound rally and subsequent 6% backslide through last week also map to the aftermath of earlier cascading index collapses. This suggests we’re in a phase of choppy aftershocks and jumpy rallies that often — but certainly not always — leads toward another test of investors’ nerve via a return to the vicinity of those panicky initial lows.

Last week, stocks were down some 2%, but failed to break down significantly despite a load of lousy news, from accelerating outbreaks in additional states, to brutal 6-million new weekly unemployment claims, to huge retailers furloughing hundreds of thousands of employees collectively. To some observers, this was a win in the form of losing less.

Coronavirus vs the VIX

The slouching rather than collapsing nature of the drop was reflected in the S&P 500 Volatility Index sliding below 47 from 65, and from a peak a few weeks ago above 80. While not anything like an “all clear” signal, this drop shows the market has moved on from outright shock to grinding resignation that things are bad and will be so for a while. It also means traders bought an enormous amount of downside protection during March and so have less need to bid for option hedges now.

Jason Hunter, technical strategist at JPMorgan, has been plotting various indicators of disease incidence with market indicators, including one tracking the number of states with 10%-plus daily Covid-19 case growth against the VIX.

Source: JPMorgan

Of course, almost any two variables can be made to appear correlated. And no doubt this somewhat-engineered statistical relationship will break down (states with rapid case growth will, at some point, reach zero and the VIX never will, for example).

But there is some internal logic in the idea that when the propagation of the virus has seemed most unchecked, the urgency of selling and trader panic levels were most intense. Both have subsided for now.

“Based on the recent correlation, case growth deceleration…can help put further downward pressure on implied equity volatility and blunt the nature of a retest of the march equity price low,” Hunter says. He expects the March S&P lows between 2150 and 2200 to hold as this quarter’s floor, with rallies capped perhaps 12% above Friday’s closing level, as the waiting game plays out.

Similarly, Julian Emmanuel of BTIG says, “If history is any sort of guide, we expect a ‘divergent’ retest of the March lows in April, as the public health and economic bad news is likely to reach its parabolic peak in coming weeks prior to the (aspirational?) date for easing social distancing, April 30.”

Credit markets ticking clock

The credit market will have plenty to say about whether such an equity floor can hold and any rallies get traction. Corporate-debt markets are always crucial indicators for stocks, reflecting liquidity, risk-appetite and macro conditions in a fairly focused way. In recent weeks, the S&P 500 traded in lockstep with the iShares iBoxx High Yield Corporate Bond ETF (HYG), to an unusual degree.

Riskier corporate bonds are a fairly direct barometer of the duration of the economic freeze. Companies have reacted to the initial shock with employee furloughs, suspended share buybacks, curtailed operations and drawdowns of all available backup bank lines.

Already, many companies in energy, retail and the travel industry are pushed to the cusp of insolvency. But the longer the economy remains shut, the more companies have trouble servicing debts and the more bond-maturity dates approach.

Bank of America fixed-income strategists project 9% of high-yield issuers will default in the coming year, broadly in line with other recessions. It means junk spreads versus Treasuries should be about 9.5 percentage points, by their math — slightly wider than they finished last week. Both those numbers will rise and fall with the length of the wait for an economic restart.

Another way the wait time matters so much: The longer this goes, the more the fiscal support measures already passed will appear insufficient to cushion consumers and businesses.

One challenge for investors who watch the tape day to day is, the market itself does not simply wait. It’s open every weekday and traders will trade it, seizing on the freshest clues, overshooting both up and down. It will on some days overestimate the severity of the economic crisis and on others seize upon green shoots.

We are in an unusual moment where the market’s vaunted ability to “sniff out” the economic path a few months out — always overstated, perhaps — is particularly impaired by the variables of disease dynamics and policy decisions.

What can be observed is the damage already done to parts of the market. The auto and retail sector are being priced for prolonged distress. The S&P 500 wiped out three years’ worth of gains. Small-cap stocks are back to early-2016 levels and at their cheapest readings compared to big stocks in nearly 20- years. Large-cap bank shares have sunk to 60% of book value, as a group.

All of this means markets have gone some distance toward accounting for widespread economic calamity. But enough?

We’ll need to wait and see.


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As unemployment spikes, here are the companies that are hiring




By every measure, the job market is getting grim.

With many non-essential businesses forced to close, workers across the country are suddenly facing extended furloughs or lay-offs. The unemployment rate jumped to 4.4% — from 3.5% — its highest level since August 2017, and it will likely climb much higher.

“There’s no avoiding a substantial rise in the unemployment rate, likely eclipsing the 10% level during the Great Recession,” said Mark Hamrick, a senior economic analyst at

“The real, unanswerable question at this point is how many of these jobs come back after social distancing guidelines are relaxed and businesses reopen,” he added. “We hope for the best but brace for the worst.”

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Yet, amid the coronavirus pandemic, there is a demand for people on the frontlines, particularly in health and online retail.

“Laid-off workers should look to industries in which the pandemic has placed increased demand for workers, like health care and delivery services,” said Irina Novoselsky, the CEO of CareerBuilder.

“Also, the retailers that are open — like supermarkets and hardware stores — are in need of more staff to manage long lines and to replace those who can’t or won’t work due to health concerns,” she said.

Amazon, Anthem, Decker Truck Line and Home Depot posted the highest number of open job listings last week, according to CareerBuilder. Amazon alone said it plans to hire an additional 100,000 warehouse and delivery workers amid a surge in online orders.

“This is not surprising given the increased demand for delivery services, and that consumers are stocking up and making bigger purchases at grocery and big box stores,” Novoselsky said.  

As for the jobs with the most openings, registered nurses, truck drivers, customer service representatives, drivers with a commercial license and software engineers are all needed, CareerBuilder found.

LinkedIn also identified the most in-demand jobs nationwide, as well as the companies with the most open jobs based on postings in March.

Job postings in health care spiked 35% compared to just a few months earlier, LinkedIn found, with hospitals, pharmacies and insurance providers all currently hiring. 

“Many of these openings are entry-level or hourly positions that require little to no training or experience, so it’s possible for individuals at all levels to jump right into a new position,” said Blake Barnes, LinkedIn’s head of careers and talent solutions.

Gig employment is ramping up in a few key areas to support those essential services, according to a separate report by staffing firm PeopleReady.

“In a time when people are struggling to make ends meet and wondering when things will return to normal, temporary work can help to bridge employment gaps while serving the greater good,” said Taryn Owen, the president of PeopleReady.

For furloughed workers looking for a temporary paycheck, some of the most in-demand jobs are for warehouse workers, cleaners, stockers and truck unloaders for grocery stores and pharmacies, PeopleReady found.

Temporary work can help to bridge employment gaps while serving the greater good.

Taryn Owen

president of PeopleReady

“As communities mobilize to stop the spread of COVID-19, they need extra hands on deck to support overburdened health-care systems, manufacturing and distribution of food and other critical supplies, emergency construction, waste management and more,” Owen said.

In addition, opportunities exist for job seekers more interested in working remotely.

Remote job search site FlexJobs pinpointed the companies hiring remote workers right now, including Amazon, CVS and UnitedHealth, based on its annual list of the top 100 companies hiring remote workers.

During the last recession, remote work was a bright spot in an otherwise bleak employment picture. Those job listings continued to increase every year even as in-office jobs declined, according to FlexJobs.

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