Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.
The app industry continues to grow, with a record number of downloads and consumer spending across both the iOS and Google Play stores combined in 2021, according to the latest year-end reports. Global spending across iOS, Google Play and third-party Android app stores in China grew 19% in 2021 to reach $170 billion. Downloads of apps also grew by 5%, reaching 230 billion in 2021, and mobile ad spend grew 23% year over year to reach $295 billion.
Today’s consumers now spend more time in apps than ever before — even topping the time they spend watching TV, in some cases. The average American watches 3.1 hours of TV per day, for example, but in 2021, they spent 4.1 hours on their mobile device. And they’re not even the world’s heaviest mobile users. In markets like Brazil, Indonesia and South Korea, users surpassed five hours per day in mobile apps in 2021.
Apps aren’t just a way to pass idle hours, either. They can grow to become huge businesses. In 2021, 233 apps and games generated over $100 million in consumer spend and 13 topped $1 billion in revenue. This was up 20% from 2020, when 193 apps and games topped $100 million in annual consumer spend and just eight apps topped $1 billion.
This Week in Apps offers a way to keep up with this fast-moving industry in one place, with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions and suggestions about new apps to try, too.
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Instagram to verify users’ ages in new test
Instagram announced this week it’s testing a new set of features for verifying users’ ages in the app, including things like video selfies, vouching from adult friends and providing an ID. The tests, which will begin in the U.S., will apply to users who try to change their age to 18 or over after being previously set to under 18. These users may be trying to correct an earlier mistake or they could be teens trying to circumvent the app’s newer age-appropriate restrictions.
If users are prompted to provide an ID card, like a passport or driver’s license, Meta will store it on its servers for 30 days before deletion. If users choose the social vouching option, they’ll need at least three other adult friends to vouch for their age — and Instagram will choose a list of six people randomly who meet the criteria. Those users can’t have a new account or be vouching for others at the same time.
The company also said it’s using AI that can estimate users’ ages in video selfies. The company is working with the London-based digital identify firm Yoti which will examine the file, make an estimate, then delete the file.
Age verification is an increasingly common feature in social apps used by younger users as a result of tighter regulations. Another company catering to Gen Z users, Yubo, recently rolled out its own age estimating tech as well.
Twitter goes long form
The news is one of Twitter’s more significant changes since doubling the character count from 140 to 280 characters, as it will allow users to write on Twitter directly, as if it’s a blogging platform. With Twitter Notes, users are able to create articles using rich formatting and uploaded media, which can then be tweeted and shared with followers upon publishing. The company also said it would merge its newsletter service, Revue, into Twitter Notes.
Users with access can create Twitter Notes from the “Write” link in Twitter’s navigation. For the time being, Twitter is testing Notes with a small group of writers in the United States, Canada, Ghana and the United Kingdom. The Notes can be up to 2,500 words in length.
The feature could encourage users to rely on Twitter Thread (tweetstorms) less in order to share their longer thoughts, ideas or stories with their Twitter followers, Community or Circle. It could also put an end to using a screenshot from the Notes app to tweet something longer than 280 characters. Meanwhile, Twitter Notes can tap into the potential for viral distribution that comes with posting to the platform. Like tweets, the Notes would have their own link and could be tweeted, retweeted, sent in DMs, liked and bookmarked. They can also be reported and must comply with Twitter’s rules.
It’s worth noting (ha!) that Twitter Notes also gives the company a new business and potential revenue stream as it further develops the product. The feature may allow the social platform to compete with established services, like Medium for blogging, or Substack’s newsletters.
- Apple released the second developer beta for iOS 16 and iPadOS 16, along with other betas for Mac, Apple Watch and Apple TV. Among the changes is support for cellular iCloud backups over LTE; a new feature that shows a brand or company’s logo beside their email in the Mail app to cut down on phishing; tech that lets you skip CAPTCHAs; plus new SMS filters and the ability to tap to report a junk SMS sender in the U.S. But another thing to note if you’re testing iOS 16 — the current beta’s editable iMessage feature doesn’t work with older iPhones, meaning your edits are texted to the person after the original message.
- Apple also rolled out Xcode 14 beta 2 which now includes a Stage Manager simulator.
- The iPad will no longer work as a home hub in iOS 16 according to information discovered in the Home app.
- As part of its ongoing efforts to expand into e-commerce, Twitter announced a new partnership with Shopify. The deal will see Twitter launching a sales channel app that will be made available to all of Shopify’s U.S. merchants through its app store. The app allows merchants to onboard themselves to Twitter’s Shopping Manager, the dashboard offered by the social media company where sellers can access product catalog tools and enable other shopping features for their profiles. Merchants will be able to use the new sales channel app to connect their Twitter account to their Shopify admin then get set up with Twitter’s Shopping Manager and other free tools Twitter built for “Professionals.” This includes Twitter’s launch of a new feature called Location Spotlight, which allows local businesses in the U.S., Canada, U.K. and Australia to display information like their street address, contact info and operating hours directly on their profile.
- Walmart gave its app an AR upgrade with the launch of View in Your Space, which allows customers to see home décor and furniture in their own homes. The feature will be rolled out to over 300 items on Walmart’s iOS app by early July.
- Tim Cook may have hinted at Apple’s AR headset plans when he told a Chinese state-run news outlet to “stay tuned” to see what Apple had in store next for AR in an interview. A later investor note by Ming-Chi Kuo also suggested the new hardware could arrive as soon as early 2023.
- IKEA launched a new in-app design experience, called IKEA Kreativ, that lets U.S. shoppers visualize furniture in their own spaces using AR and AI. The feature can also remove the existing furniture from your room so you can better imagine the changes.
- Snap shared some data about AR shopping trends, noting that there was a 32% increased use of shoppable AR during the pandemic and that 69% of consumers believed AR was a part of shopping’s future.
- Coinbase is shutting down its standalone Pro service by year’s end and replacing it with Advanced Trade across its website and app. The latter offers comparable features to the Pro service, which had lowered fees to traders who interacted directly with the Coinbase Exchange order book.
- Facebook Pay formally rebranded to Meta Pay. The change had already been announced but is now rolling out in the U.S. before expanding globally.
- Snapchat announced its first accelerator program for emerging Black creators, which will see 25 selected participants receive $10,000 per month to launch their careers across a total $3 million investment.
- Instagram has been experimenting with a new feature that would allow users to leave notes for their friends at the top of the DM inbox. The feature could help users share urgent or more important messages that could be overlooked in Stories or in messages.
- Meta announced more ways for creators to make money on Facebook and Instagram and the expansion of other monetization tools to more creators. The company will keep paid online events, fan subscriptions, badges and its upcoming independent news products free for creators until 2024, instead of 2023, as it had said before. Meta is also testing a designated place on Instagram where creators can get discovered by brands for partnerships; will launch a way for users to subscribe to Facebook Groups even for those who have paid for access on another platform; and is expanding the Reels Play Bonus program to more creators and making Facebook Stars available to all.
- Twitter announced the return of its developer conference, Chirp. The event was first held in 2010 but was then canceled the next year. At the time, the event had been a reflection of Twitter’s attitude toward its developer community in general — disorganized and constantly in flux as the company’s business initiatives changed. Times have since changed and Twitter has been trying to woo back developers with its new API, even by promoting some apps on Twitter itself.
- Telegram said it now has over 700 monthly active users and announced Telegram Premium, a subscription that gives users access to exclusive features like doubled limits, 4 GB file uploads, faster downloads, exclusive stickers and reactions, improved chat management and more.
- Camera+, an alternative to Apple’s built-in app, added a new “UltraRes upscaling” feature. With machine learning technology, the app can upscale images to up to four times what the native sensor can capture.
- Match-owned Hinge added a new feature that allows users to share their “Dating Intentions” — meaning whether they’re looking for long-term, short-term, open relationships and more. The update changes Hinge’s focus as the company has historically been the app designed to connect people looking for more serious relationships, while Match-owned Tinder was aimed at those seeking casual encounters.
Streaming & Entertainment
- Spotify revamped its concert discovery feature with the launch of a new Live Events Feed. The personalized feature will allow users to find favorite artists’ events in your area and will now include artist imagery and more tour details. Local events will also be highlighted while streaming and soon, in other places in the Spotify app.
- Clubhouse is testing a new feature called Houses, per Bloomberg, which are private rooms aimed at encouraging social interactions where anyone can unmute themselves and speak.
- Reddit Talk, the company’s live audio Clubhouse-like feature, announced its Host program would launch on July 11th. The program will promote hosts’ audio across the site. Reddit Talk also gained new features like a soundboard and topic selector for discovery purposes.
- Apple Music raised the price of its student plan in the United States, Canada and the United Kingdom. In the United States and Canada, the price for the plan has increased from $4.99 to $5.99. In the United Kingdom, the price has increased from £4.99 to £5.99.
- Epic Games has come up with a new system for game ratings. While these changes apply to its own online games store, it’s an example of why alternative app stores could be useful to provide competition with Apple’s own — they can be a ground to test out new ideas. In Epic’s case, random players who have played a game for over two hours will be asked to rate the game on a five-point scale. Over time, these will create the game’s Overall Rating. The system, which relies on random sampling, could cut down on review bombing and reviews left by those who aren’t actual players, the company notes.
- China’s regulation of the mobile gaming market may be leading to declining use of the App Store in the country, according to Morgan Stanley. The firm’s latest analysis estimated that the App Store only saw 1% growth in June so far, compared with 6% growth in May.
Health & Fitness
- Fitbit added a new premium feature, “Sleep Profile,” which will allow users to track their sleep patterns across 10 key metrics, including new data points like bedtime consistency, the time before sound sleep and disrupted sleep. The feature is rolling out to the Fitbit app’s Premium users and supports devices including Sense, Versa 3, Versa 2, Charge 5, Luxe or Inspire 2.
Travel & Transportation
- Apple is planning to expand its CarPlay experience to China, according to a job posting.
- Polestar has now added Apple CarPlay to its all-electric Polestar 2 sedan via an over-the-air software update, after previously only supporting Android Auto.
- Car rental apps saw their MAUs grow 19% year-over-year in the U.S. in May, reported Apptopia, despite rising gas prices.
Government & Policy
- TikTok offered a series of commitments in the EU to improve user reporting and disclosure requirements around ads/sponsored content as well as an agreement to boost transparency around its digital coins and virtual gifts. The agreement follows a series of complaints over child safety and consumer protection complaints filed back in February 2021.
- The U.S. Department of Justice today entered into an agreement with Meta to resolve a lawsuit that alleged Meta engaged in discriminatory advertising in violation of the Fair Housing Act (FHA). As a result, Meta has agreed to develop a new system for housing ads and will pay a roughly $115,000 penalty, the maximum under the FHA.
Reading & News
- India-based VerSe Innovation rolled out its news aggregator Dailyhunt in the UAE, Saudi Arabia, Bahrain, Oman, Qatar and Kuwait, with over 5,000 content partners in the region.
Security & Privacy
- Google Chrome for iOS gained a number of new features in a recent update, including access to Enhanced Safe Browsing to protect users from dangerous websites and malware, as well as the ability to make Google Password Manager your Autofill provider. Other additions include Chrome Actions (typed commands in the URL bar) and access to Google’s Discover feed on the main page.
- Daycare apps including those from Brightwheel, HiMama and others were found to lack 2FA and other privacy protections, in an analysis.
- Google threat researchers detailed a commercial spyware system called Hermit, used in Kazakhstan and Italy, which targeted both Android and iOS. The iOS version had six exploits, including two zero-days. Targeted victims are tricked into installing a malicious app — which masquerades as a legitimate branded telco or messaging app — from outside the app store.
Funding and M&A
Courier raised $35 million in a Series B funding round led by GV. The company provides an API for sending notifications across multiple channels, including email, text, web and mobile.
Ghana-based fintech Fido raised $30 million in equity investment and some undisclosed debt funding in a Series A round led by Israel-based private equity fund Fortissimo Capital. The round brings the total equity investment raised to date to $38 million. The startup says it’s adding savings and payment products to its portfolio later this year and will enter Uganda.
Twitter asked its shareholders to approve the $44 billion Elon Musk acquisition. At the time of its SEC filing, Twitter’s share price was around $38.12 — lower than Musk’s offer price of $54.20 a share. The company’s market cap had also dropped below $30 billion, making a $44 billion deal look very good.
The app is not the best experience for watching videos, as you may have guessed, but it is pretty wild that it actually works. The app by default shows you top trending videos, but you can customize this so the videos that appear are selected from a particular genre, like Music, News, Gaming, Movies and more. While it would be enough to just accomplish bringing YouTube to the Watch, the developer also added other features like the ability to search for videos, save videos to the app’s local Library and subscribe to Channels. When you get back to your other devices, you can also scan a QR code to share the video back to your iPhone or iPad.default pandemic link testing consumer spending south korea india brazil canada italy eu china
Pfizer bid for sickle cell drug developer GBT said to be imminent
Pfizer is on the brink of announcing a deal to buy Global Blood Therapeutics (GBT) and its oral
The post Pfizer bid for sickle cell drug developer GBT…
Pfizer is on the brink of announcing a deal to buy Global Blood Therapeutics (GBT) and its oral therapy Oxbryta for sickle cell disease for around $5 billion, according to press reports.
A deal could be announced as early as today, when GBT is scheduled to report its second quarter results, according to a Wall Street Journal report citing people familiar with the matter. Neither GBT nor Pfizer has commented on the rumour.
If confirmed, it will be another example of Pfizer leveraging the windfall cash generated by its COVID-19 vaccine Comirnaty and oral antiviral therapy Paxlovid to beef up its pipeline of new therapies, coming a few months after it closed a $6.7 billion acquisition of Arena Pharma and made an $11.6 billion takeover bid for Biohaven.
GBT won FDA approval for Oxbryta (voxelotor) as a daily tablet for the treatment of SCD in patients aged 12 and over in 2019, extending its use to include younger children aged four and over last December, and earlier this year also got a green light from regulators in Europe for the over 12s.
The $125,000-a-year drug is a haemoglobin polymerisation inhibitor designed to prevent the deformation or ‘sickling’ of red blood cells associated with the disease, and has been tipped to become a $1 billion-plus product.
Sales of Oxbryta have been a little slow to gather momentum, mainly because of payer resistance in the US, but are picking up the pace with a 41% rise to $55 million in the first quarter of this year.
There are around 100,000 people in the US living with SCD, and more than 20 million globally, according to the FDA.
If a deal is forthcoming, Pfizer would also claim inclacumab, a P-selectin inhibitor in phase 3 testing for prevention of the painful vaso-occlusive crises that afflict people living with SCD , as well as an early-stage polymerisation inhibitor called GBT021601 intended as a follow-up to Oxbryta.
Other suitors are also reported to be circling GBT however, according to Bloomberg, whose report sparked a 33% spike in GBT shares to more than $68 on Friday, not far shy of the company’s 52-week high of $73 and giving it a market capitalisation of more than $4 billion.
The post Pfizer bid for sickle cell drug developer GBT said to be imminent appeared first on .vaccine treatment testing fda therapy covid-19 europe
Here We Go Again – Monkeypox Communications Challenges
In February 2020 I published a blog posting – Emerging Pathogens, Communications – that encapsulated my observations and learnings from my years work…
In February 2020 I published a blog posting – Emerging Pathogens, Communications – that encapsulated my observations and learnings from my years work in the early years of the HIV/AIDS pandemic in the early 1980s. As we sit, possibly, on the cusp of another large scale medical challenge with monkeypox, it seemed like a good idea to revisit the topic. When there is a new and scary thing we are facing, medically speaking, there are some truisms regarding the communications environment that can inform strategic thinking about how we talk about it.
- Facts are low, speculation is high – And nature hates a vacuum and there will be many who are willing to fill the void with misinformation. People want facts, and the fact is, facts are in short supply.
- Numbers don’t mean a lot – First of all, they change quickly – and are changing very quickly with monkeypox. In addition, there is often a lack of accurate reporting for many reasons.
- Points of reference will change – What we know, and what we don’t know, will change over time as we get more experience and gain wider understanding. That might seem like a good thing, but in fact, changing stories undermine credibility.
- Fraud potential is high – There are people who will take advantage of the situation and exploit it for political and/or financial gain. That, too, impacts credibility and can confuse people.
- Policy is likely to be ham-handed – Policies may be developed quickly and without adequate information and be based on emotion and bias more than facts. This is another factor that strains credibility.
Monkeypox is not COVID, and COVID was not AIDS. They each present distinct challenges and evoke particular fears and concerns. There are big differences between the three. But they are all viruses. And when it comes to communications challenges there are many commonalities.
First and foremost, in the absence of facts, fear can drive actions. And when a pathogen is newly emerging, facts are greatly outnumbered by questions. The degree to which companies, educators, businesses and service providers may want to prepare to deal with those challenges may depend on where they are, who their stakeholders are, and how big or small they are. At this stage though, better to consider the challenges that may lay before you know, before they present themselves.
It may be that monkeypox is contained early if we are lucky. There are reported signs that transmission may be slowing in the U.K. and the trend in the graph above appears to show some deceleration. That said, the numbers have increased quickly on an extremely steep curve. That means there is an increasing amount of virus out there. The virus has mainly spread among men who have sex with men and transmission is being attributed to skin contact. But the higher the numbers go the greater potential there is for more lateral spread. A presumptive pediatric case was reported last week in California. It is also a virus that can move between people and animals.
Containment depends on systems that are able to screen, test, treat, and prevent (both by means of avoiding circumstances that can enhance transmission and by vaccination). To that end, many things are not in our favor. An extremely splintered approach at federal, state and local levels impacts the coordination of a public health response. We have COVID fatigue in the extreme. And in terms of tools, we do not have a means for screening, meaning we do not know who is infected before they exhibit symptoms which may take several days; the testing situation is complicated because there is no quick, at-home testing like there is for COVID and may be best applied when there are lesions. But people may have other symptoms such as headache, chills, muscle aches, swollen lymph nodes and exhaustion. The only FDA-approved drug to treat is approved for smallpox, but no Monkeypox and has been difficult to access. In terms of prevention, while a vaccine has been developed, supply is very short and it, too, has been hard to get.
Additional challenges include the fact that the course of illness runs two to four weeks. If a person must self-isolate for that length of time it is not only difficult, but there may be unintended consequences. With men who have sex with men comprising the overwhelming majority of cases, a diagnosis is the equivalent of coming out. For many gay men that is not a problem. For many others, who may have wives and children, it can be a very large one, facing a situation that may have both personal and professional peril.
At the present time, there are some states which are reporting higher numbers than others. If the numbers do continue to climb, then a larger number of geographies will be impacted and most likely a wider circle of people, raising the chances that large employers, those in specific sectors, may face communications challenges sooner rather than later such as:
- Travel and hospitality
- Schools and universities
- Institutional settings such as daycare centers, rehab and nursing homes (a case of a daycare workers was reported in Illinois last week)
What to Do
Every business, service or place of public accommodation is different. There is no one-size-fits-all approach to preparation. One must consider the size of the enterprise, the stakeholders and the level of physical contact and interaction with surfaces. That said, there are echos from both AIDS and COVID that shed light into how people may react to the emergence of another communicable condition. A few things to consider:
- Review policies and assess what may need to be changed or amended; this is not just COVID return-to-work policies, but discrimination policies as well. Re-think many of the things you have had to communicate about a virus transmitted by air, and re-fashion to think about surfaces. Monkeypox will present distinct challenges.
- Consider the questions and issues you may face. Can we catch monkeypox using the toilet? Trying on clothes? Do I have to sit next to the gay man? My co-worker says it is eczema, I’m afraid it is Monkeypox. Depending on your business, your clientele, there are different sets of questions that may arise for different settings. Think about what they might be and to what degree you are the one to have to provide the answers.
- Assess the triggers for potential fear and conflict between employees, customers and users of any service.
- Communicating in an environment where what we know changes, and what was certain yesterday may be uncertain tomorrow is always a strain on credibility. Therefore consider integrating reminders to that effect in your communications. What we know now is….
- Gather reliable resources – the obvious ones such as CDC, FDA, and Departments of Health at the state and local levels, but also consider credible grassroots organizations, particularly ones that may resonate with stakeholders, particularly those dealing with gay-related health issues and key medical societies such as the American Society for Microbiology and others.
Many people think that preparation during such a nascent phase of the outbreak is over-reacting. I hope they are right. But having lived through AIDS and COVID, and seen early numbers quickly spell a different story over a very short period of time, one may be well-served to think it through now.cdc pandemic vaccine testing fda containment spread transmission
Stocks for a recession: which companies have historically done well during recessions or are likely to this time?
Last week the Bank of England forecast a recession starting this autumn that it now expects to be deeper and longer than previously assumed. It also expects…
Last week the Bank of England forecast a recession starting this autumn that it now expects to be deeper and longer than previously assumed. It also expects inflation to hit 13% by the end of the year just months after reassuring that it didn’t expect more than modestly high figures.
Having belatedly acknowledged the extent of the inflation problem, admittedly exacerbated by the impact on energy and food prices the war in Ukraine has had, the UK’s central bank’s nine-member Monetary Policy Committee voted to raise interest rates. Thursday’s 0.5 percentage points rise, which took the BoE’s base rate to 1.75%, was the biggest single increase in 27 years.
The European Central Bank and USA’s Federal Reserve have also taken aggressive measures on rates, with the former also raising rates by 0.5% to 0%. It was the ECB’s first rates rise in 11 years. The Fed went even further, raising rates for the fourth and largest time this year with a 0.75 percentage points hike to between 2.25% and 2.5%.
Aggressive interest rate hikes alongside high levels of inflation tend to result in recession with the combination referred to as stagflation. With inflation expected to remain high next year and not dropping back towards the target 2% before 2023, we could be in for an extended period of recession.
Why stock markets fall during a recession but not all stocks do
Stock markets historically do badly during recessions for the simple reason they are a proxy for the economy and economic activity. When economic activity drops, people and companies have less money or are worried about having less money, so they spend less and companies earn less. Investors also become less optimistic about their prospects and valuations drop.
But the kind of drop in economic activity that leads to recessions is not evenly distributed across all areas of an economy. When consumers cut back on spending, they typically choose to sacrifice some things and not others, rather than applying an even haircut across all costs. And there are goods and services that people spend more on rather than less when tightening their belts.
So while the net impact of a recession has always historically been the London Stock Exchange and other major international stock markets losing market capitalisation, or value, that doesn’t mean all the stocks that constitute them go down. Some go down by more than others. And some stocks grow in value because the companies sell the categories of goods and services people spend more on when they are either poorer or worried about becoming poorer.
Should we be investing “for” a recession?
This surely means all investors need to do to mitigate against a recession is to sell out of the stocks that do badly during an economic slump and buy into those that do well? In theory, yes. In practice, doing that successfully would mean being sure a recession will take place some time before it becomes a reality and timing its onset, then the subsequent recovery, well.
That is of course far easier said than done which is why even professional fund managers don’t attempt the kind of comprehensive portfolio flip that would involve. Some investors will make big bets on events like the onset of a recession or inflation spiralling out of control.
They are the kind of bets that make for dramatic wins like those portrayed in the Hollywood film The Big Crash, which tells the story of a group of traders who predicted and bet big on the 2007 subprime mortgage implosion that triggered the international financial crisis. But as the film relies on for its dramatic tension, the big winners of The Big Crash very nearly got their timing wrong. Another few days and they would have been forced to close their positions just before market conditions turned in their favour and lost everything.
The reality is the big, risky bets that result in spectacular investment wins when they come off are usually far more likely to go wrong than right. Which is why regular investors, rather than high risk traders using leverage, shouldn’t take them. At least not with their main investment portfolio if they don’t have the luxury of being able to justify setting aside 10% to 20% of capital for highr isk-high reward bets.
If you have a well-balanced investment portfolio with a long term horizon and you are happy with the overall quality of your investments, you may choose to do nothing at all to mitigate against the recession that is almost certainly coming. If you have ten years or more until you expect to start drawing down an income from your portfolio, your investments should have plenty of time to recover from this period.
But if you do want to rebalance because you feel your portfolio is generally too heavily weighted towards the kind of growth stocks particularly vulnerable to inflation, higher interest rates and recession, you might want to consider rotating some of your capital into the kind of stocks that might do well in a recession.
How to pick stocks that will do well in a recession?
There are two ways to highlight stocks that might do well in a recession. The first is the most obvious and simplest approach – look at which did well in previous recessions. We had a very brief recession at the start of the Covid-19 pandemic and a much more significant one in 2008/09 in the wake of the international financial crisis. Which companies did well over those periods?
The second approach is to add a layer of complexity into the equation and consider how and why the coming recession might differ from the two most recent historical examples. The 2020 recession was extremely unusual in its brevity. Within a couple of months, stock markets were soaring again as people under quarantine and social distancing restrictions spent more in the digital economy and generally on services and products to enhance their experience being couped up at home.
The 2008/09 recession was also different because it was caused by a systemic failure in the financial sector. Unemployment leapt which is not expected to happen this time around with an especially tight labour market one result of the combination of the pandemic and Brexit. Many households also have higher levels of savings built up during the pandemic which a significant number of analysts believe is softening the impact of inflation.
While there are likely to be constants throughout recessions, there are also differences that should be taken into account. Normally energy companies do badly during a recession as lower economic activity means less energy being used. But energy companies are currently posting record profits because of sky-high energy prices which are one of the major factors behind the expected recession. They should continue to do well while the recession lasts as energy prices dropping again is likely to be one of the catalysts behind the recovery.
The online trading company eToro recently published two baskets of “recession winning stocks” – one made up of Wall Street-listed companies and the other companies listed in the UK. The stocks in each basket were selected because they were the biggest gainers during the last two recessions. Interestingly, they also did well during the intervening period between 2009 and 2020, as well as in the aftermath of the coronavirus crash.
The portfolio of US stocks beat the S&P 500 index of large American businesses by 60 percentage points through the financial crisis between 2007 and 2009 and by 9 percentage points during the Covid crisis in 2020.
The portfolio of UK stocks beat FTSE-100 by 35 percentage points during the financial crisis and by 17 percentage points in the Covid crash. Since 2007, the US portfolio has gained 834%, more than twice the return of the Nasdaq and about five times that of the S&P 500. The UK portfolio’s 129% return is eight times more than the FTSE 100’s, excluding dividends.
“Well represented segments included discount and everyday-low-price retailers as consumers trade down, like Walmart (WMT), Ross Stores (ROST) and Dollar Tree (DLTR).”
“Fast food McDonalds (MCD) is related. Similarly, home DIY, like Home Depot (HD) Lowe’s (LOWE), and auto repair parts stocks Autozone (AZO) and O’Reilly (ORLY). Health care and big biotech is well-represented as inelastic non-discretionary purchases, like Abbott (ABT), Amgen (AMGN), Vertex (VRTX).”
“Also, domestic comforts from toys (Hasbro, HAS) to candy (Hershey, HSY), and getting more from your money and tax (H&R Block, HRB), and educating yourself (2U, TWOU).”
The UK portfolio included the drug makers AstraZeneca and GlaxoSmithKline, which did well because spending money on healthcare and medicines is essential and families don’t tend to cut back even when struggling financially.
The cigarette makers British American Tobacco and Imperial Brands also don’t usually see any downturn in demand because they benefit from a customer base addicted to their products. Both companies pay high and rising dividends. Consumer goods firms such as Unilever and Premier Foods also typically do well because they own strong brands that people bought even after price rises have been passed on.
Proactive Investor also picks out a range of London-listed stocks it expects to do well over the next year or so. In the energy sector that is doing so well at the moment it highlights Harbour Energy as a “core sector stock” and Diversified Energy Company as having “one of the lowest-risk free cash flow profiles in the sector”, while Energean (a client) provides “excellent visibility on multi-decade cash flows”.
Another difference to recent recessions could be how miners do during the one expected from autumn. Normally lower economic activity reduces for demand for commodities but the sector is also facing supply constraints that should see prices supported or rebound quickly.
Copper, mineral sands and diamonds look among the commodities most constrained in terms of supply, with limited supply growth under development. Mining and commodity stocks to look at are suggested as:
“Atalaya Mining (AIM:ATYM, TSX:AYM), Central Asia Metals, Kenmare Resources, Petra Diamonds and Antofagasta, with Tharisa PLC (LSE:THS, JSE:THA) tagged on as platinum group output to be in focus as automotive sales recover.”
“Gold stocks are seen as outperforming the market during the pullback phase, as in March 2020 and in the initial stages of a rebound, with top picks currently Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF), Pure Gold Mining Inc (TSX-V:PGM, LSE:PUR, OTC:LRTNF), Wheaton Precious Metals and Yamana Gold (TSX:YRI, LSE:AUY).”
Credit Suisse has also picked out stocks that have historically outperformed during recessions, highlighting:
“London Stock Exchange Group PLC (LSE:LSEG), RELX PLC (LSE:REL), Experian (LSE:EXPN) PLC, Microsoft Corporation (NASDAQ:MSFT) and Visa Inc (NYSE:V).”
While there is nothing wrong with doing some periodic portfolio rebalancing and potentially rotating more assets into stocks seen as likely to thrive in a recession, don’t panic. Recessions have always come and gone as part of the economic cycle and stock markets traditionally go on to greater heights during the subsequent recovery.
That means the chances are your portfolio will regain its losses and add new gains over the years ahead. Buying cheap growth stocks seen as likely candidates to flourish again during the recovery could be seen as just as sensible a tactic as rotating into recession-proof stocks. But if you do decide to reposition to some extent, look for stocks that have not only historically done well during recessions, or could be expected to during this one ahead, but are also healthy companies you would expect to keep doing well when markets recover. Then your success won’t come down to the fickle fate of whether or not you get your timing right.
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