Monday 03/06/24

1. In MACRO & OIL NEWS, Biden tries to make the most of Trump’s conviction, Beijing turns the screws on Gazprom, the ANC gets a pasting and we look at US shale consolidation and the extension of production cuts by OPEC+
2. In IPO AND M&A NEWS, Shein gets closer to a London IPO and the LSE sees light at the end of the tunnel
3. In TECH NEWS, the Saudi’s spread their bets on AI, Nvidia announces more new chips, Trump joins TikTok and Universal plans one of the biggest theme parks in the world – in the UK!
4. In MISCELLANEOUS NEWS, Tesla retail investors get restricted, Wayve is to make waves in San Fran, EV car charging in apartment blocks gets a boost, booze looks cheap and councils sell off assets
5. AND FINALLY, I bring you Uncle Roger’s latest roast…

So Biden tries to benefit from Trump’s misery, China turns the screws, the ANC eats humble pie and we consider the consolidation in the US oil sector and prolonged production cuts by OPEC+…

Hi there! Just to let you know, I’m preparing for a major overhaul on Watson’s Daily that will enhance the existing offering. You may not see the updates instantly, but I shall let you know when the big “switch-over” takes place this summer. I think you will love what’s to come!

Did you know that there is a podcast to go with Watson’s Daily? In this podcast, I discuss two stories from the day’s edition in a bit more depth with a Watson’s Daily Ambassador, my mate Ralph (on the Weekly podcast) or a special guest. The idea of this is to help to give you more of an idea of what talking about this stuff could sound like 👍 You can find the podcasts on the buttons below:

Conviction politics: Joe Biden sees opportunity in Trump’s guilty verdict (Financial Times, James Politi) shows that Joe Biden has, predictably, increased his attacks on Donald Trump following the latter’s criminal conviction. The Biden campaign has referred to Trump as a “convicted felon” and someone who would “destroy out justice system, shred our democracy, rig our economy for their billionaire donors, and attack the very idea of America”. * SO WHAT? * It really is quite astonishing that a country like America can get behind such a man to be their leader. The alternative isn’t that great either – a doddery old man who can’t make his mind up, doesn’t particularly treat his allies well and who locks classified documents in his garage. The stark contrast between the outrage (quite rightly) caused by Boris Johnson’s partying during lockdown and the aftermath – and the American public’s apparent ambivalence towards someone who’s been impeached twice, who is now a convicted felon and who, allegedly, recently tried to do a deal with oil companies to severely dent the progress of EVs in exchange for campaign contributions is pretty incredible in my book. Then of course you’ve got the contrast in how to get someone into the top job – Sunak announces a snap general election that will be held in around six weeks’ time whereas the US presidential election process takes around 18-ish months – and they still end up with a couple of questionable old duffers. Don’t get me wrong – I’m not being ageist here! I just think that America should do better than this. Yes, America is bigger, but I think that its electoral process is ripe for bribery and backroom deal-making. It needs to change but I’m sure that it won’t!

Then in Russia-China gas pipeline deal stalls over Beijing’s price demands (Financial Times, Max Seddon, Anastasia Stognei, Henry Foy and Joe Leahy) we see China turning the screws on

junior partner Russia as China has scuppered Russia’s efforts to lock in a major gas pipeline deal by lowballing on price and asking for smaller supply. China only wants to pay around the same as Russia’s heavily subsidised domestic prices and has only asked to be supplied with a fraction of the Power of Siberia 2’s capacity.  * SO WHAT? * Russia’s state gas export monopoly Gazprom (which runs the pipeline) had a hideous year last year as it reported a $6.9bn loss and NEEDS countries to take up the hole in capacity that was once filled by Europe. It looks very much like Gazprom is in no position to negotiate and that, eventually, it will have to accept China’s demands.

Elsewhere, South Africa’s ‘humbled’ ANC stands by Cyril Ramaphosa (Financial Times, Rob Rose and David Pilling) highlights the ANC’s poor performance in the weekend’s general election in South Africa. The party is still in power but pressure is building to ditch its leader, Cyril Ramaphosa. Thus far it is sticking with him.

In oil news, US shale industry’s $200bn dealmaking wave redraws energy landscape (Financial Times, Myles McCormick and Jamie Smyth) is a really interesting article that delves into the consolidation frenzy we’re seeing at the moment in the US shale industry. It’s worth mentioning that dealmaking in the oil and gas sector has hit $200bn over the past year (fun fact: the number of quoted oil and gas companies in the US has dropped from 65 to 41 in the last five years alone!)! Smaller companies such as Permian Resources, Matador Resources, Chord Energy and Civitas Resources look like they could be the next ones to be snapped up while EOG and Devon Energy have been noticeably absent from the recent dealmaking. * SO WHAT? * The article goes on to say that after US consolidation has calmed down, the likelihood is that the country’s enlarged oil companies will look further afield to support their future activities. Many of the recent deals have been about consolidating assets in the Permian Basin but it is interesting to note that Conoco’s recent deal for Marathon has signalled a shift as Marathon also has assets in other less famous basins such as Eagle Ford, Bakken and Scoop Stack. Industry consolidation has attracted the attention of the FTC, which is currently investigating a number of the bigger acquisitions. However, it is thought that although a lot of the big deals have now been done, there will be plenty more smaller ones to come…

Then in OPEC+ Agrees to Extend Production Cuts in Bid to Boost Oil Prices (WSJ, Summer Said and Benoit Faucon) we see that OPEC+ has decided to extend all production cuts into next year at its meeting on the weekend. This means that oil prices are likely to be higher for longer. It will also make taming inflation more difficult – and is not going to help Biden in his campaign to be re=elected.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Things are looking up for the LSE…

Shein fashion group plans to file for London listing in coming days (Financial Times, James Fontanella-Khan and Ivan Livingston) shows that the online fast-fashion giant may be filing for a listing on the London Stock Exchange in the next few days as part of plans for a mega-IPO. Shein had previously filed an intention to list with the US SEC over six months ago but hit roadblocks with concerns over its alleged links to Beijing. This filing does not mean an IPO is nailed on, but it is an important part of the process.

Talking of IPOs, Fresh promise of stock market floats to end sinking feeling in the City (The Times, Helen Cahill) highlights the summer pipeline of flotations that will start with Raspberry Pi (maker of microcomputers) and Special Opportunities REIT (a real estate trust that invests in distressed commercial property assets) later this month but speculation of a flotation by Shein and the whiff of Unilever potentially floating its ice cream business will also get investors excited. I believe that Sunak’s decision to hold the election in July and not hang on until the end of the year will also potentially be good for London’s prospects as there is always a bit of uncertainty ahead of a general election. * SO WHAT? * I really do think that things are lining up nicely for the LSE. Inflation is weakening, interest rates are set to fall, business and consumer confidence is on the rise and we’re seeing

increased activity already in the markets, meaning that investors will be more up for some IPO action. If we get the Shein IPO I believe this could be a major catalyst for more to come, especially after the UK general election, as it seems to me that there is a lot of pent-up demand waiting in the wings. Mind you, London stock market bucks IPO drought with rush of follow-on deals (Financial Times, Ivan Levingston) made a VERY interesting point that “follow-on” transactions, where investors in listed companies sell off big blocks of their stock has reached a chunky $11.5bn this year, according to data from the LSE – the most we’ve seen in the year to May since the boom year of 2021! On the flipside, IPOs in London have only raised about $148m so far this year across four transactions. Rather incredibly, given the doom and gloom surrounding newsflow on the LSE, although other exchanges in Europe have beaten us in terms of bigger IPOs this year, if you include secondary transactions, London has actually been the most active exchange in the region! London has raised a total of $11.5bn this year while the French and German exchanges have raised less than $5bn and Amsterdam just $2.5bn. This does pale into comparison, however, with the NYSE and NASDAQ which have raked in over $34bn, but still. The number and size of transactions has been driven by companies and investors who built stakes in businesses that are no longer core and are now disposing of them – and I would have thought that this will increase with private equity firms in particular narrowing their focuses.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

The Saudis spread their AI bets, Nvidia unveils new shiny things, Trump joins TikTok and Universal makes exciting plans for the UK…

Saudi fund invests in China effort to create rival to OpenAI (Financial Times, Eleanor Olcott) highlights an important development in tech as Prosperity7, part of state-owned oil group Saudi Aramco’s venture capital arm that manages a $3bn fund, has put some money into the latest $400m investment round in Chinese AI start-up Zhipu AI, giving it an implied market cap of about $3bn. China’s AI sector has, thus far, been forced by US restrictions to rely on domestic funding only. * SO WHAT? * This is clearly this is a step up for Chinese AI companies as an example of a foreign investor investing in China’s AI capabilities. Will this herald a new dawn for rivals such as MoonshotAI, MiniMax and 01.ai?? This sort of action could limit US dominance in AI as the Saudis are obviously keen to make sure they don’t just back one horse in the AI race. For the AI companies themselves, this will obviously help with developing their business – but it could also open up new markets. That being said, the US has been stepping up its pressure to stop countries supporting China’s tech sector – only a few months ago, we heard that Abu Dhabi-based AI and investment firm G42 sold its stakes in Chinese tech companies including ByteDance. Once it had sold out of its Chinese hardware interests, G42 magically got a $1.5bn investment from Microsoft.

Meanwhile, Nvidia boss hurries out new serving of chips to hungry market (The Times, Katie Prescott) shows that the AI chip

king, Nvidia, has just unveiled its latest iteration of AI products touting an “accelerated road map” for new launches. The advent of the next-gen of chips, Rubin, comes just less than three months after the announcement of its Blackwell chips in March! Wow! It seems that they are succeeding in staying ahead of the game…

In media news, Trump joins TikTok despite seeking to ban app as president (The Guardian, Michael Sainato) shows that Trump has returned to the platform be tried to ban by executive order in the dying days of his presidency, posting late on Saturday night where he attended a UFC event. Biden signed legislation into law in April 2024 that will ban the app from the US, due to a perceived security risk, unless parent company ByteDance sells it. Trump’s no stranger to doing a 180 on his previous actions now is he!

Then in How Universal plans to build one of world’s best theme parks in UK (Financial Times, Daniel Thomas) we see that Universal is looking to make its first foray into Europe in a 500 acre site just south of Bedford by making the biggest theme park in Europe! It is thought that the project could generate almost £50bn of economic value to the UK over its first 20 years of operation. The company has bought close to 500 acres with an option to buy another 65 in an attempt to build “one of the greatest theme parks in the world”. Comcast, which is Universal’s parent company, is spending $6bn on areas based on film and video game franchises including the likes of Harry Potter and Super Mario etc. A decision to go ahead with the project depends on all sorts of planning permissions etc. but the company expects a decision by the end of the year as to whether to go ahead or not.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

Tesla hits another speed bump, Wayve takes on San Fran, EV charging at apartments gets a boost, booze gets cheap and councils sell off assets…

In a quick scoot around some of today’s other interesting stories, Pivotal Tesla retail investors at risk of missing AGM vote (Financial Times, Stephen Morris, Tabby Kinder and Harriet Agnew) shows that tens of thousands of Tesla’s international retail shareholders holding around $17bn worth of the stock may be unable to vote at its AGM because investment platforms have not been able to put sufficient cross-border systems in place. There are two important votes in the offing for the June 13th meeting – one on Elon Musk’s $56bn pay package and the other on reincorporating the company in Texas. * SO WHAT? * Both of these votes are expected to be close and, given how much support Musk tends to get from his retail fanboys and fangirls, this could be a major blow. Retail investors own about 30% of the company.

Then in British driverless car champion to take on US tech giants (Daily Telegraph, Matthew Field) we see that the British driverless car company Wayve is planning to unleash its cars on the streets of San Francisco, challenging the likes of Tesla and Waymo for driverless supremacy. This comes shortly after the company raised over $1bn last month to develop its technology. The company aims to sell its self-driving software to carmakers that will ultimately need no human intervention. * SO WHAT? * Wayve will definitely have a mountain to climb given that its taking on some serious companies on their home turf – but maybe the whole driverless thing needs a newcomer to get things back on track after a number of high-profile failures by the incumbents, particularly Waymo and Cruise – although Tesla’s also facing investigations by the US regulators and Justice Department of its self-driving tech.

Meanwhile, Electric car charging in blocks of flats gets cash injection (The Times, Tom Howard) shows that the government’s EV infrastructure fund – aka the Charging Infrastructure Investment Fund – has just put £35m into Hertfordshire-based

start-up Energy Park, which installs charging points in communal car parks. * SO WHAT? * Until now, most of the investment in Britain’s charging network has been focused on adding more points in driveways, car parks and service stations but Energy Park specialises in installing charging points in the communal car parks of apartment buildings. This sounds great and will be a boon to those who want to electrify but can’t because of where they live.

In Beverage sector serves up cheap drinks for all (Financial Times, Lex) we see that drinks companies are currently trading at record lows as shares in the likes of Diageo, Campari, Pernod Ricard and Rémy Cointreau have all dived by anywhere between 20% and 40% in the last 12 months. Diageo is having stocking difficulties in Latin America, Rémy Cointreau and Pernod Ricard are being adversely affected by a potential tariffs from China on its brandy while the world’s most profitable alcohol market, the US, is getting noticeably weaker. Diageo, Pernod and Rémy Cointreau are all trading at lows of over a decade! * SO  WHAT? * There is certainly room for upside here although drinking trends, particularly among younger people, would seem to suggest that sales aren’t likely to boom any time soon.

Then in Cash-strapped councils to recoup record £1.4bn to avoid collapse (Daily Telegraph, Melissa Lawford) we see that Britain’s cash-strapped councils are looking to put a record £1.4bn in assets and cancelled investments up for sale in order to plug their respective financial black holes. 18 councils have been given the go-ahead by central government to sell off assets and postpone projects in order to release cash in an attempt to avoid bankruptcy. * SO WHAT? * It looks like there will be no respite for the beleaguered councils as even if Labour gets into power as it has categorically stated that it would not bail out bankrupt councils. Although this is going to be bad for councils because selling off the assets means that they won’t be able to get income from them any more, I would have thought this could be a potential goldmine for developers willing to put the money into these places to get them in a saleable/rentable condition as prices are likely to be cheap.

Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!

…in other news…

It’s been a while, but I thought I’d include the latest roasting of Jamie Oliver by Uncle Roger – this time on the former’s take on Pad Thai. I feel Uncle Roger’s pain on this – there is so much wrong with it! After I saw Jamie Oliver absolutely murder what was supposed to be ramen a while back, I have absolutely no faith in his ability to make Asian food! I like Jamie Oliver’s enthusiasm but I have been repeatedly been let down by his recipes which sound good but tend to be a bit meh. On the other hand, I have found Gordon Ramsey’s to be accurate and very good. Fun Fact: actually my favourite cook book is Rick Stein’s Far Eastern Odyssey. The Nasi Goreng recipe is brilliant and when I made some of the spring rolls from there it transported me back to when I was a kid eating freshly-made spring rolls made by Vietnamese “boat people” who came to the UK a few decades ago (my dad used to work helping them get jobs in the UK by giving them English lessons, career advice etc)! It’s funny how some foods evoke such strong memories isn’t it!