1st September 2021
Good morning Morgan Stanley must really be struggling with recruiting. The US investment bank has increased the pay of junior bankers twice in one month. Graduates will now be paid a base salary of $110,000 – up from the previous rise from $85,000 to $100,000 only a month ago.
- Consumer borrowing flatlines
- Zoom boom slows
Consumer borrowing flatlines
What’s going on?
Consumers kept levels of borrowing unchanged from June in July, according to the latest data from the Bank of England. It’s the latest sign that the UK economic recovery could be stumbling.
Why is this important?
The total amount that UK households borrowed in July was roughly in line with what they repaid. Economists had expected consumers would borrow £400m more than they repaid (up from £300m in June).
It’s the weakest demand for consumer credit since February this year during lockdown and has left questions over how well the economy is recovering from the pandemic.
Households also repaid £1.4bn of mortgage debt in July, following record borrowing in June of £17.7bn as homebuyers rushed to take advantage of the stamp duty cuts.
People are still saving hard, with £7.1bn deposited with banks and building societies in July, down from June's £9.6bn but still more than the pre-pandemic average.
It brings the total amount saved by British households since March 2020 to about £180bn, or 8% of total economic output.
In July the so-called “freedom day” and full reopening of the economy was expected to drive a strong economic recovery. But the rise of the Delta variant and supply side issues caused by the “pingdemic” seems to have cooled consumer spending.
Zoom boom slows
In less than two years Zoom has gone from a little-know video conferencing platform to a verb and lifestyle, thanks to the pandemic. But its latest earnings show the boom times could be coming to an end as we all return to in-person interactions.
In 2020, Zoom’s revenue more than quadrupled from the previous year as millions transitioned to working from home.
The latest numbers were good. Profits easily beat forecasts and revenue even topped $1bn in a quarter for the first time. But although sales are still growing – growth has slowed considerably..
Zoom's revenue in the three months to July grew 54% from last year — down from nearly 200% growth in the previous period. From August to October it's expecting even slower growth.
But the company is diversifying to help keep the pandemic-related momentum.
In March, Zoom said it would start licensing its video conferencing tech to other apps as an unbranded service. Think: dating apps and telehealth providers.
In October, Zoom launched "OnZoom" for people to find and host paid virtual events, from live performances to yoga classes. In July, it launched "Zoom Events," for companies to host external and internal interactive events (think: large workshops).
In July, the company announced plans to buy cloud-based customer-service platform Five9 for $15bn. Zoom sees it as a way to attract more larges customers.
But investors don’t seem totally convinced yet, the share price fell 15% after the results announcement, as they try to figure out what’s next for the pandemic winner.
Stat of the day
An estimated 80% of Chinese students use private tuition, the UK figure is around 25%
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