Category: Protected – Watson’s Weekly

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

The Russia/Ukraine drama got increasingly tetchy, Lithuania put China’s back up and consumers kept spending…

• One of Ukraine’s main airlines, SkyUp Airlines, suspended flight sales (Monday) because its insurers refused to cover aircraft flying in Ukrainian airspace. Other airlines have been cancelling as well, global markets wobbled as geopolitical tensions heightened and sentiment waxed and waned according to what Putin said. France weighed in, calling for a re-jig of Europe’s security framework (Thursday) to combat future incidents, which is ironic considering how it wasn’t so long ago that the French were trying to cosy up to the Russians. It was also interesting to see how China supported its ideological ally (Thursday) in its demands not to let NATO expand the number of members – but it stopped short of supporting an invasion of Ukraine. The threat of possible sanctions hung in the air and it would seem that Russian companies with a secondary listing on the London Stock Exchange might be decent targets (Friday). Rozneft, Gazprom and Lukoil could be targeted along with companies like Evraz and En+ Group, but this is all speculation at the moment.
• In the US – interest rates look even more likely to go up, according to the latest meeting minutes (Thursday) and rising producer prices put even more pressure on (Wednesday).
• In ASIA – Japan’s GDP grew at an annualised 5.4% (Wednesday) as a relaxation in Covid restrictions helped to boost consumer spending going into the end of 2021 but the economy did lose steam in December as Omicron hit. Consumer spending accounts for over 50% of Japan’s GDP.
• In EUROPE – we saw that the Eurozone’s trade deficit hit its highest level in 13 years (Wednesday) and, amazingly, the ECB’s chief economist changed his position on inflation (Friday), admitting for the first time that inflation was unlikely to dip below 2% for the next two years. It was also interesting to see China banning imports from Lithuania (Monday) in a fit of pique because Lithuania dared to recognise Taiwan as a country rather than a Chinese territory. It’s the first time China has imposed such a broad ban and the EU is taking a case against China to the WTO in protest. It will be interesting to see what the outcome is here and if this will be China’s policy going forward or whether it’s just rattling everyone’s cage.
• In the UK – economists now think that the rate of inflation could see a major rise (Thursday) from 5.5% in January to 7.8% in April! This is way higher than was predicted in the October budget.
• In COMMODITIES – Russia/Ukraine tensions pushed oil prices up (Monday) which is pushing up petrol prices (Tuesday). Prices of raw materials and food staples are continuing to rise (Monday) thanks to red-hot demand for things like metals, battery-grade lithium carbonate and coffee beans.
• In CRYPTO NEWS – America’s SEC slapped BlockFi with a $100m fine (Tuesday) for offering interest-bearing accounts linked to cryptocurrency without registering them as securities first and in the UK, HMRC seized three NFTs related to a fraud investigation (Monday). It was interesting to hear that the Financial Stability Board (FSB), which oversees financial authorities in 24 countries, is coming to the conclusion that crypto needs taming (Thursday) whilst VC fund Sequoia Capital, is going to allocate at least $500m in digital assets (Friday) as part of a restructure.

• In EMPLOYMENT/WAGES TRENDS – UK employers are looking to award pay rises of 3% this year (Monday), according to a survey conducted by YouGov for the Chartered Institute of Personnel and Development – the highest rise for ten years. Although this headline rate implies that wages are not keeping pace with inflation, it seems that “real” wages (wages taking into account inflation) are better than than they were pre-Covid (Wednesday). Workers are returning to their offices (Friday), although occupancy is obviously way lower than it was pre-Covid, but commuting into London is about to get more expensive (Tuesday) as London mayor Siddique Khan is going to hike bus and tube fares by record amounts.
• Consumers are facing major pressures on their household budgets. Buying a used car will now cost £20k (Wednesday) as demand has shot through the roof, prices for household items are going up (Thursday), something that is likely to continue according to Nestle and Reckitt (Friday) and there have been rumblings about the government imposing a new road pricing system (Friday) that could hit EV owners. In the meantime, rents are rising (Thursday) and lenders are pulling their cheapest mortgage rates (Thursday) in anticipation of more interest rate increases from the Bank of England.
• In CONSUMER TRENDS – Americans are primed to spend (Friday) as a number of companies do brisk business, Gucci is benefitting from luxury spending (Friday), DoorDash’s strong performance shows that demand for takeaways remains unabated (Thursday) and tourism is sparking demand for planes (Friday) and hopes for places like Australia (Friday), which is opening up next week (well, unless you are Novak Djokovic)!
• As for RETAILERS – Amazon made up with Visa (Friday), Walmart put in a solid performance (Friday) and Ocado expanded its deal with France’s Casino (Friday), in a rare bit of good news for the online retailer. It was also good to hear that John Lewis is getting back to profitability (Monday), with Waitrose being a major driver.

• Ericsson admitted to bribery (Thursday) where it may have “inadvertently” paid terrorists Islamic State to transport equipment through terrorist-controlled areas. Investors didn’t like this and the stock got sold off.
• The Texas Attorney-General filed a lawsuit against Facebook’s parent Meta (Tuesday) alleging that its face recognition tech violated the state’s privacy protections. It’s seeking civil damages in the hundreds of billions of dollars. Funnily enough Meta’s going to fight this vigorously.
• Google said it would be cutting ad-tracking (Thursday) quite some time after Apple did! It’s done well from ads since advertisers have switched from Apple but advertisers will no longer be able to track users across apps on Android smartphones.
• The UK Home Office is looking at ways to compel big internet companies to take more responsibility for content on their platforms (Wednesday). Home Secretary Priti Patel is looking to make changes in the upcoming Online Safety Bill.
• Meanwhile, cybersecurity rises up the priority list for companies as insurance premiums rise for cyberattacks (Monday) and a new dating app Fluttr launched on Valentine’s Day (Monday). It’s different from others in that it makes all users complete biometric ID verification before they can participate.

• In CAR NEWS – Chinese company Luxshare Precision Industry is looking to assemble EVs (Wednesday). It’s a competitor to Foxconn, and also an assembler for Apple. In the UK, the SMMT is pushing for a proper charging point “road map” with timings (Wednesday) to give more people confidence to go electric. Britishvolt also secured even more money to pour into its Northumberland gigafactory (Wednesday).
• Rolls-Royce made the headlines for some interesting things this week! It is on track to produce Britain’s first generation of zero-emissions hydrogen engines for trains (Monday), it’s also aiming to roll out an electric passenger plane by 2025 (Tuesday) and is on the lookout for sites for its SMRs (Thursday), starting with de-commissioned nuke sites.
• SUPPLY CHAIN problems are continuing. The chicken industry is bracing itself after some cases of bird ‘flu were found in the US (Tuesday), tough timing considering that meat prices are already going up. There could also be a shortage of paper (Monday) as European printing companies are warning that food and consumer goods industries could suffer particularly acutely.
• In other news bits, SPACs continue to fade in popularity (Tuesday), Wizz Air announced plans to go transatlantic with cargo (Tuesday) and US hotel group Hyatt seems to be turning a corner (Thursday), something confirmed by similarly solid performances from rivals Marriott and Hilton. Also, after all the recent hoo-hah, Peloton might not be sold after all (Tuesday) as the new CEO doesn’t seem to be keen on the idea.

• Watson’s Yearly updates 2021/22: there have been updates in the G20 statistics (some inflation and unemployment rate changes) as well as country updates. Please click HERE to see Watson’s Yearly and the changes. Changes have been highlighted in this purple colour 👍 You will be able to see how themes and countries develop throughout the year by reading this document! 

It was very easy to pick my favourite “alternative” story this week. I just had to be this: Puzzled dogs play whack-a-mole with sausages and get confused when they disappear (The Mirror, Nia Dalton). Absolutely hilarious!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

The Russia/Ukraine drama continued, talks about a potential windfall tax caused a kerfuffle, prices rise everywhere, Arm/Nvidia collapsed and Peloton saw its CEO step down. But apart from that is was quite quiet 🤣…

• With the Russia/Ukraine situation – US president Biden and Germany’s Olaf Scholz presented a disjointed view on Nord Stream 2 (Tuesday) and it looks like any sanctions that Europe takes against Russia will be messy (Thursday), especially given that Russia is Europe’s biggest energy supplier, a major commodities exporter and owe-er of money. Later in the week, western nations advised citizens to leave Ukraine as the situation worsened.
• In the US – inflation hit its highest level for 40 years (Friday), but inflation is rising pretty much everywhere you look (Friday) and it seems that it’s always the poorer citizens that get affected the most as they are the ones who spend the highest proportion of their income on the basics like bills and rent.
• In EUROPE – the ECB’s president backpedalled on recent statements (Tuesday) that the market interpreted as the central bank potentially looking at making an earlier-than-expected interest rate rise.
• In the UK – BoJo is mooting the brave/stupid move of ending requirements to self-isolate after a positive Covid test (Thursday) but we’ll have to see whether this does indeed come forward a month earlier than expected, as is being speculated.
• In COMMODITIES – aluminium prices hit their highest level since 2008 (Wednesday), which will put even more pressure on producer prices considering that the metal has so many applications. Aluminium also uses a huge amount of electricity to produce, which doesn’t bode well for the likelihood of prices coming down any time soon…
• In OIL AND GAS – there was a lot of talk this week about the UK government imposing a windfall tax on oil and gas companies. BP rejected the suggestion (Wednesday) despite having announced not only its best results for eight years, but also that they were going to give some of that money to shareholders and do a share buyback! The UK oil regulator also voiced its opposition to a windfall tax (Thursday). As if to reinforce just how well oil companies are doing right now, French rival Total announced massive quarterly profits (Friday) and its very own share buyback! US shale oil producers continue to hold back (Wednesday) despite sky-high oil prices because they are still smarting from over-investing too early in previous booms. There was a sobering bit of news in a report from the Oil and Gas Authority and Climate Change Committee (Friday) which predicted a huge uptick in gas imports as North Sea reserves run down.
• In SUPPLY CHAIN NEWS – the world’s #2 container shipping company Maersk predicted that supply chain woes will calm down in the second half (Thursday) but companies are finding things really difficult in the interim (Thursday).
• In CRYPTOCURRENCY NEWS – it turns out that January saw record outflow of tokens and cryptocurrency (Monday) but then again Bitcoin staged a recovery this week (Tuesday) and crypto exchange Binance put a large slug of money into Forbes (Friday).

• In the US – Tyson Foods, America’s biggest meat processor, said that rising meat prices have failed, so far, to phase consumers (Tuesday) while Chipotle raises prices in response to climbing raw ingredients prices (Wednesday). Ride-hailer Lyft also raised prices (Wednesday) and its results followed the success of Uber’s Q4 numbers (Thursday). Car insurers are also increasing premiums (Thursday) because repairs/parts prices are on the rise – yet another rising cost that consumers have to bear!
• In the UK – house prices continue to rise (Tuesday) but at a lower rate as Barratt booms (Thursday) while the north-south divide in terms of price rises continues (Thursday). Lenders are withdrawing their cheapest mortgages (Thursday) in anticipation of more interest rates rises from the Bank of England, food prices look like they will continue to rise (Monday), according to Tesco’s chairman and apparel retailer Joules increases its prices (Wednesday) to mitigate soaring costs and supply chain disruptions. No wonder that both Deloitte’s consumer confidence tracker (Monday) and Bank of America’s research (Wednesday) point to consumer wobbles about the cost of living and research from the British Retail Consortium pointed to more potential pressure on consumer spending in the coming months (Tuesday).
• In terms of SPENDING TRENDS – luxury continues to do well! Chanel is managing to put through price rises with ease (Monday), posh watches are selling well (Friday) and L’Oreal put in a decent performance as well (Thursday). At the “normal” end of things, Disney+ subscribers numbers continued to rise (Thursday), showing that there is still life left in the market, something that Netflix needs to be struggling with at the moment. UK shops are restaurants are seeing a recovery in footfall (Friday) after the Omicron dip we experienced at the end of last year and beginning of this.
• In GROCERY RETAIL NEWS – Ocado has lost all of its pandemic gains (Wednesday) and Amazon got classed as a supermarket (Thursday), which means it’ll have to obey tighter rules regarding suppliers. It was also interesting to see how supermarkets are trying to keep a lid on prices (Tuesday) via a mix of cutting staff costs, putting pressure on suppliers, shrinkflation and cutting less popular product lines, among other things.

• US budget airline Frontier put in an offer to buy rival Spirit for $6.6bn (Tuesday) in a move that will help them to compete against the “big four” airlines American, Delta, Southwest and United.
• Tata took the reins at Air India (Tuesday) in a bid to turn fortunes around at the national flag carrier that has had problems for the last twenty years.
• Nvidia’s proposed purchase of Arm fell through (Wednesday) and it looks like Arm’s next move will be to float in New York rather than London.

• Apple announced a new service (Wednesday) whereby you can use your iPhone to pay merchants by tapping their Apple device. It also turns out that Apple is prioritising iPhones over iPads, but given how important phones are to Apple this is hardly surprising!
• Google is being sued by PriceRunner (Tuesday) as the latter is being accused by the former of unfairly prioritising its own price comparison service over others.

• It was a dramatic week for Peloton as rumours of bidders emerged (Monday) – and that was closely followed by its CEO stepping down (Wednesday) and then activist investor Blackwells Capital reeling off a number of potential suitors (Friday)
• It was interesting to see parts maker Bosch earmarking €2bn to retrain some of its 400,000 employees (Thursday) to keep them relevant as carmakers switch to EVs.
• AstraZeneca announced record annual revenues (Monday) as it unveiled its first profits from its Covid vaccine. Will it be able to match the stellar profits at rivals who made money from their vaccines right from the start?

• Watson’s Yearly updates 2021/22: there have been updates in the G20 statistics (some inflation and unemployment rate changes) as well as country updates. Please click HERE to see Watson’s Yearly and the changes. Changes have been highlighted in this purple colour 👍 You will be able to see how themes and countries develop throughout the year by reading this document! 

Given that I included quite a lot of stories about dogs this week it probably won’t surprise you that my favourite “alternative” story for this week was Talented Labrador performing yoga with his owner steals people’s hearts (The Mirror, Nia Dalton). Amazing!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

This week was dominated by inflation, tech ups and downs and Joe Rogan. What a week!

• Eurozone growth weakened (Tuesday) as the latest figures from Eurostat showed that the bloc’s output grew by a pretty sluggish 0.3% in Q4 on Omicron impact and rising energy prices, with particular weakness in Germany being offset by stronger performances from France, Italy and Spain. It’s possible that this could improve once tourist-centric countries like Spain start to pick up the pace as travel restrictions are lifted. Meanwhile, we saw inflation in Germany and Spain remaining high (Tuesday), something that was also reflected in the latest figure for the Eurozone hitting a new high (Thursday) – with rising energy and food prices being the main drivers. Markets were predicting at least two 0.1% interest rate rises this year for the Eurozone (Wednesday), but although the ECB admitted concerns about the current situation regarding inflation (Friday) it continued to do nothing!
• In Italy, Sergio Mattarella was re-elected as president of Italy for another term (Monday), something that he didn’t really felt that he wanted to do, but something he felt duty-bound to continue. Investors breathed a collective sigh of relief because they thought that the popular Mario Draghi would not be able to be replaced with a decent PM, so this created a new status quo.
• In Turkey, we saw inflation getting further out of control (Friday) as President Erdogan’s “unique” way of dealing with inflation doesn’t seem to be working just yet as it climbed from an eye-watering 36.1% in December to 48.7% in January! This puts our fears of the prospect of 7.5% inflation into perspective, though…
• In the UK, Rishi Sunak announced measures to help people pay higher utility bills (Friday), the Bank of England raised the interest rate from 0.25% to 0.5% (Friday) and markets are indicating that there is a 91.5% chance that there will be another 0.25% interest rate rise in March (Friday), followed by another one in May – although Alistair Bailey said that the market shouldn’t get too carried away. Whatevs. I don’t think anyone cares what he says at the moment considering his uselessness last year. He needs to build back some credibility if he wants to keep his job IMO.
• In oil news, oil supermajor Exxon posted its highest profits since 2014 (Wednesday) due to stronger-for-longer oil and gas prices just one week after rival Chevron said something similar. It is also interesting to note that US oil frackers are slowing down production (Friday), which is interesting considering the current strength in the oil price.

• The US job market remained tight (Wednesday) while consumer confidence waned (Wednesday) and it seems that consumer spending is shifting away from goods to more services (Thursday).
• In the UK, house prices were off to a strong start in 2022 (Wednesday), powered in part by a surge in demand for 10-year fixed rate mortgages (Wednesday), but lenders started to pull their cheapest mortgage deals (Thursday) in anticipation of more interest rate rises. Still, research from Savills showed that homeowners made big gains on their properties last year (Monday) due to this aforementioned strong market.
• UK consumers are facing a number of challenges. Food and drink prices are set to rise (Tuesday) and many will face a stark choice between eating or heating (Tuesday) as bills are set to rise by a huge amount.
• In RETAIL, French supermarket operator Casino had a profit warning (Tuesday) as demand for its city-centric formats waned due to the Omicron outbreak. Meanwhile, UK retailers faced a shaky start to 2022 (Friday) as shopper numbers and footfall went lower. However, further out, they are hoping for a boost thanks to Jubilee celebrations this year (Monday). Tesco ditched its discount “Jack’s” brand (Tuesday) and cut the nightshift in some stores (Wednesday) in order to bring costs down. Apparel retailer Joules had a shocking profit warning (Wednesday) which sent its share price down by over 40% (!) and private equity firms lined up to buy Boots (Monday) from current owner Walgreens Boots Alliance.

• Spotify had a nightmare due to a backlash against podcaster Joe Rogan (Monday) and had to hurriedly put in place content warnings after Neil Young and Joni Mitchell took their music off the platform in protest. It also called into question Hipgnosis’ business model (Tuesday) because, despite paying Neil Young $150m for his back catalogue it was powerless to stop him from removing his music from Spotify. Joe Rogan even apologised and said he’d work on making a more balanced offering, although I have to say that this sounds like it won’t work because I suspect that controversy is why his podcast got so popular in the first place! Spotify did say that it reported a rise in the number of users (Thursday) but that wouldn’t have included the latest developments with Joe Rogan etc.
• Meta had a bad week and saw its share price crater (Thursday) due to a downbeat assessment of its prospects in advertising and the fact that it continues to lose the younger demographic on Facebook (Friday), although I think it is hanging on in there with Instagram.
• On the other hand, Google saw stellar Q4 results due to a boom in advertising (Wednesday) and announced a 20-for-1 stock split.
• Snap announced its first quarterly profit (Friday) and its CFO said that its advertising business recovered faster than expected in the wake of Apple’s new privacy rules.
• Amazon announced an increase in Prime prices in the US (Friday) as well as bumper Q4 profits.
• Staying with the tech space, Vista Equity Partners and Evergreen Coast Capital got together to conduct a leveraged buyout of Citrix for $16.5bn (Tuesday) and Sony bought Bungie for $3.6bn (Tuesday), which will make it the third big acquisition in the sector this year after Microsoft’s purchase of Activision Blizzard and Take Two Interactive’s purchase of Zynga.

• Aston Martin committed to a more electric future (Wednesday) by outlining intentions to sell only electric or hybrid cars within four years! It said that it wants to launch plug-in hybrid models in two years and fully electric cars by 2026. Ferrari put in a solid performance (Thursday) as it managed to avoid the semiconductor shortage suffered by volume manufacturers amid continued strong demand for its vehicles. It delivered over 20% more cars last year and profits leapt by 37%. Meanwhile, GM announced strong earnings for 2021 (Wednesday) but it wasn’t such a good week for Tesla as it announced a recall (Wednesday), but it could have been way worse as this just involved an update delivered over the internet.
• Constellation Automotive (which owns brands including Webuyanycar and Cinch) bought 20% of UK dealership Lookers (Tuesday), which probably makes sense right now as sales of used cars are still pretty hot right now.
• In BATTERIES, Britishvolt and its backer, Glencore, announced plans to build a lithium-ion battery recycling plant in Northfleet, Kent (Thursday) that can recycle lithium-ion batteries used in cars and electronic devices. The plant is expected to be up and running in 2023 and capable of recycling at least 10,000 tons of lithium-ion batteries per year, which roughly equates to about 50,000 electric car batteries. It will also be processing scrap from Britishvolt’s “gigafactory” in Northumberland.
• In SEMICONDUCTORS, Infineon is looking forward to another year of chip shortages (Friday) and the global chip industry is continuing to expand (Monday) as Intel, Samsung, TSMC and GlobalFoundries are all investing money in production to keep up with demand.

• Ryanair has hit turbulence in terms of bookings (Tuesday) and is going to offer flight discounts to boost demand after Omicron dented its prospects at the end of last year. Like other rivals, it is hoping for a strong second half of the year and is in a better financial position than competitors such as Wizz, EasyJet and Jet2.
• PayPal had a shocker after it slashed 2022 profit forecasts (Thursday) due to a slowdown in growth of online spending. Its former parent, eBay, is also continuing to push its own payments system and take some of PayPal’s market share.
• Restaurant chains in the US – such as Burger King, Denny’s and Domino’s – are cutting the number of discounted items on the menu (Monday) and/or reducing portion sizes in order to preserve margins while raw ingredients prices, wage bills and running costs all continue to climb. I suspect that if this isn’t already happening over here, it will!

• Watson’s Yearly updates 2021/22: there have been updates in the G20 statistics (some inflation and unemployment rate changes) as well as country updates. I have also added to the “Themes for 2022” section. Please click HERE to see Watson’s Yearly and the changes. Changes have been highlighted in this purple colour 👍 You will be able to see how themes and countries develop throughout the year by reading this document! 

I didn’t find quite so many great “alternative” stories this week, but the lady in this article sounds hilarious: Woman leaves table gobsmacked after challenging them to Rock Paper Scissors (The Mirror, Paige Holland). Superb!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

This week was dominated by news about Russia/Ukraine, BoJo’s partying and some major Facebook developments.

• The IMF cut economic growth forecasts (Wednesday) in its latest World Economic Outlook report. It blamed the impact of supply chain issues and pandemic restrictions for the cuts but said that it thought fuel prices would “moderate during 2022-3” while supply chain issues and the effects of Covid would lessen as time goes on. Not particularly insightful, but there you go…
• The Russia/Ukraine situation continued to develop as the week wore on. Russian state media continued to up the ante with the broadcast of accusations against Ukraine (Thursday), the ECB asked the 115 banks it overseas in the Eurozone about contingency plans for an invasion and China threw its weight behind its Russian comrade (Friday).
• In the US, the Fed made clear signs that it would be raising interest rates very soon (Thursday), a move that got all the more pressing with the release of its latest GDP growth figure (Friday), which beat expectations.
• In the UK, the whole Boris Johnson/partygate scandal continued to escalate (Tuesday) with the “imminent” release of the Sue Gray report, which didn’t actually get released as expected. No-one seems to be emerging as a leading candidate for the PM’s position at the moment, but you would have thought that Liz Truss’s star got tarnished by revelations about the use of the government’s private jet to fly to Australia which would have cost the taxpayer about £500,000.
• In Europe, the latest IHS Markit PMI showed that Eurozone businesses had a weaker-than-forecast start to 2022 (Tuesday) but it looks like the Omicron effect isn’t going to be as bad as first feared.
• In cryptocurrency news, Bitcoin continued to weaken (Monday). Some said it was due to the “de-risking of portfolios” but I think it’s more to do with the threat of Russia potentially banning it (although it sounded like that assumption may have softened a bit towards the end of the week).

Meanwhile, there were some pretty notable developments in the world of energy and oil.

• Gas prices continued to climb as tensions rose as the week progressed with Russia/Ukraine/NATO/EU/US (Tuesday). Europe gets around 40% of its gas from Russia, most of which goes via Ukraine, and so prices are rising because it is feared that supplies could be interrupted by potential conflict. Analysts at Goldman Sachs think that gas prices will stay higher for three more years (Tuesday) on the assumption that energy shortages in Europe will continue.
• Oil prices hit $90 a barrel (Thursday) and many think they’ll hit $100 before long. Again, some of this is being driven by fears that a Russia/Ukraine conflict could hit supplies.

• Renault, Nissan and Mitsubishi committed to putting £17bn into EVs over the next five years (Monday) in an initiative dubbed “Alliance to 2030”. They will be pooling R&D costs and production facilities in France, Britain, China and Japan.
• Tesla announced a great set of results (Thursday) thanks to the major surge in demand for EVs. Its Model 3 became the second most popular vehicle in the UK and Europe’s most popular car.
• GM continued to commit to EVs and announced more detail on its plans to electrify (Wednesday) but supply chain problems forced Ford to stop taking any more orders for its popular $20,000 Maverick pickup truck (Tuesday) to give it time to catch up on its order book.
• In batteries news, Britishvolt signed a deal to start producing its first batteries (Monday) in the UK’s first ever gigafactory, LG Energy Solution continues to garner excitement (Wednesday) one week on from its flotation – which was South Korea’s biggest ever – as investors bet on it becoming a beneficiary of the ongoing US-China tensions.
• In charging news, the UK’s charging network came in for criticism from the MD of VW UK (Thursday) and a study conducted on behalf of British Gas showed that charging prices were highly variable (Wednesday) depending on your geographic location.

• Apple had a brilliant week this week! Not only did it regain its #1 spot in China for the first time in six years (Thursday), it also announced record sales and profits (Friday) thanks to booming demand for its iPhones and growing services business.
• Facebook had a mixed one as it admitted defeat in crypto (Thursday) on the one hand, but announced that it was developing the world’s most powerful AI-dedicated supercomputer (Tuesday) on the other.
• Microsoft took a bit of a battering this week (Wednesday), despite announcing a 20% increase in quarterly revenues, as the wider tech sector seems to be losing its lustre at the moment.
• Nvidia got a bit downbeat this week (Wednesday) as it looks like it won’t be able to buy Arm Holdings as it had originally hoped. None of the world’s regulators have approved it, so it looks increasingly like it’ll lose its $1.25bn security deposit to SoftBank.
• Ocado announced new lighter robots (Thursday) that can pick and pack groceries more quickly than current models.

• So although Ocado is benefiting from consumers doing “dry January” (Tuesday), UK consumers are still spending money on property as TSB returned to pre-Covid levels of profitability on record mortgage demand (Friday). The travel industry is hoping for a second half boom (Friday) with the likes of EasyJet, Saga and Wizz Air talking a good game, but the luxury sector also reported strong performances (Friday) as LVMH did particularly well in Asia and the US, something we’ve seen recently with Burberry reporting similarly.
• Amex is seeing rising card usage (Wednesday) as Americans are building up debt once more and Mastercard is also likely benefit from the spending boom (Friday) while Barclaycard’s latest figures highlight the increasing use of contactless (Wednesday).

• M&S is launching a new teleshopping service (Friday) by using influencers on a livestream. Shoppers can interact with them and “buy the look” in real time and I think that this could really catch on as it has already shown its popularity in China. M&S is the first major British retailer to do this, which is pretty surprising given its usually bland reputation.
• A report by EY said that almost 90% of major financial services firms plan to expand or set up UK operations (Wednesday), contrary to many predictions made pre-Brexit.
• The advertising industry is staging a big turnaround, according to the Advertising Association and WARC (Thursday). Inflation could limit upside but most areas of advertising are expected to continue to do well.

• In supply chain news, American chip inventory is running very low at the moment (Wednesday), which means that there is absolutely zero room for production shocks. Despite this, Intel announced a fall in earnings (Thursday), but that was because it is playing catch-up with rivals and investing in new facilities. Carmakers continue to see a shortage in chips.
• Chinese authorities are now turning their attention to vaping (Tuesday), more specifically at Huabao International Holdings, which makes flavours and fragrances used by tobacco manufacturers, and is looking at allegations of corruption.
• Calls are increasing for the chief of Peloton to be axed (Monday), with activist investor Blackwells Capital pushing for his removal in order to scale the business. It thinks that Peloton could be a decent target for a fitness-focused or tech company.
• The National Express/Stagecoach deal hit a bump in the road as the CMA said it would be investigating the proposed £1.9bn merger (Thursday).

• Watson’s Yearly updates 2021/22: there have been updates in the G20 statistics (some inflation and unemployment rate changes) as well as country updates. I have also added to the “Themes for 2022” section. Please click HERE to see Watson’s Yearly and the changes. Changes have been highlighted in this purple colour 👍 You will be able to see how themes and countries develop throughout the year by reading this document! 

There was another easy “alternative story” winner this week with Olympic gold medalist skateboarder wears a kimono on the half-pipe (SoraNews24, Oona McGee). You don’t see a skateboarder wearing a kimono very often, now do you!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

This week was dominated by news about Boris Johnson’s survival, China challenges and Microsoft’s biggest ever acquisition. However, before we get into that, let’s tuck into a bit of macro:

• President Biden made an almost Trump-esque gaffe regarding the Russia/Ukraine situation (Friday) when he said that a “minor incursion” by Russian forces into Ukraine would not provoke a full response from the Allies. He had to retract this rather hastily given how offensive this was to Ukraine, but Putin is sitting pretty at the moment as he’s managed to split the newly-minted German coalition government (Tuesday) and NATO whilst giving away no concessions!
• Meanwhile, China is having a tough time as its GDP growth rate slowed to 4% year-on-year (Monday), its slowest pace for 18 months. It has been exercising extreme caution ahead of next month’s Winter Olympics and shut roads and suspended plane, train and bus services, which has been terrible for the economy. China cut its policy interest rate this week (Tuesday) in order to jolt it back on track.
• In ITALY, investors had a bit of a wobble as they worried about Mario Draghi becoming President in next week’s elections (Monday) because they thought he would leave a vacuum behind that would create a real void and potentially plunge the country back into the very turmoil he was brought in to tame! Maybe that wily old dog Silvio “bunga bunga” Berlusconi could save Italy from this and keep Draghi in the PM spot as he has, at the tender age of 85, thrown his hat into the ring as a Presidential candidate (but no-one really thinks he stands a chance)…
• In the UK, inflation hit a near-30 year high of 5.4% (Thursday). Raw materials price rises have been causing small and medium-sized builders to go out of business (Monday) because they just can’t make any money and road freight rates shot up by almost a third last year (Monday), which all add up to higher prices that are then being passed on to customers. On the plus side, recent moves by the Baltic Dry Index (which measures the prices of shipping bulk materials around the world and is widely regarded as a proxy of world trade) suggest that supply chain problems have gone past their worst point. BoJo managed to hang on to being PM thanks to Operation Save Big Dog (Monday) and the subsequent announcement that Plan B restrictions would be lifted (Wednesday), which was welcomed by businesses (Thursday). It sounds like the signatures are building up to the 54 needed to prompt a vote of no-confidence in the PM. I think he’s a dead man walking, but maybe everyone is waiting to see the contents of a report into the whole shebang that is due out next week.
• In ENERGY, Together Energy became the latest UK power company to go bust (Wednesday), plans to build offshore wind power plants off Scotland caused controversy (Tuesday) and Serica Energy continues to benefit from high gas prices (Friday), although it might have to be careful not to do too well as the government might ask it to pay a windfall tax!
• In CRYPTO, things got quite interesting this week what with regulators in Spain (Tuesday) and the UK (Wednesday) cracking down on dodgy crypto ads while the FCA is also considering additional moves to limit crypto investment incentives (Thursday). Russia is actually considering an outright ban on all crypto operations (Friday) given that crypto-mining’s thirst for electricity will severely hamper the country’s bid to cut carbon emissions. On the other hand, Turkish people are turning to crypto investment in larger numbers (Friday) due to the lira going bananas because of President Erdogan’s penchant for doing crazy things to the economy. Meanwhile, Facebook is making plans for the metaverse (Wednesday) and looking into increasing activity in NFTs (Friday), as is Twitter.

• Microsoft made its biggest ever acquisition in the form of Activision Blizzard for $75bn (Wednesday), which hit the share price of Sony (Thursday) because investors feared the impact the deal could have. It’s not a done deal yet, though, because Activision has been facing allegations of sexual harassment and dodgy work practices (which could yet prove to be expensive) and regulators could see it as a way to challenge Big Tech (Friday) while investors were trying to guess what the next target might be (Friday). EA looks like a possible acquisition target, although this is obviously just speculation.
• In the UK, THG suffered a sell-off (Wednesday) as it issued a profit warning. The share price is now at less than half its flotation price as it just doesn’t seem to be doing anything right at the moment.

• Although the cost of living is rising faster than wages in the UK (Wednesday), we’re losing confidence about our finances (Friday) and companies like P&G are saying that prices will continue to rise (Thursday), pubs are recovering (Friday) and will probably get a further boost as workers are ordered back into the office. We’re already shopping in Covent Garden, to the extent that retailers there are now more able to pay rent (Tuesday) and richer consumers are pushing luxury brands like Burberry to new highs (Thursday) and buying posh cars (Tuesday). It was also interesting to see that Amazon and Visa have decided to bury the hatchet for the moment (Tuesday) regarding processing charges.
• In other retailer news, Boots is attracting bidders (Monday) while Aldi unveiled a cashierless shop (Wednesday) but ditched Deliveroo for grocery deliveries to concentrate on click-and-collect (Friday).

• In EUROPE, EV sales overtook diesel sales (Monday) but carmakers protested against new rules in France (Wednesday) that would compel them to insert phrases like “for short journeys, walk or take a bike when possible”, “consider carpooling” and “take public transport for your daily journeys” in adverts.
• In the UK, it turns out that EV sales are exceeding the number of chargers being installed (Friday), but on the positive side, Britishvolt’s Northumberland factory got another load of cash from investors (Friday). It expects to begin construction near Blyth in April, with battery production slated to start by 2024!

• Evergrande continues to die a slow death (Wednesday) and TikTok owner ByteDance disbanded its investment team (Thursday), not long after it did a structural overhaul. Ant Group got caught up in allegations of corruption (Friday) in the latest setback for the former fintech titan (well it’s still a titan – just a tamed one!).
• On a positive note, Chinese casino stocks like Sands China, MGM China and Wynn Macao all got a boost (Tuesday) as Chinese officials decided to keep the number of gaming operator licences unchanged. There had been fears that their number would be cut as part of an overall clampdown.

• Netflix saw its share price absolutely crater (Friday) due to disappointing new subscriber numbers in Q4. I guess that lockdown momentum was never going to last forever. They need Squid Game 2 to come out asap!
• Peloton also saw its share price bomb (Friday) as it has decided to temporarily pause production of its connected fitness products due to weakening demand. This is extremely concerning IMO. Given the competitive environment, inflationary pressures on consumers and the fact that more people are going to gyms at the moment the immediate future is not looking good.

• Watson’s Yearly updates 2021/22: there have been updates in the G20 statistics (some inflation and unemployment rate changes) as well as country updates. I have also added to the “Themes for 2022” section. Please click HERE to see Watson’s Yearly and the changes. Changes have been highlighted in this purple colour 👍 You will be able to see how themes and countries develop throughout the year by reading this document! 

My favourite “alternative” story this week was, without a shadow of a doubt Meet the Japanese grandma who manually operates vending machines in the countryside (SoraNews24, Oona McGee). What a fantastic place and wonderful woman!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

This week was dominated by news about INFLATION, NATO vs Russia and, of course, BoJo’s highly inappropriate partying. So, without further ado:

• The US Labor Department announced that inflation had increased by a whopping annual rate of 7% in December (Thursday), which was the biggest 12-month increase since June 1982! It was the seventh consecutive month for the rate of inflation being more than 5%! Fed chief Jay Powell sounds like he’s softening everyone up for an interest rate increase (Wednesday) because, in order to power labour markets higher for longer “we are going to need price stability”.
• Meanwhile, the European Central Bank continued to do nothing despite the incoming new Bundesbank chief Joachim Nagel pushing for them to do something about rampant inflation levels in Europe (Wednesday).
• With regard to the UK, chief European economist at Goldman Sachs, Jari Stein, thinks the UK’s got worse to come in inflation (Wednesday) and that the bank is going to make more interest rate increases to bring us to 1% by year end.

In terms of all the NATO vs Russia chat that kicked off this week,

• There were meetings (Monday) to try to de-escalate the heat between NATO and Russia regarding Russia’s build-up of troops along Ukraine’s border. Russia argued that NATO is going against a 1997 agreement that it would not permanently station military forces in former members of the Soviet bloc and limit the number of troops and equipment there. This all changed when Russia annexed Crimea from Ukraine in 2014 and NATO increased its presence in Poland and the Baltics. The US and Russia extended talks (Tuesday), but didn’t achieve anything and, by the end of the week, the Kremlin concluded that the talks proved to be “unsuccessful”. President Putin said he’d be open to more talks but to give it a few days before resuming.

Then it all started to kick off in the UK for Prime Minister Boris Johnson as a more serious “partygate” scandal broke (Thursday) than the one that weakened his credibility last year, all because he was actually in attendance. I don’t see how he can survive this and think that the official investigation that is going on at the moment will be used as cover to give potential replacements time to formulate plans (but that’s just my opinion and not the official line). “Fortunately” for BoJo, it looks likely that he will be out of the public eye as a member of his immediate family tested positive for Covid. Hmmm. Interesting timing.

• UK companies are feeling optimistic (Monday) according to surveys from Deloitte and Make UK although the one from BDO was more downbeat due to the effect of Omicron.
• UK companies will be facing more difficulties as food import costs look set to rise (Monday) following the introduction of new post-Brexit checks that will entail more admin. Also, SMEs are struggling with dramatically higher utility bills (Monday) which could prove to be fatal for some.
• It seems that buying in instalments is spreading. A start-up called Fly Now Pay Later just raised £55m in funding to expand in the US (Tuesday) and it helps users to split payments for holidays over 12 months with a sliding scale of interest rates from 0-40%. Over 250 companies currently use its services.
• Funnily enough, Heathrow passenger numbers hit a record low in 2021 (Wednesday). This was its lowest number of passengers since 1972!

• Volume recruiter Hays is raking in the placement fees (Friday) while rival Robert Walters highlighted wage inflation (Wednesday) and another recruiter, Morgan McKinley, said that almost three-quarters of employees said they’d quit if they could do at least some home working (Wednesday). Meanwhile, major London law firms are facing hiring difficulties (Monday) because everyone is chasing the same candidate pool, something that is also forcing Pret a Manger to raise its wages (Thursday).
• There was a bit of controversy this week as both Ikea (Monday) and Next (Friday) joined a growing band of employers who are limiting sick pay for the unvaccinated in certain circumstances. Will this catch on??

• In tech hardware, Apple got investors excited about its potential involvement in the metaverse (Thursday) despite the company not saying anything about it in particular! Philips saw its shares fall sharply on worries about a major product recall (Thursday) and profits warning and the future’s looking bright for semiconductor maker TSMC (Friday) as demand for chips generally continues to be strong and because they are also one of only two suppliers (the other being Samsung) who make advanced chips using 5nm technology.
• In software, payments platform Checkout.com managed to raise $1bn in its latest funding round (Thursday) that gave it an implied valuation of $40bn, making it the UK’s most valuable private tech company. Also, restaurant tech company Flipdish, became a unicorn (Thursday). Its software provides tech to create food ordering apps and just got a slug of money from its latest funding round that tipped its implied valuation to $1.25bn

• Figures from the China Passenger Car Association showed car sales rising for the first time in three years (Wednesday). This was powered by strong sales of EVs despite the ongoing global chip shortage and Covid outbreaks hitting production. Chinese brands including XPeng and NIO put in a strong performance but it was mixed for the foreigners as Tesla did well but VW didn’t (Wednesday).
• Beyond Meat is one of the biggest shorts in America (Friday) as investors are more inclined to doubt the hype.
• Private equity firm TPG had a great IPO (Friday). It was the latest in a line of private equity firms deciding to crystallise value in their businesses and getting currency to hire and keep future and existing talent.
• The Grand Theft Auto maker Take-Two decided to buy FarmVille maker Zynga in a $13bn punt on the future of mobile gaming (Tuesday). This should be interesting as they specialise in different platforms.

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story this week was Why are cats scared of cucumbers? (Metro, Nicole Vassell). Well I never!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

This week was dominated by news on inflation as well as the effects and spread of the Omicron variant.

• In the US, the Fed saw its steepest rise in inflation in almost 40 years (Tuesday), which prompted Fed chief Jerome Powell to hasten the scaling back of monetary policy and then the subsequent signalling of rate rises to come in 2022 (Thursday).
• In EUROPE, the ECB chickened out of raising interest rates (Friday) but the pressure got too much in the UK as the Bank of England surprised the market by raising interest rates (Friday) to curb inflation that had, yet again, hit new highs (Thursday) with all sorts of pressures coming to bear, including rising wages (Thursday) as UK employment levels continued to rise (Wednesday). The IMF had earlier urged the Bank of England to get a grip on inflation (Wednesday). Meanwhile, Turkey’s currency fell (Tuesday) on concerns that president Erdogan would continue to insist on going against all economic theory – a concern that proved to be well-founded as he did indeed cut interest rates to combat inflation (Friday) – the exact opposite of what everyone else thinks he should do – whilst simultaneously hiking the minimum wage by 50%! It seems to me like he’s buying himself time and potentially favour with poorer people. This is all pretty incredible, considering that the country’s current inflation rate is running north of 21%! Given that he just gets rid of opponents and installs yes-men into key positions I can’t see anyone standing up against him as things stand currently.
• Talking about “strong” leaders doing weird things, Brazil has kicked the IMF out of the country (Friday) because it doesn’t like the unflattering forecasts that it is making about its economy. Seems pretty petulant to me as this isn’t going to stop them!

Meanwhile, the effect of the spread of Omicron is just multiplying by the minute.

• BoJo felt a strong backlash from businesses in response to “Plan B” restrictions (Tuesday) and saw serious rebellion from his own parties on the measures (Wednesday), which only got voted through because of support from the Labour Party. The economy has taken a hit (Friday) and some measures were hastily brought in like Harrods starting its sale earlier (Friday) and the Congestion Charge was eased (Friday) to encourage people into the West End and other areas of London. Hospitality is suffering so much that there are calls for an industry-wide reintroduction of furlough (Friday). Virgin Atlantic got a much-needed cash injection (Tuesday) and among all the chaos, BA decided to announce plans to launch a new budget short-haul airline operating from Gatwick (Wednesday)!

Elsewhere, in ENERGY…

• A giant battery storage site is planned for Teeside (Tuesday), which will be real boon in the pursuit of a smoother delivery of power.
• Gas prices are continuing to rise (Tuesday) and Gazprom is loving it.
• EDF has suffered a major setback as faults were discovered at one of its nuclear power plants (Friday), which led to them shutting down four reactors. Given that Macron recently committed to more nuclear in the power mix, this is tricky timing.

…and in CRYPTOCURRENCY DEVELOPMENTS…

• The Bank of England, once again, warned against cryptocurrency (Wednesday) but the Advertising Standards Authority took matters into its own hands and warned seven crypto businesses for breaking standards (Thursday). So in reality, criticism still pretty much amounts to hot air at this stage but it seems that the powers that be are getting really really cross now and perhaps stamping their feet in frustration 🤣. Maybe they’ll actually do something at some stage…

• In UK REAL ESTATE NEWS, the number of new homes for sale hits a new low (Monday) but Rightmove reckons that the frenzy will subside in 2022 (Monday). Meanwhile, central London residential rents are rising (Monday) as people head back to city centres.
• US RETAILERS are getting a Christmas uplift (Thursday), while in EUROPE Inditex posted record results (Thursday). Frasers Group was so confident about its performance that it launched a share buyback (Tuesday), Screwfix is planning on surfing the DIY wave and expanding the number of outlets (Tuesday) and Ocado saw its share price rise (Wednesday) because its legal battle against rival AutoStore seems to be going its way at the moment. On the downside, Currys complained of supply chain problems causing shortages of popular products (Thursday) and Boohoo suffered not only from this (Friday), but also the increasing expense of processing returns as well as rising costs.

• Microsoft’s proposed acquisition of British AI company Nuance Communications is attracting closer scrutiny of the CMA (Monday) as part of the current trend of the CMA looking into foreign takeovers of key British assets (Monday). Private equity firm KKR made a big investment in PureGym (Wednesday) while another American private equity firm Fortress bought Punch Pubs (Thursday). Hard Rock bought Mirage Casino in Las Vegas (Wednesday) and Nike bought virtual trainer designer RTFKT (Wednesday). Meanwhile, Rentokil announced plans of its biggest-ever deal in buying US rival Terminix (Wednesday) and National Express announced plans to buy Stagecoach (Wednesday). On the other hand, Cineworld reeled from getting slapped with a massive fine (Thursday) because it walked away from its proposed purchase of Canadian cinema operator Cineplex.
• Funnily enough, bankers and other advisers have been raking in the fees on all these deals (Monday). I suspect this will keep the top end of the housing market stoked up for some time yet!

• In BATTERIES, Volvo Cars and Northvolt pursue a major battery venture (Tuesday) as they look to expand both within Europe and further afield. Galp and Northvolt are teaming up to build Europe’s biggest lithium processing plant (Wednesday) and the joint venture will be called Aurora and located in Portugal.
• In VEHICLES, British EV start-up Arrival is now making a special vehicle for Uber (Friday) and Harley-Davidson wants to spin off its electric bike division (Wednesday), LiveWire. Toyota committed even more money to EVs (Wednesday) and Tesla shares fell as Musk sold more (Wednesday). The company also announced it would accept Dogecoin as payment for its branded merchandise. Elsewhere, the government said it is going to cut EV subsidies (Thursday) while the EV charging network still leaves a lot to be desired (Wednesday). 

• There were a couple of interesting SPAC prospects that came up this week. Indian online education start-up Byju is in talks about a SPAC-backed IPO in the US (Friday) and British online cycling retailer Wiggle looks set to take on the world (Wednesday) with the help of its new SPAC sugar-daddy.
• Streaming (and the need to produce new content for it) is providing a major boost for the UK film industry (Monday).
• Jaguar and Porsche buy into BNPL (Monday) for repairs – so rather than having to pay a massive bill on credit card, car owners will be able to split the payments via a start-up called Bumper.
• Adobe introduced a new design software package (Tuesday) that will put it in direct competition with Australian success story Canva. I think this sounds pretty compelling and could prove to be a useful “on-ramp” for Adobe’s more established professional design software.

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story this week was the misheard Christmas songs by comedian Bec Hill. She really is superb! Wouldn’t it be great if you could present like this in business meetings 😁!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

In MACRO NEWS…

• US made a Nord Stream threat (Wednesday) in an attempt to stop Russia from invading Ukraine.
• BoJo announced Plan B (Thursday) in an effort to limit the spread of the Omicron variant. The CBI downgraded UK GDP growth forecasts for this year and next (Monday) although the latest ONS data suggests that the new curbs will only have a limited impact on the economy overall (Friday) – but try telling that to the leisure industry! Pubs and restaurants have already been hit by cancellations etc., jobsite Adzuna has seen a meaningful drop-off of job vacancies in the sector (Wednesday) and the whole industry is calling for more help from the government (Thursday), but it looks like they’re not going to get it (Friday). Tui, Europe’s biggest travel and tourism business, has decided to cut winter capacity as a result (Thursday), but is hanging onto hopes for a better summer.

In CRYPTO NEWS…

• Bitcoin had a wild weekend as it weakened significantly (Monday) and it seems that Bitcoin mining has not suffered since the Chinese clamp down on activities (Friday) as other countries have taken up the slack.

• Black Friday prompted shoppers to go out and buy more (Tuesday), according to a report published by KPMG and the BRC and it showed that clothing, toys and jewellery were the most popular items. Bars and restaurants also saw a lot of action. Some customers are doing very well, though as Watches of Switzerland said it had run out of Rolexes (Friday) and had to restock between August and the end of October! Meanwhile, most of the rest of us are facing rising energy bills next year (Thursday) and we can’t even console ourselves with a cheap-and-cheerful cup of coffee as coffee bean prices have skyrocketed (Thursday) for various reasons!
• It was an eventful week for some retailers as well! Tesco has decided to use the vast trove of data it has collected over the years via its Clubcard to diversify into advertising (Thursday). Meanwhile, Frasers says that it’ll swing into chunky profit for the full year (Friday) as long as there aren’t many major lockdowns.
• On the high street, it was interesting to see that posh bakery Gail’s is keen to take on Pret (Monday) and that Franco Manca owner Fulham Shore announced it had exceeded targets (Tuesday).
• It was an important week for employees this week as a group of Starbucks employees voted to get unionised (Friday), something that could spread, IMO, not only within Starbucks itself but also beyond. In the UK, Tesco workers looked like they might strike (Tuesday) but in the end, Tesco caved and offered them a pay rise and some extras (Thursday) so as not to disrupt Christmas. Still, their pay rise was nowhere near as good as the one Harrods restaurant employees managed to extract (Wednesday) from their employers, but then if your company is ultimately owned by a Qatari sovereign wealth fund there’s not really much the employers can do to say they can’t afford it given the recent state of the oil price! There was another very important development that happened this week – the European Commission decided that gig company workers will, by default, be treated as employees (Friday) rather than contractors and legislation to this effect will apply to all such companies who operate in the European Union.

• Evergrande continued to suffer this week as its stock cratered (Tuesday) while the government moved in to take increasing control (Wednesday), leading its share price to record lows (Thursday) before ratings agency Fitch officially declared it as being in default (Friday). Concerns increased about the Chinese real estate sector generally as the shares of Kaisa Group Holdings were suspended on the Hong Kong stock exchange (Thursday).
• In EUROPE, there are rising concerns about the ongoing inflation of Germany’s property bubble (Tuesday) as prices have doubled relative to incomes in Frankfurt over the last ten years, for instance. Meanwhile, the ECB continues to sit on its hands regarding raising interest rates…and in the UK, property prices keep rising (Thursday), mainly because supply of new properties just isn’t satisfying demand and so companies like posh paint company Farrow & Ball are prospering (Wednesday) as new owners insist on “putting their stamp on the property”, existing owners spruce up their abodes to maximise selling prices or decide that prices are rising too quickly and want to just say put and upgrade where they already are.

• EV sales are booming (Tuesday) and are now making up a higher proportion of new car sales (Monday), so Halfords has warned that the government needs to help train specialist mechanics (Monday) to cope with their increased uptake otherwise there will be problems! Meanwhile, Gridserve has committed to rolling out a big upgrade in the motorway charging network (Thursday).

• In FINANCIALS, Lloyds Bank announced major growth plans (Monday) after years of “meh” under the old boss. He’s going to move into more racy stuff like property, wealth and commercial and investment banking, so it should be a wild ride 🤠 yee-hah.
• In PROFESSIONAL SERVICES, the Big Four accountancy firms posted their best financial performance since the collapse of Enron in 2002 (Thursday), mainly thanks to the advisory business.
• In M&A NEWS this week, we saw that Nestlé offloaded a massive stake in L’Oréal (Thursday) to L’Oréal, although it’s still got a fair chunk left over while CMA CGM did a $3bn logistics deal (Thursday) as it bought a load of warehouses in the US and Europe along with cloud-based digital platform Shipwire from US tech group Ingram Micro.

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” stories this week were about the culinary abomination in People left divided over dad’s bizarre Yorkshire pudding pies filled with KFC (The Mirror, Emma Rosemurgey) and the brilliantly talented flipchart lady. Do they inspire you??

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

In MACRO NEWS…

• The US – Fed chief Jerome Powell said that he was more minded to accelerate the central bank’s monetary tightening programme (Wednesday) to curb inflation, prompting speculation that interest rates could go up.

…but really this week was all about Omicron and inflation…

• There was initial panic as news of Omicron hit the travel industry and markets (Monday) as many countries immediately shut down borders and imposed movement restrictions. The OECD warned about the effects of  Omicron (Thursday), but said that it could go either way in that supply chain problems could get worse as movement restrictions are re-imposed, which would cause inflation to rise further. On the other hand, tighter restrictions could harm demand for goods and services, leading to economic slowdown, leading to weaker inflation. A Bank of England policymaker said Omicron could mean higher-for-longer inflation (Wednesday). In the meantime, Moderna and Pfizer/BioNTech’s respective share prices were particularly strong (Tuesday) because it is thought that their mRNA-based vaccines are more adaptable to variants.
• Inflation in the Eurozone hit new highs (Wednesday) as the rate hit 4.9% in November, which was way higher than forecasts, putting even more pressure on the ECB, but Germany’s rate was even higher! It hit 6% – its highest rate since 1992 (Tuesday)!!! ECB board member Isabel Schnabel said in TV interview that “November will prove to be the peak” for inflation, saying that a lot of the drivers behind this figure – rising energy prices, supply chain problems – will fizzle out next year.

There were some interesting developments in OIL…

• Gazprom made a lot of money amid all the gas shortages (Tuesday). It is the world’s biggest producer of gas and announced RECORD quarterly earnings, with even better results expected for Q4! The company says it fulfilled all contractual obligations in supplying Europe but Europe is still grumbling. It’s like AstraZeneca all over again!
• OPEC+ stuck with agreed oil supply increase (Friday) rather than retaliate for last week’s mini-assault with reserves.
  Shell walked away from the Cambo project (Friday) in the North Sea as, ostensibly, it was getting impatient about waiting to get the go-ahead to drill in this oilfield.

In ENERGY developments…

• We saw the world’s first floating nuclear power plant (Thursday) – made by Russia – on northern coast of Siberia and it’s being used to power Russian efforts to carve a new shipping lane through the Atlantic called the Northern Sea Route. Reliance on the Suez Canal was highlighted earlier this year by that whole blockage nightmare and it is thought that this new route could shave serious amounts of time off some routes e.g. South Korea’s Busan to Rotterdam – 27-28 days via NSR versus 40 days via Suez Canal…
• We also saw Commonwealth Fusion Systems being backed by Tiger Global Management and Bill Gates (Thursday) to look at fusion, not fission, to generate nuclear power. Fission splits atoms, fusion brings them together. Advantages include it being cheaper (it uses widely available elements like hydrogen), waste from process stays radioactive for a shorter time and there is no risk of meltdown.
• Drax is moving to biomass (Thursday). The UK power company wants to double the production and sale of wood pellets to burn for fuel. The company reckons it could remove 12m tonnes of carbon from atmosphere each year. Critics think this is not commercially viable.
• Nissan is building a solar farm (Thursday) at its Sunderland plant to power production of its Leaf as part of company’s £13bn push into decarbonisation. It’s due to complete by May next year and will mean the plant will meet 20% of its energy needs on its own! In the meantime, Nissan reiterated its overall commitment to EVs (Tuesday).

• Clara became the first approved pension superfund (Wednesday) and it will give companies who want to exit pensions a possible way out.
• A new UK clearing bank prepared to launch (Wednesday) and is aimed at providing services to business customers.
• Wise, formerly called Transferwise, is confident about the full-year (Wednesday) but was held back by development costs. It’s now targeting rapid growth.
• Brazilian fintech company Nubank had to rein in the pricing expectations for its IPO (Wednesday) to make it more attractive to investors.
• AJ Bell announced plans to launch its own trading app (Tuesday) in order to attract younger clientele with a commission-free trading platform called Dodl.
• Abrdn bought Interactive Investor (Thursday) in order to enhance its retail investor offering.

• The CMA told Meta to sell Giphy (Wednesday). Although this isn’t what I’d call a key acquisition I think that both sides will want to win this on appeal more as a point of principle than anything else! Meta also lost its crypto chief (Thursday), although this thing was going down the toilet anyway. He’s saying that it was to pursue his own interests, but…really??
• Founder Jack Dorsey quit Twitter (Tuesday) to concentrate on being CEO of Square, which is probably best for both companies.
• The Nvidia/Arm Holdings deal looks increasingly likely to collapse (Friday) as the US regulator is now weighing in with others to side against Nvidia. I just wonder, if it does collapse, what could be next for Arm?

In the US – Cyber Monday wasn’t that impressive (Tuesday) according to the latest figures from Adobe Digital Economy, but Black Friday saw consumers return to shops (Monday) and supermarket Kroger also did brisk trade (Friday).

In the UK – real estate demand keeps rising (Monday) and prices rise (Thursday) while household bills look set to increase by £1,700 on average next year (Thursday). Fortunately, household wealth reached all-time highs (Friday)! Amid all of this it seems that we’re all still buying cars as dealership Pendragon had to raise its full-year guidance for the third time in five months (Thursday)! There was a bit of good news for retailers as footfall in the West End has been recovering (Wednesday) and Selfridges got a new owner (Thursday), which should give some feeling of stability.

• Pressure from Chinese authorities has now led to Didi saying it will delist in New York (Wednesday) after only having listed there on June 30th!

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story this week just had to be this: Defiant baby pays no attention to mum as she insists on sharing highchair snack with dog (The Mirror, Catherine Swan). The expression on this little girl’s face is priceless!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

In MACRO NEWS…

• US – incumbent Jerome Powell got the nod for another four year term (Tuesday), but the pressure is going to be on because inflation continues to go wild!
• EUROPE – it all started off badly with anti-lockdown protests in Rotterdam, Brussels, Vienna about new movement restrictions. There are worries that a fourth wave could send the fragile European economic recovery into reverse (Tuesday) and the Euro fell to new lows. This was all exacerbated by the Bundesbank warning that inflation could go higher, tricky for the Eurozone because Germany accounts for 29.6% of the EU’s GDP. Talking about GERMANY, Olaf Scholz is one step closer to succeeding Angela Merkel as Chancellor as he announced a three-way coalition comprising of the Social Democrats, Greens and Liberals (Thursday) against the backdrop of ongoing subdued business confidence (Thursday) and consumer confidence (Friday). In the UK, UK factories are struggling (Thursday) and although they are scraping by with existing inventory, that won’t last forever. The majority of companies are likely to be raising prices in the next few months, which is likely to impact on inflation. In the meantime, Spain managed to pass its biggest ever budget (Friday), no mean feat considering the perilous state of the government.

…which brings me on to the subject of INFLATION. Yes, I know it’s kind of boring but it IS very important at the moment!

• New Zealand raised its interest rate for the second time in two months (Wednesday) in order to tame inflation – so it’s now 0.75%. On the other hand, Turkey’s president Erdogan remains defiant and maintains his stance of cutting interest rates to curb inflation (Wednesday), which goes against all collective conventional wisdom, which is why investors sold off the lira in horror, which could lead to citizens taking a number of dramatic courses of action (Thursday). Meanwhile, Bank of England governor Andrew Bailey threatened not to give the market any policy guidance (Wednesday) given the flak he took recently for not doing anything to curb market expectations of a rate rise. He just needs to put his big boy pants on and do his job IMO rather than just going off in a sulk 🤣.

Things got quite dramatic THIS WEEK IN OIL because…

…the US, China, India, Japan, South Korea and the UK got together this week to release 70m barrels of oil onto the market to try to push oil prices down (Wednesday). However, this is tiny in the scheme of things. Americans consume 50m barrels in 2.5 days, OPEC+ countries produce 40m barrels of oil per day – so this does seem like a token effort! The IEA appealed for Russia in particular to pump out more oil (Thursday), but it seems that Russia and Saudi Arabia were annoyed by other countries ganging up, so they might punish this uprising by not opening up the taps as they were due to do next month. This sounds terrible to say, but markets plunged and oil prices fell on news of a new Covid variant on Friday, so oil prices may get/stay weaker anyway…

• KKR made a massive €33bn buyout offer for Telecom Italia (Monday), which could prove to be one of the biggest ever private equity buyouts of a European company.
• The private equity bods are at it again as Hellman & Friedman and Bain Capital clubbed together to buy health-tech company Athenahealth for $17bn (Tuesday). Private equity funds have a lot of money sloshing around right now so I think there is going to be plenty more of this kind of activity going on!
• Ericsson bought Vonage (Tuesday) to broaden its service offering.
• Netflix bought Scanline (Tuesday) in a deal that will enhance its content going forward given Scanline’s experience with visual effects on productions including Game of Thrones, Zack Snyder’s Justice League and Stranger Things.
• Commodities trading house Vitol agreed to buy petrol stations operator Vivo for $2.3bn (Friday).

• HP is benefiting from workers returning to the office (Wednesday), as is Pret (Wednesday) although Compass is trying to evolve by developing “dark kitchens” (Wednesday) to service companies who can’t justify a full canteen service.
• Companies are trying to evolve with customer behaviour that changed under lockdown. Twitter is teaming up with Walmart to experiment with online selling (Tuesday) and Macy’s is selling NFTs (Tuesday)!
• It’s also interesting to see that advertising agency M&C Saatchi is bouncing back strongly (Wednesday) from a disastrous time under lockdown. All the advertisers seem to be saying the same thing, so it’s clearly not a one-off.

• US consumers are very downbeat on their own finances, but jobless claims are at their lowest since 1969 (Thursday) and crowds are expected to return in force at malls and stores over Thanksgiving weekend (Friday). UK consumers are facing increasingly unaffordable house prices (Thursday) and the prospect of more expensive coffee (Monday) but they continue to spend (Tuesday). British shoppers are buying early this year (Friday), according to the latest figures from the CBI. This stands in stark contrast to how German consumers are feeling right now (Friday).
• US retailers are having mixed fortunes as Best Buy and Dick’s Sporting Goods report slowing online sales (Wednesday), Gap faces supply chain issues (Wednesday) and Dollar Tree has to raise prices (Wednesday) because of higher costs and inflation generally. In the UK, M&S continues to revamp its clothing offering by buying into Nobody’s Child (Wednesday) and supermarket Lidl is pretty confident going into Christmas (Thursday) although online-only electrical goods retailer AO World announced another profit warning (Wednesday) citing supply chain problems, higher costs etc.
• In LEISURE, Nando’s drew a line under a disastrous year (Thursday) and reckons that it’ll return to pre-Covid profitability levels in February 2022. The choice of fast-food joints in the UK is about to get broader as Wendy’s announced a European expansion (Thursday).

• British luxury accessories brand Mulberry announced plans to expand production in the UK (Thursday), a trend I expect to see more of as Brexit and supply chain problems mean that it makes increasing sense to keep production closer to home.
• In REAL ESTATE, prospects for the office market are mixed as prime property is seeing strong demand (Monday) but landlords are facing increased costs (in terms of upgrading properties to meet tightening climate regulations) and competition for tenants given the amount of space flooding the market currently. It was really interesting to see Britain’s first 40-year mortgage this week (Monday), something that sounds sensible given longer life expectancy and higher housing prices. I also wonder whether this will mean that it will be easier for older people to get mortgages. It may well encourage other providers to offer alternatives products.
• London attracted its first SPAC this week (Wednesday), so the clock will start on it finding a suitable asset to get excited about.
• Energy provider Bulb went into administration this week (Tuesday), but it’s so big that rivals can’t take it on, hence it is being kept alive by the taxpayer until something can be done about it. Its demise was followed by Entice Energy and Orbit Energy (Friday) later in the week.
• The travel industry is bracing itself for more turbulence (Friday) as concerns about another Covid wave threaten bookings for flights and holidays.
• Autonomous taxis got approval to operate fare-charging services in Beijing (Friday) and it will be the first capital city in the world to do so.
• Tencent was dealt another blow this week (Friday) as a number of Chinese state-run companies were told to stop using (or limit their usage of) Weixin/WeChat messaging app, citing security concerns. The Great Clampdown of China continues…

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story this week was Optical illusion has internet baffled – even after woman explains the trick (The Mirror, Paige Holland) as it is just so darn clever!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

In MACRO NEWS…

The presidents of both the US and China held talks about nuclear arsenals (Wednesday) after tensions have been mounting over the last few months in particular.

Brazil’s inflation is going crazy right now (Wednesday) as it edged above the 10% mark for the first time in over five years. There are concerns that President Bolsonaro is going to fritter away money to spend on an aid package on the poorer in society in order to buy their votes in next year’s election. Mind you, if you think Bolsonaro is bonkers, Turkey’s President Erdogan is faring even worse on the inflation front (Friday) with an eye-watering rate of 20% and he is cutting rates and not increasing them because he is one of the only leaders in the world that believes cutting interest rates helps to curb inflation!

Japan’s GDP has contracted way more than had been expected (Tuesday) and industrial production is down for the third straight month. The country is to launch a stimulus (Thursday) that will give families with kids ¥100,000 ($872) as part of a $350bn stimulus package, but it’s not widely seen as something that will be of huge benefit.

In the UK, Andrew Bailey has been yapping on about inflation concerns (Tuesday), but after last month’s fiasco of letting everyone believe that an interest rate rise was coming and then it not happening, if the Bank doesn’t raise interest rates at the next meeting his credibility will go down the toilet. As if to prove the point, UK inflation hit 4.2% in October (Thursday) – up from 3.1% in September and above market expectations – and the Institute of Fiscal Studies said that workers would have to get a 7% pay rise from now in order to merely maintain their current spending power.

In ENERGY,

Shell shifted its tax domicile to the UK (Tuesday), like Unilever and Relx before it while Brexiteers revelled in the news and the Dutch were frustrated by it. Peak power prices hit a new high (Tuesday) as low wind speeds hit renewable power generation and gas prices shot up because Germany decided to delay Nord Stream certification (Wednesday). Rising power prices have also helped National Grid’s revenues boom (Friday). Meanwhile, Qatar invested in Rolls-Royce’s Small Modular Reactor nuclear power generation venture (Wednesday) as interest in nuclear continues to gather pace.

• Chip shortages are forcing manufacturers to improvise, adapt, overcome (Monday) so they are supplying older chip-less models or modifying the design of existing ones and Tesla is supplying unfinished cars (Tuesday) because of the shortage, promising to retrofit them when the parts become available while GM and Ford have decided to get more directly involved in chip manufacture (Friday). High-end bicycle manufacturers are warning of longer disruption (Monday) due to parts shortages, Greggs is running low on vegan sausage rolls and bean and cheese melts (Thursday), Oatly is having production and distribution issues (Tuesday) and America’s Tyson Foods is increasing meat prices (Tuesday) due to rising costs and the expectation that this will continue for a while yet.

• UK employment is going up (Wednesday) and consumer confidence is rising again (Friday), according to GfK’s consumer confidence index. Consumers are spending money on stocking their wine cellars (Monday), buying board games (Monday) and going to watch the Bond movie at Cineworld (Tuesday). On the other hand, Alibaba has observed a weakening in Chinese consumer spending (Friday).
• In retail, Walmart and Home Depot continue to win (Wednesday) and Target and TJX are upbeat about Christmas (Thursday) while in the UK, House of Fraser got served notice from the landlord to move out of its flagship store in January (Thursday) while M&S has decided to rent out dresses (Wednesday).
• In leisure, US REIT Sun Communities bought Park Holidays for almost £1bn (Monday), international restaurants are looking to buy London premises (Monday) and while Wagamama’s parent upgrades earnings on a strong performance (Wednesday), Revolution Bars is hit by higher costs for employing bouncers (Wednesday).

• In commercial property, WeWork has benefited from the return of office workers (Tuesday), while Landsec (Wednesday) and British Land (Thursday) are staging a recovery.
• In residential property, house price growth is weakening (Monday) while rents are rising (Tuesday) and mortgage lenders are fighting for customers (Wednesday).

• In aviation, budget airline Wizz Air decided to put in a hefty order of new planes with Airbus (Monday) as Airbus is facing huge demand (Monday) and it won its first new freight plane order (Tuesday).
• In some surprising developments this week, Rivian became bigger than Europe’s biggest carmaker VW (Wednesday), Peloton announced plans to raise $1bn in cash in a stock offering (Wednesday) and Redefine Meat announced an amazing new development in alt-meat (Wednesday).
• In demergers/mergers/acquisitions news, Johnson & Johnson became the latest conglomerate to announce a split (Monday) after the likes of Toshiba and General Electric. On the subject of GE, it is seeing intense interest from PE firms (Tuesday) as they all salivate over what they could do with its businesses and in acquisition news, Nvidia’s proposed purchase of Britain’s Arm Holdings is going to get a thorough investigation (Wednesday). Separately, Nvidia announced record quarterly results (Thursday). There was disappointing news as Carlyle decided to walk away from its bid for Metro Bank (Friday) and Unilever decided to sell its tea business (Friday) to slim down its offering.
• Elsewhere, India’s biggest IPO failed (Friday) as fintech company Paytm saw its share price fall by 27% on its market debut.

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story this week was Three minutes of golden retriever madness that will make your day (The Mirror, Bethan Shufflebotham), which I think will make anyone’s day!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

In MACRO NEWS…

US inflation has now reached its highest level since 1990! (Thursday) and President Biden is telling his top economic advisers at the National Economic Council and competition regulator, the FTC, to do something about it! Interestingly, current Fed chief Jerome Powell is up for election at the end of his four-year term and there is only one candidate, Lael Brainard, going up against him. It’s thought to be unlikely that he’ll be pushed out, but if he was a new face might not find it so difficult to raise interest rates IMO…

In China – factory gate inflation (= prices charged my manufacturers to wholesalers) rose at the fastest rate for 26 years (Thursday) due to major power shortages and skyrocketing commodity prices at a time where it looks like President Xi Jinping is going to get the go-ahead to stay in power until 2028 (Friday) thanks to a special “historical resolution” bestowed on previous leaders Mao Zedong and Deng Xiaoping.

In Europe, the German Council of Economic Experts, which advises the government, says that Germany could become the eurozone’s economic laggard (Thursday) as higher rates of Covid will stunt consumer activity and exacerbate existing supply chain problems. Neighbouring Poland faces increasing pressure from the east and the west (Thursday) as the country faces difficulties with the EU over judicial matters on the one hand and chaos on its border with Belarus on the other.

In COMMODITIES,

There was a record surge in gas prices (Tuesday) as Russia didn’t pump gas to Europe at beginning of the week, but then it did (Thursday), causing relief all round.

Rising gas prices and the failure of renewables to deliver consistently enough has boosted talk of nuclear power generation. Mini nuclear power reactors got funding (Tuesday) from France’s BNF and America’s Exelon Generation for Rolls-Royce led SMR venture. Meanwhile, France’s EDF is getting ready to build more nuclear reactors (Thursday) as France aims to rely more on nuclear power in the future.

In CRYPTO NEWS,

Bicoin hit record levels (Wednesday), Apple said it is “looking at” crypto (Wednesday) but didn’t really go into any specifics and Twitter is actually hiring a crypto team (Thursday) that is being tasked with setting “the strategy for the future of crypto at (and on) Twitter”.

• It was interesting to see that automakers did not back a COP26 pledge to end sales of emissions-producing cars (Wednesday) in “leading markets” by 2035 and globally by 2040, although VW did announce it was building a new EV gigafactory (Wednesday). Semiconductor maker Infineon doubled its profits in the latest quarter (Thursday) due to continued strong demand from the automotive industry but it was interesting to hear from one of the world’s biggest supplier of car parts, Continental, that it thought the chip shortage had “likely reached its peak”.
• In electric vehicle news, the US charging network got a major boost from President Biden’s new infrastructure bill (Monday). Rivian Automotive was the hot topic this week as the company went for the top end of its price range (Wednesday) and then boomed on its market debut (Thursday) but it’s still got a tough task ahead of it (Monday) both in terms of production and increased competition. While all this was going on, Elon Musk asked his Twitter followers whether he should sell some of his shares to pay a tax bill (Monday) and then duly sold some (Thursday).
• In EV battery news, Savills came up with the earth-shattering statement of the bleedin’ obvious that UK gigafactories are going to require more space (Monday) – the clue’s in the name 🤣 – and EV battery prices are going to rise (Monday) after years of falling. However, British company Johnson Matthey has decided to withdraw from making battery materials for EVs (Friday), which is disappointing because there were high hopes.

• UK consumer confidence continues to wane (Tuesday) although high street spending is actually going up (Tuesday) as we are returning to offices in our suits (Friday), buying James Bond watches (Wednesday) and buying second hand cars to such a great extent (Friday) that insurance premiums are rising (Thursday)! While Primark outlined its US expansion plans (Wednesday) and Asos stated a similar plan to expand overseas (Thursday) we saw that in the domestic UK market that Tesco has rebounded (Wednesday), M&S is staging a comeback (Thursday), WH Smith expected to be profitable again next year (Friday) and Halfords has benefited from more drivers on the road (Thursday) over the course of the pandemic.

• In food delivery news, American fast food delivery specialist GoPuff is focusing efforts on the UK (Wednesday) to potentially become a consolidator in a fragmented market and DoorDash announced intentions to buy European food delivery company Wolt Enterprises (Wednesday) for $8bn as part of its strategy to broaden its horizons beyond its domestic market.
• In M&A news, America’s Viasat made a $7.3bn offer to buy UK satellite firm Inmarsat (Tuesday) in the latest example of a US firm buying a strategic British asset and McAfee is now being bought out by a consortium of private equity firms (Tuesday) only a year after it returned to the stock market in October 2020.

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” stories of the week were the one about the skateboarding bulldogs in Meet Chowder and Maddie – skateboarding bulldogs who can’t get enough of their wheels (The Mirror, Edward Kay) and the rather more educational video from the BBC about the actual impact of planting trees, which I found quite surprising!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

In MACRO NEWS…

There was a lot of comment on CLIMATE as the COP26 conference kicked off in Glasgow…

• India PM Narendra Modi’s commitment to an emissions target (Tuesday) to cut emissions to net zero by 2070 was applauded but, let’s face it, it’s laughable given that it is so far away! India is the world’s third worst polluter but did add that it aims to get half of its energy from renewables by the end of this decade. Notably, US and China made ZERO promises!
• The UK government faces a North Sea dilemma (Wednesday) as the government’s Oil and Gas Authority is going to have to rule on whether Shell and Siccar Point Energy will be allowed to start drilling in the Cambo oilfield 80 miles north-west of the Shetland Islands. The decision is expected to be made by the end of the year. If it allows the drilling, it will look like BoJo made empty promises on the environment, but if it doesn’t, the UK’s energy situation could potentially get worse…
• Banks came under scrutiny about their green promises (Wednesday) given that they talk about being kind to the environment on the one hand and then lend to the fossil fuel industry on the other. Scrutiny over lending has increased ahead of COP26 leaving the likes of Barclays, Deutsche and BNY Mellon open to criticism for having such double standards.
• Industry is calling for commitment to energy storage (Thursday) as some of the world’s biggest energy and engineering companies got together to form the Long Duration Energy Storage Council this week. They were calling for up to $3tn of investment into long duration energy storage, which will clearly be able to go some way towards smoothing out the volatility of renewable energy supply.
• Indonesia threw a spanner in the works by having second thoughts about the agreement it signed up to (Friday), which had been signed this week by over 100 world leaders to stop cutting down forests by 2030. Also, the IEA warned that the goals of the Paris accord on global warming were potentially unattainable (Friday) as the US and China both countries swerved the UK’s flagship coal pact
• Meanwhile, Coal miners are doing very well at the moment (Thursday) as rising coal prices have resulted in miners like Thungela Resources (a Johannesburg-based miner which demerged from FTSE100 company Anglo American in June) seeing their share prices skyrocket. Glencore, Peabody Energy, Whitehaven Coal and Exxaro Resources are among the thermal coal miners to have benefited from strong demand for their product, especially from Asia.

There was also a lot of speculation on interest rates given ongoing inflation around the world…

• The US and Europe dismissed interest rate speculation (Thursday) and the UK looked like it was on the cusp of increasing interest rates (Thursday), but it didn’t pull the trigger in the end (Friday). Mind you, ONS stats say furlough has only resulted in 6% of staff leaving their jobs and the latest figures from the Recruitment and Employment Confederation and KPMG show that starting pay is seeing its steepest increase since the survey began in 1997! This will continue to keep the pressure on the Bank of England to raise rates…

In Asia…

• China manufacturing slowed down (Monday) for the second consecutive month. The National Bureau of Statistics’ Purchasing Managers Index figures just reflect the cumulative effect of the property sector clampdown and energy shortages against a backdrop of rising commodity prices
• What’s currently going on at HNA presents a potential template for an Evergrande restructure (Tuesday). HNA used to be China’s most aggressive offshore dealmaker but investigations into its heavily-leveraged acquisitions and opaque ownership structure struck alarm bells with the state, which is now going to implement a streamlining of its structure and take more control. Something similar could be used to “rehabilitate” Evergrande.
• We also saw Japan’s LDP wins the election (Monday), which isn’t exactly a surprise as the party has been in power pretty much continuously since WWII.

There were also some interesting developments in oil and crypto…

• Saudi Aramco’s valuation climbed above $2tn (Monday), thanks to ongoing strong demand for oil.
• …and in crypto, Bitcoin’s rise has prompted increased hiring activity in crypto-related jobs (Tuesday) as companies seem to be desperate to recruit staff with the requisite crypto know-how!

• Maersk warned that supply chain problems will persist (Wednesday) whilst also announcing its best ever quarterly results (!). Ongoing labour shortages and skyrocketing freight rates don’t look like ending any time soon. In the meantime, US warehouses are running out of space (Monday), exacerbating the whole thing!
• Qualcomm is benefitting from chip shortages (Thursday) and posted record quarterly sales.
• Apple is having delays and having to prioritise iPhones over iPads (Wednesday) due to chip shortages.
• Ikea and Next are warning that supply chain restrictions mean they can’t take full advantage of underlying demand (Thursday) and Next announced a downbeat outlook for the final quarter.
• Meanwhile, some secondhand cars in the UK are selling for more than new (Monday), so for example a Dacia Sandero with 10,000 miles on the clock will set you back £11,700 on average despite the fact that it costs about £1,901 more than it would cost you to buy it new! How amazing is this??

• TikTok’s owner, ByteDance, restructured into six divisions (Wednesday) making the business lines clearer.
• It turns out that Snap/Facebook/Twitter lost $10bn in ad revenues thanks to iPhone’s new privacy rules (Monday). Facebook has been particularly badly affected by the changes, but Alphabet and Twitter have not suffered quite as much while Apple, funnily enough, recently posted a “record” quarter for its advertising business!
• Facebook announced that it was ditching facial recognition (Wednesday) but Facebook and Instagram had yet another outage (Thursday) – the third in a month 😱.

• First class air travel is making a return (Monday), according to the latest IATA data, although it’s recovering more slowly than economy class travel.
• Lufthansa returned to profit (Thursday) for the first time since pandemic lows.
• Budget airlines are facing headwinds (Friday) after posting profitable quarters, with Wizz Air lowering fares to tempt passengers in what is usually a quiet quarter and Ryanair cutting its earnings forecasts.

• Franklin Templeton made a bolt-on acquisition (Tuesday) of private equity firm Lexington Partners to broaden its offering.
• Barclays is having leadership turmoil (Tuesday) after the abrupt departure of Jes Staley, following allegations of links with Epstein.
• Brazilian lender Nubank is aiming for a $50bn valuation (Tuesday) in its upcoming IPO, which would make it one of Latin America’s biggest companies!
• SocGen’s investment bank comes up trumps (Friday) as it profited from a major uptick in deals in Q3.
• Metro Bank got a takeover approach (Friday) from US private equity firm Carlyle, which got everyone very excited.
• Klarna bought Pricerunner (Wednesday), enhancing its functionality with the price comparison site.

• Allbirds had a strong debut (Thursday), with its share price booming by 95% on its first day on the NASDAQ!
• Polish locker specialist InPost is to take on Amazon in the UK (Monday) via a major expansion of its parcel locker service.
• Coke bought the 70% of Body Armor it didn’t already own (Monday), in its ongoing battle with fierce rival in the space, Gatorade.
• BlackRock offloaded a hefty chunk if its THG holdings (Wednesday), which isn’t great for sentiment in THG.
• It looks like the UK poultry industry will only use half of the emergency visas allocated to it (Thursday) because farmers have nurtured fewer birds and employed more locals.
• BTS NFTs are going to be a thing (Friday) as Hybe, BTS’s music label, has agreed a deal to use South Korea’s biggest crypto exchange Upbit, to sell NFTs related to the band, giving them another revenue stream.

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” stories of the week were the scary mushroom in Woman finds terrifying ‘zombie-like’ mushroom with ‘eyes and mouth’ on woodland walk (The Mirror, Alahna Kindred) – but its scariness paled in comparison to this: Our nine male Japanese reporters turn into lovely young ladies with magic of A.I. photo editing (SoraNews24) 😱😱😱.

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

In MACRO NEWS…

• So Rishi Sunak unveiled the least Conservative-like Budget a Conservative government has come up with in living memory (Thursday), as it was a high tax, high-touch state plan not normally associated with the “Big Society”, low tax hallmarks of a Conservative government under more “normal” circumstances.
• Inflation continues to be a hot topic of conversation as speculation increased about a sooner-than-expected interest rate rise to clip the wings of inflation. Markets are already pricing in a hike next week (Friday) but it was interesting to see that there are also winners from higher interest rates for a change (Thursday) because most commentary tends to concentrate on who will lose out! Many members of the MPC (including the governor of the Bank of England) seem to be leaning towards an earlier interest rate rise but there is at least one member who wants to take a wait-and-see approach (Tuesday).
• Although it’s not strictly “macroeconomic”, I thought I’d include some commentary about what’s going on in advertising as is often seen as being a lead economic indicator (it reflects the direction of the wider economy). Research from the Advertising Association shows that advertisers are willing to splash the cash going into the end of the year (Thursday) and this bullishness seemed to be reflected later on in the week as WPP lifted its sales forecasts for 3^rd time (Friday). Spotify benefited from ad revenues over the quarter as well (Thursday).

• Major US banks believe that Americans are likely to hit the credit cards again (Tuesday). Meanwhile, in the UK, consumers are spending more on BNPL (Wednesday) according to Credit Karma – and this will probably be enhanced by the new Klarna/Stripe tie-up (Wednesday), which will enable more retailers in the US, UK and Europe to add Klarna as a payment option more easily.
• UK consumers are facing stronger headwinds at the moment and their confidence continues to weaken (Monday) as they get increasingly concerned about inflation (Wednesday). House sales and prices are continuing to rise (Tuesday), which usually implies consumer confidence, but I think this may be supply-led than demand-led. Mortgage rates are now on the rise (Friday) as banks expect interest rates to increase and many Londoners are also facing additional costs as the ULEZ was expanded considerably this week (Monday). On the plus side, the majority of employers are aiming to hire over the next 12 months (Monday).
• In terms of UK consumer trends, we are spending at restaurants (Monday) giving chains like Giggling Squid and Las Iguanas more confidence to expand (despite ongoing difficulties of hiring staff), picking up our online shopping in-store (Monday) and going mad for frozen food (Monday). Meanwhile, Ikea bought Topshop’s former flagship store (Wednesday) for an eye-watering sum. It’s all part of the company’s strategy to have more presence in city centres, but I think it just makes them like any other furniture store…

• Facebook is facing various issues in the wake of the Facebook Papers revelations (Tuesday) but it outlined a new future and brand (Friday) emphasising the shiny new things to come rather than the rather murkier practices that have brought them to this current stage. The company is now under investigation by the FTC (Thursday).
• Google and Microsoft posted solid results (Wednesday) thanks to advertising and cloud services respectively, but Apple and Amazon were more downbeat (Friday) on supply chain problems and increased costs.
• In tech hardware, Samsung announced strong figures (Thursday) thanks largely to semiconductor demand.

• BP/Daimler announced new hydrogen plans (Thursday) as part of the journey to be carbon neutral. Lorries are more difficult to power on electricity alone, so it’s good to see alternative avenues being explored.
• The UK’s only Gigafactory, owned by Chinese company Envision, is planning a massive expansion (Tuesday) that will make the facility one of the biggest in Europe.
• Tesla became a $1tn company (Tuesday) powered by various reasons (Wednesday), including the fact that it sold 100,000 cars to Hertz , who then announced that it was supplying half of the new order to Uber (Thursday).
• In “traditional” carmakers, Volvo had to reel in its expectations for its IPO (Tuesday), GM and Ford moaned about chip shortages lasting into next year (Thursday) and UK car production hit new lows (Thursday).

• In IPO and M&A news, online petcare retailer Zooplus had a joint bid from two private equity firms (Tuesday) but two big potential M&A deals fell by the wayside as PayPal abandoned its bid for Pinterest (Tuesday) and DraftKings pulled out of the proposed Entain takeover (Wednesday).
• In banks news, Deutsche Bank benefited from advisory fees on deals (Thursday), Santander benefited from mortgages (Thursday) and Lloyds Bank’s profits doubled (Friday), also because of its exposure to the red-hot housing market. Further afield, Brazilian “challenger bank” Nubank filed for an IPO in the US (Thursday) as it continues to benefit from having less baggage than the incumbents.
• Then Evergrande started work again in Southern China (Monday) to give the impression of some sort of normality but it looks like the state is leaving it to its own devices (Wednesday).

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” item this week was, of course, the drumming granny! What an inspiration to us all!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

In MACRO NEWS…

• China’s GDP growth is slowing down (Monday), according to official figures from the National Bureau of Statistics. It still grew by 4.9% in Q3 though, but the slowdown was due to a cooldown in the property market and ongoing energy shortages. China’s energy crisis looks like it’ll continue for a while yet (Monday) as Xi Jinping is sticking to his aim to wean his country off its current reliance on coal. There was also some interesting news about China continuing to block beef imports from Brazil (Monday), which is a nightmare for Brazil because the country is the world’s biggest exporter of beef. China stopped imports initially because of a few cases of mad cow disease, but although Brazil later gave the all clear, the Chinese kept the ban in place. This might work in China’s favour because they’ve got an oversupply of pigs and I believe that Chinese people generally prefer pork to beef anyway. This is clearly bad for Brazil though – but maybe that will mean beef prices elsewhere will go down. Meanwhile, Brazil saw 4 economic ministers resign (Friday) because Bolsonaro looks like he’ll breach spending caps to boost welfare payments to poor families, which critics say is doing to buy votes given next year’s election!
• In the UK, the Bank of England dropped more hints about an earlier-than-expected rate rise (Monday) and speculation of a rate rise in the November meeting continued to gain traction (Tuesday). The new chief economist, Huw Pill, said inflation could hit 5% early next year (Friday), reinforcing that perception. Mind you, the inflation rate cooled off slightly from last month (Thursday) but given that wages are rising, and consumers are looking at higher paint prices and utility bills (Thursday), the pressure is still on! Sunak is also considering an online sales tax (Tuesday), which sounds good in theory but could slow down the digitisation of the economy, target startups and will be another burden on companies who are just emerging from the pandemic. Some believe that it would be better to increase VAT or income tax because the burden will be spread more widely.

In ENERGY NEWS…

• Russia kept gas prices up (Tuesday) but offered to boost gas supplies to Europe as soon as the new Nord Stream 2 pipeline is approved by Germany. In the UK, Goto Energy went bust (Tuesday) and the government announced an offer of £5k incentives for households to get heat pumps (Tuesday) but subsequent reports pointed out that there aren’t many people qualified to install them and it’s also not a given that they will be appropriate for all properties. Renewables (or lack of them) have been partly to blame for the current shortage of power and so SMRs continue to be pushed as the future of nuclear power (Thursday).

In CRYPTOCURRENCY NEWS…

• A bitcoin ETF, called the ProShares Bitcoin Strategy ETF, started trading (Wednesday). The market saw this as another move towards the mainstream, which led to Bitcoin breaking through $65k (Thursday) and Facebook launched a digital currency wallet (Wednesday). There was also an interesting article on Worldcoin (Friday) being given out for free in exchange for personal details via the use of iris-scanning orbs.

• The buzz around EV batteries continued as Britishvolt and an Aussie battery maker Gelion Technologies are aiming for London IPOs (Monday) and Coventry is open for giga-action (Thursday) at the site of its airport.
• In terms of the cars themselves, Tesla posted a third consecutive quarter of profits (Thursday), Foxconn unveiled its first EV (Tuesday) and Ford committed to investment in EVs in the UK (Tuesday).

• Facebook is committing resource to becoming a player in the metaverse (Tuesday), joining others including Nvidia, Roblox, Epic Games and Microsoft. The company sounds like it’s going to do a rebrand (Thursday) but it’s got a lot of convincing to do (Friday). Snap is the latest digital advertiser to suffer from Apple-it is (Friday).
• Meanwhile, Klarna seems to be preparing for a regulatory crackdown (Monday) and Apple’s ads have taken off since their new privacy updates came into force (Monday).

• City deal-making is continuing to soar (Monday) and this week we saw Aristocrat buying Playtech (Tuesday) bringing together analogue and digital gambling, PayPal announced an interest in Pinterest (Thursday), which is particularly interesting because of PayPal’s aim to build a “superapp” (Friday), as per WeChat and Alipay, where financial services, social media and commerce come under one roof in some kind of app ecosytem. PayPal has already bought online coupon start-up Honey Science (for $4bn in 2019) and Japanese Buy Now Pay Later player Paidy (for $2.7bn only recently), so Pinterest could fit in nicely as a social network that would give them a pathway to customers. Elsewhere, FirstGroup announced the £125m sale of its Greyhound bus services in the US (Friday), making the company 100% UK-focused.
• WeWork floated on the NYSE this week (Friday) and it had a great debut just two years after its previous attempt fell apart in disastrous fashion.
• Pod Point edged closer to flotation (Tuesday), BrewDog postponed its float (Tuesday) and, separately, rapid grocery-delivery start-up Gorillas raised $1bn (Wednesday) as the trend for superfast delivery increases momentum and it was interesting to see quantum computing gaining momentum (Friday).

• South Korea is feeling China heat (Thursday) amid the ongoing government crackdowns and so is looking elsewhere for growth.
• Netflix announced strong figures (Wednesday) and have a pretty good pipeline going into the end of the year. Squid Game has clearly helped!
• THG’s chief decided to give up his golden share (Tuesday) in an effort to appease investors who have been selling his stock.
• There was a really shocking story about vets this week (Wednesday) because, despite the fact they are in the private sector, pay and conditions are very poor at a time when a number of companies and investors are putting more money into petcare.

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story of the week this week was Pop-up restaurant Karen’s Diner opens with ‘rude staff and poor service’ (The Mirror, Emma Rosemurgey), which sounds like an interesting concept! It sounds like fun, though!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

In MACRO NEWS…

• US inflation rose higher than market expectations (Thursday), reaching levels seen over the summer, which were themselves the highest for 10 years! Grocery prices were a major driver.
• There was a lot of talk about the UK interest rate rising earlier than had previously been flagged (Monday) as an MPC member hinted over the weekend that the market is right to be pricing in an interest rate increase THIS year, (Tuesday). Then we heard that members of the MPC were banned from talking to outsiders (Thursday) as there were rumours that one let slip that interest rates weren’t going to rise in the November meeting (Thursday). Later in the week, there were reports that other members of the MPC were cautioning against raising the rate too early, so it sounds to me like the Bank of England is indirectly telling the market that there will be an interest rate increase at the December meeting, unless something drastic happens! Against that backdrop, the IMF downgraded its forecasts on the UK economy (Wednesday) in its latest World Economic Report, saying that rampant inflation is going to hamper our recovery.
• Germany continues to lose confidence (Wednesday) as the latest ZEW Institute’s future expectations indicator survey is at its lowest level since last spring. This is just the latest survey to reflect doom and gloom in Europe’s biggest economy.
• Vietnam’s recovery falters (Thursday) because it had a severe lockdown and its migrant population went home and are having difficulties coming back because they don’t have the money, transport or Covid vaccination papers.

In COMMODITIES NEWS…

• Coal is bouncing back (Thursday) according to a report by the IEA which says CO2 emissions are on track to hit their highest ever annual increase. Countries are increasingly relying on coal-fired power generation to meet the sudden rise in energy usage. Also the fact that China is ramping up imports of coal and natural gas (Thursday) is sure to keep commodity prices high.
• The oil price looks like it’s staying stronger for longer (Monday) because OPEC didn’t increase production recently and now some sectors trying to replace gas with oil. WTI prices hit new highs at $82 a barrel (Tuesday). In the meantime, shale oil producers are facing higher costs (Friday), which means that they need a higher oil price to be profitable.
• Aluminium and zinc prices hit new highs (Thursday) because aluminium is VERY energy intensive and has now reached highest level for 13 years while Zinc prices set to go higher because Zinc smelter Nyrstar plans to cut European output by 50% due to rising energy prices.

In CRYPTOCURRENCY NEWS…

• The US is now bigger than China on bitcoin mining (Thursday), which is hardly surprising considering that cryptocurrency has been subject to recent crackdowns (and the fact that China is going to be launching a digital version of its currency at next year’s Winter Olympics). The US is now the world’s biggest bitcoin mining hub! Meanwhile, Bitfury Group is looking at flotation within the next 12 months (Monday) and if it went ahead, it would be the biggest ever listing for a European cryptocurrency company.
• Coinbase wants to launch an NFT market place (Wednesday), which will be based initially on the ethereum blockchain.

• Felixstowe featured a lot in this week’s news! The week started off with news that the backlog at the Port of Felixstowe is getting pretty bad (Tuesday), to the extent that Maersk is telling ships to avoid it (Wednesday) and it looks like UK problems at ports are set to continue (Thursday).
• Over in the US, President Biden has changed the rules to allow the Port of Los Angeles to remain open 24/7 (Thursday), but it’s not a given that his approach is going to work (Friday) because the whole of supply chain needs to be addressed for everything to get back on kilter. In the meantime, some big US retailers are now so desperate that they are chartering their own ships (Monday) in order to avoid having empty shelves.
• In terms of the ongoing effects of supply chain problems, warehouse space is at a premium (Friday) as everyone wants to store more and there’s bad news for pigs as visas are going to be granted for overseas butchers (Friday) to carve them up. There has been a shortage of slaughterhouse workers which has caused a backlog on farms, so this may go some way to easing the pressure on this bit of the supply chain.

• Car and home sales fell in China (Wednesday) because the shortage of semiconductors has hit car sales and China’s crackdown on debt has made people twitchier about getting caught up in developers with dodgy finances.
• UK consumers are not feeling so confident (Tuesday) according to latest BRC/KPMG survey and it seems that, according to the latest Barclaycard data that we’re spending on groceries and fuel. Given the prospect that food costs are set to rise (Thursday), food producers are already indulging in shrinkflation (Tuesday) and Christmas dinner looks like it’s to be more expensive (Tuesday) because CO2 producers will be able to increase prices soon, you can understand the concern. If you add into that mix that utilities companies are getting sneaky with direct debits (Friday), you have a recipe for a meaningful tightening of household finances. FWIW, I think that, despite this, everyone is going to be focused on having a decent Christmas because we had it taken away at the last minute in 2020 and they will be willing to spend more on Buy Now, Pay Later and on credit cards to have that. Q1 next year could be a bit tricky, though, in my opinion. However, if unemployment doesn’t rise as much as economists are projecting I think that there is a possibility that confidence could bounce back quite quickly.
• In real estate, house prices are picking up again (Thursday) due to there being a shortage of supply, buy-to-let has been slowing down (Monday) which is contributing to rents going up (Wednesday). Mortgage rates are set to go higher (Monday) and if you’re thinking of feathering your own nest, there’s bad news because home renovations are getting pricier (Tuesday). Further afield, Evergrande is prompting concerns of further defaults (Monday) and it missed another interest payment (Tuesday). The drama continues…

• France wants more nuclear power (Wednesday) in a reversal of Macron’s initial intentions when he came to power. He cites recent experience of shortages in power being due to the unpredictability of renewables (plus he’s probably talking his own book here because France is big in nuclear power).
• LG Chem compensates GM (Wednesday), which I think is a big deal because you would normally expect LG chem to put up more of a fight for its batteries, which were alleged to have caused fires in the Chevrolet Bolt, which then resulted in a massive recall. I think that the fact that LG Chem decided to foot the bill is a major admission on its part…
• Pod Point to list in London (Tuesday), which you can understand because it will obviously want to take advantage of the fact that it is the market leader in the UK in the provision of EV home-charging kit. It is still loss-making, though!
• It was interesting to see that LinkedIn shut down in China (Friday), but I don’t think anyone will be surprised. There aren’t any more big US social media companies left in China now!

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

You are going to think that I have gone soft but my favourite “alternative” story this week was Mum ‘lost for words’ by Morrison worker’s act of kindness after food shortages (The Mirror, Rosaleen Fenton and Fatima Aziz). It’s just nice to have your faith in humanity restored every once in a while!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

In MACRO NEWS…

• Germany is a country that has been more affected than most by the semiconductor shortages and leading German thinktank, the Ifo Institute, says that the situation “remains critical” (Tuesday) as its closely-watched gauge of business confidence has fallen sharply since the three-year high in July. German parties to start three-way talks on coalition led by Social Democrats (Thursday) marked talks between Olaf Scholz’s SPD, the FDP and Greens to form a coalition government. If this came to fruition, it would be the country’s first three-party coalition since WW2 and would exclude the CDU, which has been in power for 52 out of the last 72 years! There’s going to be a lot of jostling going on as a result and the latest data from the country’s Federal Statistical Office showed that demand in the manufacturing sector fell by 7.7% after two months of growth (Thursday), so whatever coalition is formed will really be up against it.

In INTEREST RATE CHAT…

• Poland raises interest rates for first time since 2012 (Thursday), the first time its central bank has done so since 2012. This comes after recent rises in the Czech Republic, Hungary and Romania. Meanwhile, New Zealand raises rates in new blow for Ardern (Thursday), shows that the Reserve Bank of New Zealand had to raise interest rates from 0.25% to 0.5% – and all of these recent moves were made in order to rein in inflation. The pressure on the Bank of England to hike interest rates is intensifying – and markets are now betting inflation will hit 6pc (Thursday) shows that investors reckon the UK’s rate of inflation will hit 7% next year, which would be its highest level since the 1990s!
• Both the ECB and Bank of England are worried about prolonged inflation (Friday) as UK households face rising house prices, rail fares and second hand car costs.

In SUPPLY CHAIN NEWS…

• Staff shortages are becoming more widespread (Monday), according to findings from a report by accountancy firm BDO which shows that it’s not just blue-collar jobs that are seeing shortages – white-collar ones are as well (Monday), according to another report by KPMG and the Recruitment & Employment Federation. Accountancy, consulting, financial services, tech and law firms are all  fighting over the best candidates. Recruitment agency Robert Walters echoed this trend (Friday).
• The UK’s biggest HGV driver training company is appealing for the revival of a loan scheme to help train drivers (Monday). The old scheme, which ended in 2019, used to offer candidates up to £10,000 for training with candidates footing 20% of the course costs and repaying the loan when they got jobs. On average it costs about £4,000 to train to become an HGV driver, so you can understand why such a scheme would be useful.
• It turns out that South Korea’s battery supremacy could be a problem (Friday) because it’s so dependent on China at the moment. The race is on for it to make its own materials or use other sources!
• Fuel Shortages are likely to carry on for a while longer (Tuesday) as the Petrol Retailers Association reported that 20% of forecourts in London and the South East were still out of fuel versus 8% across the rest of the country. This is due to higher population and fewer fuel stations per head.
• BDO’s survey said that British businesses are having to cut their product ranges (Monday) in order to better manage staff or stock shortages and more saying that they are going to have to start doing so “unless the situation changes within the month”.
• Supply chain shortages continue to hit all sorts of sectors in different ways and the pork industry is having problems. Farmers are having to cull pigs (Tuesday) because CO2 shortages and lack of workers are snarling up the supply chain stretching from abattoirs to meat processing plants. The problem is that the pigs are getting fatter and farmers are having to keep feeding them (on animal feed, which is continuing to rise in cost) as they aren’t being slaughtered at the normal time because of all the delays.

• UK new car sales are continuing to crater (Wednesday) as punters can’t wait to get a new car and settle for second hand instead.
• Volvo is preparing to do an IPO (Tuesday), which just goes to show how far it’s come under Geely’s ownership. It’s also pretty good timing as well because it comes at a time when its EV subsidiary, Polestar, announced a SPAC deal.
• GM made a big noise about doubling sales (Thursday), thanks to increased EV sales.
• Chip orders from car manufacturers are strong (Wednesday), according to Europe’s biggest chip manufacturer, Infineon. The implication here is that once we get through this dry period, the production of new cars (and hopefully, sales!) will return to more normal levels.

• Facebook, Insta and Whatsapp broke down this week (Tuesday), at once showing us how integral these services have become to us and highlighting just how much power is in the hands of one company!
• Facebook faced a lot of questions (Wednesday) following damaging revelations from ex-employee-turned-whistleblower Frances Haugen.  Facebook decided to slow down new releases as a result (Thursday).
• Ofcom decided to announce new tighter guidelines in the Audiovisual Media Services Regulation (Wednesday), saying that video streaming platforms including TikTok, Snap and OnlyFans will have to verify the ages of users and take down harmful and illegal content or face chunky fines.
• Amazon has data breach with Twitch (Thursday), which highlights failure but also underlines the importance of keeping our data safe.

Consumers continue to face more challenges…

• US mortgage payments are rising faster than wages (Monday)
• The New York real estate market is getting stronger (Wednesday)
• UK consumers are getting hit by higher gas, utility bills manufacturing (Wednesday) despite wages rising

…and there were some interesting developments for retailers..

• Morrisons got a new owner (Monday) but its fate may be painful (Wednesday) as the winning bidder paid a fat premium and is likely to do things that private equity firms are (in)famous for.
• Investors were speculating as to whether Tesco and Sainsbury’s could be next (Tuesday), but Tesco announced some bullish results (Thursday) and implied that it would be cutting prices going into Christmas.
• Amazon launched first UK 4star outlet (Wednesday), which was quite interesting, but it’s not worth getting too carried away given that it is such a small part of the overall business.
• Greggs was positive about the full year (Wednesday) but Hotel Choc and Pepsi warned about price rises (Wednesday)

• Evergrande shares got suspended (Tuesday)
• China’s property situation could have ongoing repercussions (Wednesday), as it turns out that Chinese Estates Holding, HK-based property group, is going to take itself private (Friday) after exposure to China Evergrande nuked its share price.
• China is also feeling the impact of the current energy crunch (Monday) because the country is trying to cut emissions, and in doing so is effectively cutting manufacturing activity. This is likely to lead to shortages of anything made there – adding to the consequences of an already backed-up supply chain.

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story this week was Doting dog owner refuses to mow lawn so Chihuahua can peek above the clovers (The Mirror, Edward Kay). Cute!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

In MACRO NEWS…

• In Europe, Scholz’s SPD won the German election by a whisker (Monday) but it looks now like there is going to be a three-party coalition, which is likely to make putting through difficult legislation a real challenge given the different agenda of each party.
• In the UK – the government took over Southeastern (Wednesday) due to finding a £25m hole in the accounts. It’s the latest railway line to get renationalised. In ENERGY, three more UK energy suppliers went bust (Thursday) and Ofgem braced itself for the possible collapse of Teneo (Friday) because wholesale gas prices keep rising (Wednesday), which gives US LNG exporters hope (Tuesday) because it looks like Europe is going to be a very lucrative market while Serica benefits right now (Wednesday) because it’s more exposed to spot prices than its rivals. It’s not just us that’s suffering either – China has coal shortages (Thursday) and all of this makes nukes more compelling (Tuesday) as part of an overall energy strategy to generate consistently reliable amounts of power (Europe as a whole is now suffering from the poor performance of renewables), which could boost Rolls-Royce with their SMRS as the government is thinking of putting more money in (Monday). Mind you, the UK is keen to get unentangled from China on nukes (Thursday), which I imagine is not going to go down well and will be used in any kind of trade negotiations with the country.

In SUPPLY CHAIN NEWS…

• There are still problems in the US – two of the country’s busiest port complexes, the port of Los Angeles and Long Beach, are only able to run at 60-70% capacity because of the ongoing shortage of workers (Monday). Other major ports in Europe and Asia operate 24-hours per day but it seems that the shipping lines, lorry drivers, port workers, warehouse operators and others are just blaming each other for not being able to come to an understanding and get on with it
• In China – the government’s efforts to limit energy consumption and cut carbon emissions is leading to power outages in many of its manufacturing hubs. Some manufacturers have been told to shut down factories and/or limit working hours and the rising price of coal is adding to the problem. This led to the economy’s first official contraction in manufacturing activity since the beginning of the coronavirus outbreak (Friday) as power shortages made already-tricky conditions worse. However, Beijing says blackouts will not be tolerated as power shortages hit factories (Friday) says that the government has warned state-backed energy firms that power outages should be avoided at any cost this winter. I am presuming that this is going to be bad news for everyone else as “at any cost” will probably mean that energy costs (particularly coal) will see a resulting price spike as companies try to comply with the order.

• Shapps’ longer hours plan hasn’t worked (Monday) but businesses say that UK visa changes aren’t enough (Monday), fuel deliveries are prioritised (Thursday), some are saying that fuel prices may be higher for longer (Wednesday) and there are increasing fears that the crisis will damage health services and industry (Tuesday). The military is going to start delivering petrol to UK garages from Monday, but given that we are only talking 100 drivers here, you do think that this is probably more of a PR thing to stop people from going out panic buying. Still, it’s a move in the right direction because, let’s face it, there was always enough petrol – just the perception that there wasn’t enough.
• All of this is making EVs more attractive (Wednesday), Ford announced an increased commitment to EVs (Tuesday, Wednesday), Polestar unveiled a SPAC deal (Tuesday) but Evergrande’s EV division cancels its listing (Tuesday) shows that even the positive vibe surrounding EVs can’t help the troubled company. It was interesting to see that more money is being poured into solid state battery development (Wednesday) which could reduce the amount of EV fires as solid state batteries are much more stable than existing lithium ion batteries. Meanwhile, Cazoo announced strong sales (Wednesday) while the SMMT’s latest figures show that chip shortages continue to hit production (Thursday).

• The walls continue to close in on Evergrande (Monday) as at least two local governments are stepping in to put presale revenues into state-controlled custodial accounts so that “homebuyers’ interest can be protected and project construction continued”. Also, Evergrande has managed to raise a chunk of change by selling part of its 20% stake in Shengjing Bank (Thursday) to Shenyang Shengjing Finance Investment Group, the state-owned investment group. Shengjing Bank is “demanding” that money from the sale is used to settle liabilities it is owed. It’s still not out of the woods yet, though Evergrande it missed another interest payment on Wednesday (Friday) – its second in the period of a week – adding fuel to fears that it will default. At the moment, it appears that Beijing is not minded to bail the company out, but then it has to balance this against the potential damage that could be caused to domestic investors and home owners. The drama continues…

Consumers are facing increased challenges…

• House prices are continuing to rise (Friday) as the latest figures from Nationwide say that the value of the average home continues to go up (although at a slower rate than before)
• Gas bills set to rise further under green energy surcharge plan (Friday) shows that ministers are thinking about phasing in a green energy surcharge to household bills over a period of up to ten years. Clearly, the timing of the debate over this proposal is quite controversial given the backdrop we’ve got at the moment. Gas is currently taxed at a lower rate than electricity despite generation of the latter being “cleaner”.
• Furlough ended this week (Thursday) and some parts of the country with big exposure to one industry or company are expected to suffer particularly acutely e.g. Crawley (Gatwick), Slough (Heathrow) and Luton likely to be particularly badly affected. As things stand, Luton already has the country’s fourth highest proportion of its population on jobseekers’ help and could rise to #1.
• UK consumers will be seeing higher food prices (Wednesday), as food prices increased in September for the first time in six months thanks to rising logistics costs, commodity prices, staff shortages and Brexit admin,
• In consumer trends elsewhere, Chinese pet care spend is expected to rise (Wednesday) according to Goldman Sachs report as younger people and the elderly are spending more on their pets than other demographics and DIY spending is continuing in the US (Wednesday).

…and as for the retailers themselves…

• River Island is now seeing profits above pre-Covid levels (Monday)
• Although Next did pretty well in its latest results, its chief exec said that shortage in staff/logistics/supply chain issues could dent Christmas (Thursday)
• Boohoo spend a lot of money to mitigate damage on its tarnished image (Monday) and its profits took a big hit due to big acquisitions and higher costs (Friday), which the market took badly. Still, I think there’s upside going into the end of the year given it’s party season and that maybe it’ll give people reason to buy (maybe there will be more informal departmental nights out this year).
• SSP is showing signs of recovery (Thursday) as the company that owns Ritazza and Upper Crust, reported better revenues in the latest quarter as airports and railway stations gradually return to normal. The company itself sounds cautiously optimistic about the future
• In SUPERMARKETS, Aldi announced UK expansion plans (Tuesday), Morrisons heads for auction on Sunday (Thursday) and it also announced a new venture with Deliveroo called “Hop” (Friday), which provides rapid grocery delivery in the right catchment areas.

• Facebook outlined a future beyond mobile phones (Monday) and it also suspended work on Instagram Kids (Tuesday)
• Mastercard announced that it was going to do BNPL (Wednesday)
• In IPOs, there was a real contrast between the massive jump seen on Oxford Nanopore’s market debut (Friday) and the rather more staid performance of Peel Hunt (Thursday).

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” stories this week were animal-related. There was the all-seeing Wheeler-dealer hamster Mr Goxx trading in cryptocurrency and has own hi-tech office (The Mirror, Ruki Sayed) and the sheer drama of ‘James Bond villain’ owner threatens dog with bath or nail clippers in hilarious clip (The Mirror, Edward Kay). Brilliant!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

• In the US – the Democrats announced details of a proposed tax increase (Tuesday) – boosting the top corporate tax rate from the current 21% to 26.5% and implementing a 3% surtax on people who make over $5m. Clearly the Republicans were up in arms about this, partly because it would erase the tax cuts Trump implemented when he was in power.
• In the UK – the OECD’s latest report shows that the UK’s economy grew at the fastest rate among developed countries in Q2 (Thursday). The monthly rise of 1.2% was the biggest jump since the Bank of England gained independence in 1997! Having said that, the latest data from the Office For National Statistics shows that output increased by just 0.1% in July versus the 1% reading for the previous month (Monday) as the number of people being pinged for being in contact with potential coronavirus carriers – and the spread of the Delta variant – increased sharply. Also BoJo had a cabinet reshuffle (Thursday) probably with an eye to the next election (Friday) as the new cabinet is now younger, more female and more ethnically diverse versus the previous one.
• In Europe – Norway voted the social democrats into power (Wednesday), becoming the latest country in Europe move to the left politically. The result of Monday’s election means that it will be the first time since 2001 that all three countries in the region – including Denmark, Finland and Sweden – will have social democrat PMs. It’s looking increasingly likely that Germany may swing to the left as well because Social Democrat Olaf Scholz is the current front-runner for the forthcoming elections.
• In South Korea – the Financial Services Commission (the FSC), South Korea’s financial regulator, has set a September 24th deadline for foreign and local crypto exchanges to register as legal trading platforms (Monday) in an act that could wipe out two-thirds of the country’s crypto exchanges in the overhaul because 40 out of the main 60 operators are unlikely to be able to meet the conditions!

• I’d say that the biggest news this week is Beijing’s enforced intervention into Ant’s Alipay making it help to create a separate loans app (Tuesday). Beijing is going to unravel Alipay, the superapp owned by Ant Group, to make a separate app for the company’s highly profitable loans business. As part of this, Ant will have to put its user data into a new credit-scoring joint venture that will be partly owned by the state and Tencent is also going give competitors access to its data (Tuesday). Given the strict regulatory climate at the moment, it’s likely that the opening up will happen quickly.
• The Chinese authorities are clamping down on the real estate sector at the moment and so Soho China’s share price almost halved on the news of the collapse of the proposed $3bn takeover by US private equity firm Blackstone (Tuesday). The proposal had hinged on regulatory approval, which they didn’t get. Staying with the property sector, Evergrande hired US restructuring specialists Houlihan Lokey (Wednesday) to give the hugely-indebted Chinese property giant Evergrande some options, prompting its Hong Kong-listed shares to fall by 12% yesterday to their lowest point since 2014. The share prices of other property giants like China Vanke, Sunac and Country Garden also fell as investors worried about what might happen next for the massively debt-laden sector.
• As a result of all this sudden regulatory tightening, investors are having a bit of a wobble (Monday) about whether it is safe to invest in China at the moment. There ARE investable sectors, though, like EV and solar (Friday) which should be relatively sheltered given that they feed into the “common prosperity” objective of the current administration.

• ONS data says that employment in the UK rose in August and that we now have the biggest number of vacancies since records started in 2001 (Wednesday) although it’s likely that the road to lower unemployment is likely to be lumpy (Thursday) because job seekers are not always geographically where all the jobs are – and given house price rises, moving is not likely to be easy. Still, a report by BDO says that wages are rising at their 2^nd fastest rate in 4 years. Interestingly, European workers are showing increased interest in UK jobs (Monday), according to research by Adzuna, but I guess they’re going to have to wait until the government relents on giving out temporary visas.
• Consumers look like they will have to pay higher utility bills as energy prices keep rising (Tuesday), a situation made worse by the outbreak of a fire at a substation in Kent (Thursday). Big users are being asked to restrict usage – and some companies have gone one further and closed their facilities down completely. One major fertiliser company decided to shut down production (Friday), which could pile problems on to an already struggling agricultural sector as this company makes about 40% of the UK’s fertiliser!
• It was also interesting to note that global house prices have been rising at their fastest rate since 2005 (Tuesday) according to Knight Frank, but the latest data from the ONS says AVERAGE house price fell in July (Thursday).
• There was a lot of newsflow this week on apparel retailers. Inditex recovering nicely from a disastrous 2020 (Thursday) while Primark was confident enough to upgrade its full-year profit forecasts (Tuesday). Meanwhile, purveyors of the athleisure trend have done well under lockdown as JD Sports decided to upgrade its full-year forecasts (Wednesday) and Superdry also saw positive momentum (Friday).
• Elsewhere, M&S decided to close its shops in France (Friday) and Amazon announced a number of deals – with Deliveroo to do food and grocery deliveries for Prime members (Wednesday), another one with Co-op to sell all of its products on its website and another one with the Post Office (Monday) where the Post Office will handle deliveries and collections after a no-contest deal with Royal Mail lapsed, allowing it to deal with other companies. What a week for Amazon!

It was another very busy week for M&A and IPO newsflow!

• In M&A news – Canadian Pacific’s $31bn deal for Kansas City Southern went through (Thursday), creating a single railway connecting Canada and Mexico via the US; Intuit agreed to buy Mailchimp for about $12bn in cash and stock (Tuesday) to strengthen its array of customer services; Kape bought ExpressVPN (Tuesday) in one of the biggest ever tech deals for a British firm. Kape says that this will beef up its cybersecurity capability; Bain Capital made an offer to buy posh bakery Gail’s (Wednesday) in the latest example of a private equity firm using up some of its “dry powder”; and Goldman Sachs bought GreenSky (Thursday) in a bid to hasten its development in the consumer banking arena.
• In IPO developments – Peel Hunt is aiming to list on London’s junior AIM market (Wednesday). This should give it currency to finance its European expansion ambitions.

• Apple revealed a new product line-up (Wednesday) – and it is still highly reliant on iPhone sales!
• The Restaurant Group outperformed rivals (Thursday), fuelling confidence to upgrade its full-year earnings guidance! There are some concerns about inflationary pressures but it said that  it wanted to continue with the expansion of the Wagamama and Brunning & Price brands.
• There was a really interesting article this week on data gatekeepers in the growing world of sports betting (Thursday) which identifies companies such as Sportradar Group (Swiss-based) and Genius Sports (London-based) whose data powers betting platforms and media companies.
• After an absolutely disastrous year last year, car rental companies like Avis Budget, Sixt and Europcar are all doing well (Friday) and even Hertz, which went bankrupt before being bought, is actually turning a corner!
• Britishvolt became a “unicorn” in its latest funding round (Thursday). It is aiming to be able to make a huge number of battery packs and provisional deals lined up with a number of major car manufacturers. Given the massive interest in EV batteries at the moment, it’d hardly surprising that Britishvolt is attracting such a high valuation!

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” stories this week were the weird yet intriguing We try Japan’s new drinkable curry in a can (SoraNews24, Oona McGee) and the hilarious Woman shares genius hack for clipping her dog’s nails and it works every time (The Mirror, John Bett). Curry-in -a-can? Suspended dogs?? What’s the world coming to??

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

• Germany’s having a tough time at the moment as its manufacturing sector is losing momentum (Tuesday) despite new factory orders in July appearing at first glance to have hit their highest level since records began in 1991. Apparently this was due to a data blip and comes ahead of imminent elections where Angela Merkel is now putting her weight behind CDU/CSU candidate Armin Laschet as her successor (Wednesday) whilst warning of the dangers of a leftwing German government. Given that Germany is the main driver behind Europe, any instability or uncertainty at the moment isn’t going to be great for sentiment.
• Norway’s also faces an imminent election dilemma (Wednesday) as, on the one hand, you have a country that is seen as being staunchly pro-environment but then on the other, it is Europe’s biggest petroleum producer with a humungous great sovereign wealth fund that was built on oil and gas revenues! Put bluntly, voters will be chosing between the Greens, Socialist Left and Liberals who want to stop oil and gas exploration as quickly as possible and Labour and Conservatives – who want the oil industry to make a more gradual change to renewables given that the sector accounts for about 6% of Norway’s jobs.
• Brazil suspended beef exports to China after cases of mad cow disease were discovered (Monday). Brazil is the world’s biggest beef exporter and China is its biggest export market. If this spreads it could be disastrous for Brazil and torpedo President Jair “Tropical Trump” Bolsonaro’s re-election next year. However, I’ve read in some sources that it has been seen as a one-off and exports are back on track (although I haven’t seen that in a source I 100% trust thus far!). It is worth following because if it turns out to be a cover-up and spreads, the long-term damage could be huge (I’m sure that British beef still has remnants of stigma attached after the mad cow disease outbreak over two decades ago).
• In Europe, the ECB said that it would slow the pace of its bond-buying (Friday), but reassured investors that it would be quite gradual.
• In the UK, there were dividend tax rate and National Insurance rate hikes (Wednesday) which will come into force next year and Rishi Sunak confirmed that the autumn budget is to take place on 27 October (Wednesday). On the Covid front, large English venues will be bringing in Covid vaccine passports (Monday) at major indoor venues in England.
• IN COMMODITIES, Aluminium hit another new high after a military coup in Guinea coup (Tuesday). It was only last week that Aluminium prices hit new highs because one of China’s major aluminium producing regions had cut down on energy consumption, meaning a drop in production capacity. Guinea is the world’s second biggest producer of aluminium. Prices of vegetable oil are shooting up (Thursday) as food companies like Krispy Kreme, Bimbo Bakeries and Pepperidge Farm are pitted against oil companies like Marathon Petroleum and ExxonMobil in buying vegetable oil! Oil companies need it for “renewable diesel” and food companies need it to make their products. The food industry is worried that the oil companies are only just getting started and that if they continue to increase their usage, food companies will be priced out of the market.
• IN CRYPTO NEWS, El Salvador debuted bitcoin as legal tender this week (Wednesday) but it had a tricky start as the government had to take its digital wallet app for storing the cryptocurrency offline due to server problems. The app gave Salvadoran citizens $30 of free bitcoin and came back online after a few hours. The price of bitcoin also crashed just one day after the nation spent millions to buy 400 bitcoins (although it then bought 150 more, bringing its total to 550). Then after last week’s warning remarks, SEC threatened to sue Coinbase (Thursday) if it goes ahead with a new digital asset lending product called Lend and issued it with subpoenas for more information. Meanwile, UK regulator called for greater powers against risky crypto ventures (Tuesday) in order to protect UK consumers from dodgy crypto investment promos that you see all over the place online. So far the FCA is all talk and not much action on this.

• The CBI joined everyone else and their dog in calling for ministers to relent on their position on visas for foreign workers (Monday) and to cease “waiting for shortages to solve themselves”. Logistics bosses called for faster truck driver training to ease shortages (Monday) while Iceland said that it thought that the trucker shortage will last into 2022 (Wednesday). Elsewhere, Bed linen and staff shortages force UK hotels to cut back services (Monday) highlighted difficulties in hospitality while Wagamama said it was to find chefs at a fifth of its UK sites (Monday) highlighted difficulties in the restaurant trade. M&S is panicking about an impending import crisis (Monday) when new strict borders controls come into effect next month. It also looks increasingly like Bonfire Night and/or New Year celebrations could be a bit iffy (Monday) because importers are battling with sky-rocketing fireworks prices – a large crate of them will now cost $30,000 versus the $8,000 it used to cost them and Ikea is experiencing shortages in furniture (Wednesday). A recent survey by the European Commission showed that a record one in three EU furniture makers said that they’d experienced supply problems.

• Global dealmaking is on track to reach new highs (Monday) as Refinitiv data shows that global M&A levels are at record levels and is currently on track to overtake the previous all-time high of 2007, just before the financial crisis.
• In terms of individual deal news this week, PayPal bought Paidy (Thursday) and Mastercard bought CipherTrace for an undisclosed sum (Friday) while BrewDog teamed up with Asahi (Monday), Deutsche Telekom did a share-swappy thing with SoftBank to boost its US business (Wednesday) and Morrisons is heading for an auction (Thursday) after bidders were unable to outdo each other. Companies including Oxford Nanopore, EG group and Mishcon de Reya said they were considering IPOs (Friday), presumably to take advantage of hot markets and leisure companies like PureGym and Hawksmoor (Monday) are lining up to do the same.

• The UK consumer is facing cost rises in building materials (Tuesday), real estate (Wednesday) and utilities (Tuesday). Meanwhile they are spending superhero blockbusters (Tuesday) but most definitely not on cars (Tuesday).
• In terms of the retailers themselves, Ted Baker is recovering (Wednesday), M&S is bringing back an old own-label (Thursday), B&M is booming (Thursday) and John Lewis is trying yet another new thing – a fast fashion range (Wednesday) but retail sales overall have slowed down a bit (Tuesday). There’s a new department store in Bournemouth that could herald a new way forward (Thursday) while over in the US, meme stock GameStop appears to be turning a corner after a rough period (Thursday).

• UK private schools in China feel the effects of Beijing’s education crackdown (Monday) as schools like Harrow, Wellington, Dulwich College and Charterhouse – who have been trying to make inroads into the country by having schools there – are not feeling the love. Will their charms diminish as a result? Or maybe rich parents will send their kids abroad for schooling at an earlier age?
• Staying on the subject of China, investor Cathie Wood said that she’d cut her positions in China (Friday) with only those who are least likely to fall foul of the current regime’s crackdown remaining in Ark’s portfolio. On the other hand, BlackRock announced that it had raised $1bn for a China mutual fund (Thursday), although some are sceptical about the merits of doing business in a regime that seems to like to shift the goalposts quite a lot.
• Facebook made the headlines this week with the defence of its acquisition of Giphy (Thursday) and the launch of some new camera glasses in a venture with Ray-Ban (Friday), causing some controversy.

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story this week was all about the very niche invention in Japanese company makes a robot specifically to keep your cat entertained (SoraNews24, Katy Kelly). Amazing!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

• China manufacturing activity slowed down for first time since April 2020 (Thursday) according to the Caixin manufacturing purchasing managers’ index which shows its first fall since the early stages of the pandemic, notable because this independent measure echoed the official PMI. It all seems to be due to falling export demand, rising raw materials costs and a fragile property sector that is suffering from another crackdown designed to reduce debt. In agriculture, it looks like the pork shortage caused by swine fever last year appears to be over (Thursday) and hog stocks like Muyuan and feed businesses like New Hope Liuhe are suffering as a result.
• Vietnam’s status as a reliable Asian manufacturing hub is being called into question by the current Covid surge (Wednesday). Its relatively successful handling in the early stages of the pandemic via super-strict quarantines and track-and-trace to the difficult situation the country finds itself in today stand in stark contrast to each other. Global manufacturing companies are getting increasingly concerned, but I would have thought this will die down.
• Japan’s PM Yoshihide Suga resigned (Friday), apparently to take responsibility for the country’s poor response to the coronavirus.
• In the Eurozone – high frequency indicators are all at their highest levels since the beginning of the pandemic (Tuesday) as data on things like visits to leisure venues, spending, travel and recruitment are all trending strongly. This implies good news for the bloc!
• German inflation surged to a 13-year high of 3.4% (Tuesday) putting extra pressure on the ECB to raise interest rates to rein in spending but the ECB is standing firm. Interestingly, the last time German inflation reached this level was just before the 2008 financial crisis.
• In the UK – business confidence is at four-year high as restrictions ease (Tuesday) according to a Lloyds Bank survey, although this is getting increasingly tinged with concerns about staff shortages and the inevitable upward pressure on wages that will no doubt result. The vaccine rollout, the lifting of lockdown restrictions and lower chances of getting pinged have all helped.
• In COMMODITIES – Aluminium prices hit a 10-year high as China production fell (Wednesday) due to a crackdown on electricity consumption. China produces over 50% of the world’s aluminium and its aluminium production hub of Guangxi has cut production to 80% of normal levels. Meanwhile, demand for aluminium used in planes, vehicles and cans continues to grow as economies pull themselves out of the lows of the pandemic
• In MARKETS – Germany’s Dax index announced that it was going to expand the number of its constituents (Thursday) from the current 30 constituents to 40 after consultation with a big number of companies and financial institutions. There will be new selection criteria that specify profitability and the constituents will be reviewed twice a year rather than the current once. This is the first overhaul of an index that has been around for 32 years. This news isn’t going to rock your world, but it is notable!

• Although we are hearing a lot about employee shortages at the moment, the other side of this is that the treatment of transport workers is making supply chain pressures worse (Tuesday) and Korean global shipping giant HMM, one of Asia’s biggest shipping companies threatened to strike (Thursday) although a last minute deal was reached in the end.
• US retailing giant Walmart said that it will add 20,000 workers to supply-chain operations this year (Thursday), taking on more order pickers, freight handlers, forklift truck drivers, technicians and managers.
• The consequences of supply chain problems continue to have knock-on effects as building materials costs climb to record highs (Thursday) and they are up to 20% higher versus the previous year. They have now risen so much that the construction materials price index is at its highest level since records began in 1996!
• Wetherspoons has not been immune to shortages either as it was running short of some brands of beer (Thursday)! This is just the latest hit stemming from the lack of delivery drivers as Nando’s and McDonald’s have also reported other shortages of things like chicken (!) and milkshakes.

• Bankers continue to rake in the fees (Tuesday) as the sheer volume of M&A deals and a fat pipeline is putting bankers on course for their their best year on record. Fee income so far this year has been estimated by Refinitiv to be about $4bn and is the highest year-to-date total since at least 2000 and way above last year’s levels! It looks like the party is going to continue as a survey by KPMG of big international businesses said 87% were looking to do deals in the next three years (Wednesday).
• In terms of specific deals, European tech giant Prosus put in an all-cash offer for Indian payments platform BillDesk (Wednesday), Russian internet giant Yandex is in the process of buying out Uber from its various joint ventures (Wednesday) in a $1bn deal, Baxter put in an offer to buy US medical equipment group Hillrom for $12.4bn (Friday), which many see as a punchy price and private equity firm Advent and sovereign wealth fund GIC put in offer $8bn to take biotech company Swedish Orphan Biovitrum (aka “Sobi”)private (Friday). Meanwhile, woolly shoe maker Allbirds announced intentions to do an IPO (Wednesday).

• US consumers seem to be stockpiling toilet paper again (Wednesday) and P&G, the country’s biggest maker of loo roll (including the Charmin brand) and paper towels (including the Bounty brand)is increasing production to meet demand.
• The latest figures from the Bank of England show that UK consumer borrowing fell to zero in July (Wednesday), implying that some households are leaning towards more saving than spending as Covid cases rise (or are they maybe saving up for a big Christmas spending spree perhaps?).
• Meanwhile, prices in the shops are rising as driver shortages and Brexit red tape are being passed on to the consumer (Wednesday), according to the latest figures from the British Retail Consortium and UK house prices showed their second biggest monthly increase in the cost of the average home  in 15 years (Thursday), according to the latest figures from the Nationwide building society

• In TECH NEWS, China decided to limit gameplay to three hours per week (Tuesday), Alibaba decided to suck up to the government (Friday) by giving them large sums of money to further “common prosperity” and South Korea ruled on in-app game purchases (Wednesday) but shortly after that Apple said that it was going to allow media apps to link to their own websites for payment options (Friday), rolling it out around the world from next year for reader-apps available via the App store. WhatsApp was fined €225m for not telling users how it shared data with Facebook (Friday) by the Irish Data Protection Commission, but I’m not holding out much hope as it is puny and doesn’t seem to be very effective against the might of US Big Tech. Elsewhere in tech-land, Snap continues to grow (Tuesday) and wearables company Whoop is gaining traction (Tuesday) but Zoom seems to be losing ground (Tuesday).
• In CAR NEWS, UK second-hand car prices continue to rocket up (Tuesday), with the average asking price having gone up by over 15% year-on-year, according to Auto Trader and rising prices are already feeding into rising inflation. Elsewhere, Ford and GM shut down factories and Tesla delayed the launch of its Roadster due to chip shortages (Friday)
• In TRAVEL SECTOR NEWS, flying overall is picking up (Thursday) but business travel looks like it’ll still take a while (Thursday). Ryanair is taking a bullish stance (Wednesday)!

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” stories this week were the search tips in Man says we all ‘suck’ at using Google – and shares tips we need to know (The Mirror, Zahna Eklund) and the rather wonderful Adorable seven-month-old puppy loves to cuddle the other dogs he meets on walks (The Mirror, Paige Freshwater). Brilliant!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

• The US is doing another stimulus (Weds) – this time US House of Representatives has approved an outline for Joe Biden’s massive $3.5tn domestic spending package, the detail of which is to be fleshed out later this year. It follows the $1.9tn stimulus package he signed in March and is a major part of his greater economic plan.
• IN ASIA – South Korea raised interest rates 0.5% to 0.75% (Thursday) in a bid to rein in record household debt and red-hot property prices. House prices have risen by 14.3% between July last year and this year – the steepest rise since 2002 – and household debt increased by 10.3% in Q2 versus the previous year.
• IN EUROPE, German business confidence continues to waver (Thursday) the latest closely-watched Ifo survey reflects a major drop in business expectations in August in Europe’s biggest economy.
• IN THE UK – Confidence in the UK’s service economy was also hit (Thursday) according to the latest CBI survey which voices concerns about the ongoing impact of supply shortages and rising costs. ALSO IN THE UK, HS2 looks like it’s getting scaled back (Thursday) as the government looks for ways to rein in costs and Wales looks at putting Small Modular Reactors in existing nuke sites (Thursday). It was interesting to see signs of recovery such as City Airport expects biz travel to return next year (Tuesday) and footfall is rising in the West End (Tuesday).
• Elsewhere, South Africa jobless rate hits 34.4% (Wednesday) as the headline unemployment rate rose from 32.6% in Q1 to 34.4% in Q2 as businesses cut staff due to the economic impact of the pandemic

• Coronavirus outbreaks in Vietnam, Indonesia, Sri Lanka and Thailand are causing supply chain problems (Wednesday) that are having global repercussions. Such countries have had low vaccination rates and are now suffering particularly badly with the advent of the Delta variant. Western brands such as Adidas and Crocs rely heavily on Vietnamese manufacturing and are currently paying for expensive air freight to keep product flow going and make up for production delays. Fun facts: Vietnam produces over 30% of American shoe imports and it is the #2 supplier of shoes and apparel to the US after only China. Some American companies, including Nike and Gap, have written to Biden asking him to increase US vaccine donations to the country.
• Industries across the UK are getting hit by supply chain problems (Wednesday) as restaurants, pubs, wholesalers, construction firms and farmers are all showing increasing signs of strain. McDonald’s cut milkshakes and bottled drinks, Nando’s closed 45 stores due to a lack of chicken and Greene King and City Pub Group have run out of certain drinks. A monthly CBI survey yesterday showed that the UK retail sector is now at an undersupply level of -21% this month – its lowest on record 😱. The Recruitment and Employment Confederation, which represents UK recruiters, says that staff shortages are going to continue to put pressure on supply chains – and it’s likely that this could affect Christmas. The CBI weighed in on giving workers in specific sectors temporary visas to ease supply chain problems (Thursday). As the MD of Iceland put it, “We’ve already had one Christmas cancelled at the last minute, and I’d hate this one to be problematic as well”. Things are getting so bad in the food processing industry that the Association of Independent Meat Suppliers – which is the industry body representing butchers, abattoirs and processors –set up a call with the Ministry of Justice earlier this week to talk about how its members could recruit more current prisoners and ex-offenders. So far ministers are holding firm on issuing temporary visas (Monday), but surely they will have to relent.
• Executives highlight ongoing trickiness with regard to the availability not only of containers – but also of the ships that carry them (Monday) and even the reopening of the world’s 3rd busiest port in Ningbo, China won’t make a difference for weeks or months (Thursday).

• IN THE UK – the CBI’s latest stats show that retail sales rose this month at their fastest pace in almost seven years (Wednesday), with a net 60% of retailers reporting higher sales in the year to August – the highest level since December 2014 BUT this was at higher prices as a net balance of 73% of retailers reported higher prices versus the same month last year.
• Also, M&S’ share price hit its highest level since the pandemic started (Wednesday) and investors felt they had reason to feel more optimistic as the high street stalwart upped its annual profit guidance last week.

• UK banks have extended their experiment of sharing branches (Tuesday). The pilot scheme involves having multiple banks in one branch but it has proved to be so popular that the original October deadline has been extended.
• British Airways is looking at launching a new low-cost short-haul subsidiary (Friday) from Gatwick. It’s done this once before, but it didn’t work. Will it work now when things are even more competitive and they are facing increasing pressure on other long-haul routes (particularly London-New York)?
• Lixil making digital showrooms a permanent feature (Tuesday). Under lockdown, the Japanese building materials and housing fixtures company had to rely on digital showrooms to communicate with customers and it has been decided that this is to continue. I suspect that this will be increasingly popular especially among retailers who sell big products that take up a lot of room, e.g. furniture retailers.
• WeWork is now offering PAYG desks (Wednesday), which I think is a great way to generate some quick cash – but it could also prove to be a novel way of getting new business as it gives potential longer-term customers a “try-before-you-buy” opportunity. On a related note, I also wondered whether private member clubs such as Soho House could be another alternative provider of workspace in a more relaxed environment (Friday). If so, this would provide even more competition for the likes of WeWork and IWG etc.
• Walmart is offering the use of its delivery platform to 3rd parties (Wednesday), which will offer another useful income stream and opportunity to other companies in the highly competitive “last mile” delivery segment.

• Xiaomi leapfrogs Apple (Tuesday) According to figures from Counterpoint Research, in June, it sold the most phones globally – more than Samsung – and it became the world’s second biggest mobile phone manufacturer in Q2, pushing Apple into the #3 spot. It doubled its market share in Europe to 24% over the last 12 months and became the top seller in Denmark, Belgium, Ukraine and Russia
• OnlyFans had a drama as it initially said that banks were behind its recent announcement to ban explicit content (Wednesday) but then it reversed its decision to continue being a platform for such content (Thursday). This just proves that OnlyFans needs porn more than it does banks!
• FCA gave up on trying to regulate Binance (Thursday) as it said that the cryptocurrency trading platform couldn’t even answer basic questions.
• Didi suspended its UK and European expansion (Tuesday) due to concerns about how it handles passenger data. China’s latest data protection laws force companies to let them access data upon request.
• In the world of fitness, Peloton decided to cut the price of its flagship product – its exercise bike – by $400 (Friday) as sales are slowing – and budget UK gym chain PureGym is preparing for an IPO (Friday) in order to fund overseas expansion.

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” stories this week were the ingenious Man gets QR code tattoo which shows he is coronavirus-free, and uses it at McDonald’s (The Mirror, George Roberts) and the rather sensational Japanese grade students make working game consoles entirely out of cardboard for their summer homework (SoraNews24, Katie Pask). Enjoy!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

• The latest PMI from IHS Markit showed that the UK economy is being held back by the pingdemic (Thursday) despite prices rising at their fastest rate for 25 years due to labour shortages, rising wages and higher input costs. The Bank of England changed its year-end inflation forecasts yet again – this time to 4% (Friday), but maintains that this is temporary. I really do think that once a “proper” country’s central bank raises interest rates, there will be a domino effect as others raise theirs because they are all running out of excuses for doing nothing to rein in inflation.
• Supply chain issues persist in the UK and Germany (Tuesday) and this is hurting Germany more given its larger exposure to manufacturing. Germany’s situation is being made even worse because its car industry is currently experiencing an acute shortage of semiconductors. In the UK, there’s still a shortage of lorry drivers, so M&S (Tuesday) and John Lewis (Thursday)are offering extra incentives.

• The travel industry is showing signs of recovery around the world and many governments are trying to implement measures to help things along in this regard. Although French and British governments are trying to implement health passes and vaccine passports respectively (Monday), there’s resistance from protesters in France and MPs in the UK mainly to do with there being human rights and privacy issues.
• According to the latest figures from the UN’s World Tourism Organization, some tourism-centric countries are really suffering from the Covid impact (Wednesday). Places like the Bahamas, Maldives and Fiji weren’t doing too well going into the pandemic and their economies really are being battered now. The Asia-Pacific region suffered particularly badly from the lack of Chinese tourists, but Caribbean countries have started to bounce back thanks to an influx of American tourists.

• As The Great Crackdown of China continues, ed-tech companies hit by the new restrictions (like New Oriental and TAL Education) have started to cut jobs (Monday), but this is just leading to the teachers all becoming freelancers while parents have already formed “tutoring co-operatives” 😂! Chinese parents just can’t get enough of extra-curricular schooling!
• The Great Crackdown of China this week aimed the cross-hairs firmly at online gaming as a state-run publication called the Economic Information Daily described it, somewhat chillingly, as “opium for the mind” (Wednesday) which then resulted in share prices of Tencent, NetEase and Bilibili falling through the floor as investors panicked. Tencent quickly responded by tightening existing/imposing new restrictions on minors playing Honor of Kings (Wednesday) but I’m sure that the authorities will want more. Investors, and hedge funds in particular, will no doubt be playing the brand new game of “Which industry is China going to kill next” (and shorting the appropriate companies) but it seems that the authorities are concentrating their efforts on companies and sectors with particularly racy valuations (Wednesday). Existing and potential investors in China would be well advised to think first about an industry or companies and whether their values align with President Xi Jinping’s regime – and if they don’t (and have a high valuation) then there’s a chance that they could get a right kicking.

• Fintech really did have some fun this week! After a sluggish start in its recent IPO, Robinhood became its own meme stock (Thursday) as superstar investor Cathie Wood of Ark Invest took a punt on the trading app as it started offering options trading. The share price shot up but then it weakened the following day as it turns out that a number of early investors decided to sell about $6.3bn worth of shares over time! No doubt a lot of the investors who bought the previous day were mightily annoyed about that. The timing seems pretty darn fishy to me…Robinhood fans will probably say that this is not a big deal and now that it’s out in the open, everything should be OK now but haters will say this is typical of a meme stock and that it’s all part of the fun of buying into something that is inherently rather risky and prone to regulator intervention.
• Square bought Afterpay in a $29bn all-share deal (Monday), which is likely to shake things up in the world of Buy Now Pay Later (BNPL). I would have thought that Klarna should be getting increasingly nervous given that Apple is working with Goldman Sachs on another BNPL service called Apple Pay Later and banks should also be concerned about such developments as you would have thought that their credit card businesses could be losing out.

• Tesla had a fire at a major battery installation in Australia (Thursday) that was due to be operational this summer, but this will now be delayed. Such battery fires are incredibly difficult to put out – a few months back, a crashed Tesla Model S took eight firefighters seven hours to put out, using 28,000 gallons of water in the process (Monday) – and we saw that, last month, GM recalled all 69,000 Chevvy Bolts it sold between 2017 and 2019 following cases of batteries combusting (Monday). I don’t think that there are enough cases yet for spontaneously combusting batteries to put people off buying EVs per se, but it is a situation worth monitoring.
• On the subject of charging, it was interesting to see a British start-up, called Myenergi, aiming for an IPO (Thursday), although it could still go down the private equity route. It is known for making car chargers that run off roof solar panels.
• It was also really interesting to see that Nissan is involved in thoughtfully recycling Nissan Leaf batteries (Thursday) and putting them to good alternative uses. Given that hardly any batteries are recycled at the moment, this is a decent alternative, but better and more longer-lasting solutions need to be found as EV demand is going to go up considerably over the next few years.
• In power generation more generally, Rolls-Royce got the go ahead to make mini nuclear power plants (Wednesday) and its chief exec reckons this business has the potential to eclipse its engines business (Friday).

• M&A activity proceeded apace. PepsiCo offloaded brands including Tropicana (Wednesday) as part of a broader plan to focus on less sugary beverages, Sanofi bought partner Translate Bio (Wednesday) because it really wants to explore mRNA tech for vaccines and the latest figures show that UK firms have seen a record number of approaches from foreign firms (Wednesday). Parker Hannifin’s takeover bid for Meggitt (Tuesday) illustrates that very point, as does the fact that posh athleisure brand Sweaty Betty was snapped up by American firm (Wednesday).
• Banks continued to make the headlines this week as HSBC saw its profits quadruple (Tuesday), Goldman Sachs decided to up its pay for junior bankers (Tuesday) and although bankers have been pushing for removing bonus caps post-Brexit to attract more talent (Monday), Rishi Sunak was having none of it (Tuesday).
• In the gig economy, Uber’s ridership increased (Thursday), South East Asian ride-hailer specialist Grab has been held back by Covid restrictions in its markets (Tuesday) and there are plans afoot in New York to level the playing field in food delivery (Tuesday) which could have wider implications if widely adopted.
• In automotive-related news, there were solid performances from Stellantis (Wednesday), GM and Toyota (Thursday) and the industry deepened its commitment to EVs (Thursday) while UK online secondhand car specialist Cazoo put in a strong performance (Tuesday) thanks to the red-hot used market being boosted by customers being unable to buy new cars because of the semiconductor shortage. The weakness in new cars sales in the UK was highlighted by the latest figures from the SMMT (Friday).

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

I thought that the most impressive “alternative” story this week was Baker’s mind-boggling cakes look so real people can’t tell if they’re sweet or savoury (The Mirror, Courtney Pochin). What a talent!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

• US Q2 GDP growth was slower than expectations (Friday), which probably takes a bit of the pressure off the Fed to increase interest rates to calm inflation. In Europe, business confidence in Germany is weakening (Tuesday) according to the latest Ifo survey but then again its latest rate of inflation is at its highest level since 2008 (Friday). France managed to get a watered-down version of its “health pass” legislation approved (Tuesday) after a lot of push-back and protest to the original version. Meanwhile, the UK is growing at its fastest pace for 80 years (Monday) according to the EY ITEM club. The British financial regulator, the FCA, relaxed rules on SPACs, making this an easier path to listing (Wednesday), but the British are becoming less amenable to China as ministers called for limiting China’s involvement in our nuclear power generation industry (Monday), which kind of follows on from Boris Johnson recently ordering a review of the purchase of Newport Wafer Fab (Thursday) by Nexperia, which is owned by Wingtech, a Chinese company.
• Bitcoin jumped after a job ad from Amazon (Tuesday) said that the company was looking for some to “develop Amazon’s digital currency, blockchain strategy and product roadmap”. This was interpreted as meaning that Amazon is on the cusp of accepting Bitcoin, hence it’s jump in value! If Amazon does ever accept it, though, it will be a huge moment and will probably catapult the cryptocurrency into the stratosphere 🚀🌚! It was also interesting to see that the Chinese authorities are forcing Ant Group’s Alipay and Tencent’s WeChat to take part in the development of a digital Yuan (Monday). Given the companies’ policies thus far of essentially making their entities walled gardens, this is quite a shocking development as it is a bit like forcing turkeys to vote for Christmas! Also, you would have thought that once they pass the Alipay/WeChat test, China’s digital currency will be ready to roll. Its crackdown over the years on Bitcoin in particular is potentially clearing the way – and I think that if China rolls out a cryptocurrency, other countries will soon follow as they won’t want to be left behind.

• China’s tech crackdown continued as China’s Ministry of Information Technology said that it will make errant tech companies change their behaviours regarding user rights and data utilisation within six months – or they will face the consequences (Tuesday). This is why the share prices of companies like Tencent and Meituan, who are expected to be in the firing line, absolutely tanked. Interestingly, one of China’s most recent targets, Didi, is considering taking itself private (Friday) as a way to appease the authorities as well as shareholders. However, even more shocking than this, Chinese authorities turned around and essentially killed their $100bn edu-tech industry at a stroke (Tuesday) as they decreed that any company teaching the national curriculum would no longer be allowed to make profits, raise capital or list on overseas stock exchanges – nor will they be allowed to accept foreign investment! It looks like this is all part of a general campaign by President Xi Jinping to bring corporate China (and its education system) under control. This is a very dramatic development for overseas investors who have already put money into the sector – and it doesn’t bode well for investment in China generally as everyone will now be second-guessing who is going to be next to come under fire.
• Meanwhile, Apple, Google and Microsoft reported fat profits (Wednesday), as did Facebook (Thursday), although the latter warned that it might be in for a rough ride from regulators over the coming months. On the hardware side of things, Intel set out its aims to be the biggest chip company in the world (Tuesday) while Samsung reported quarterly profits up by 73% as chip sales were stellar (Thursday), more than compensating for the rather more sedate performance of its smartphone business.
• Elsewhere, Robinhood had a pretty rubbish market debut this week (Thursday) as it fell below its IPO price that was itself at the bottom end of the stated range. The co-founders don’t care though, as they made an absolute mint 😂!

• Supply chain disruption is continuing. Freight costs are sky-rocketing (Thursday), UK builders reckon that current shortages of materials – such as bricks, cement and timber – will continue for the next six to nine months (Monday). In the US, school cafeterias are facing shortages of food for kids’ lunches ahead of them going back-to-school (Monday) and airlines are facing fuel shortages (Wednesday) due to not enough lorry drivers to transport fuel and existing fuel stocks being prioritised for planes involved in fighting current wildfires.

• It seems like the UK residential property market is turning a corner. Zoopla said that house prices rose strongly in June – to the extent that they are now about 30% above what they were pre-2008 crisis (Tuesday)! However, Nationwide figures point to a notable slowdown in momentum in July (Thursday), which suggests a repeat of what happened leading up to the original stamp duty holiday deadline (before it was pushed back). House prices suffered their biggest fall in a year – so things could be getting quieter over the summer months…
• Banks seemed to have a good week this week! Deutsche has such a good quarter that it abandoned cost-cutting plans (Thursday), Santander benefited from people buying houses and cars (Thursday), Barclays had a rebound (Thursday) and even Metro seems to be turning things around (Thursday)! Lloyds Bank upped its full-year forecasts (Friday) and US financial group Raymond James’ announced intentions to purchase Charles Stanley (Friday), the 229-year-old City stalwart, for £279m in the latest deal in the rapidly-consolidating wealth management sector.

• Luxury goods are flying off the shelves according to LVMH (Tuesday) and Gucci owner Kering (Wednesday), while at the other end of the scale, B&M is worried about tightening margins (Tuesday) as input prices continue to rise. Their margins are already pretty skinny so the scope for absorbing higher costs are very limited.
• In supermarkets, Tesco is offering golden hellos to lorry drivers (Wednesday) in order to attract them (!) and Morrisons gets more flak from whinging investors (Wednesday) who are pushing for a higher price from Fortress/someone else.

• Battery recycling start-up Redwood Materials has just raised a ton of cash (Thursday) to transform the US supply chain for EVs giving the company an implied value of $3.7bn! Given that less than 5% of EV batteries get recycled at the moment, there is going to be a huge need for this. Speaking of batteries/charging, it’s interesting to see that Dutch electric vehicle charging group Allego has just agreed to do a SPAC merger with Apollo Global Management’s Spartan Acquisition Corp III (Thursday).
• VW announced a disappointing performance in China (Friday) and vowed to try harder in the world’s biggest car market. Asia now accounts for about 50% of total profits, so it needs to sort itself out pronto. It seems that younger Chinese prefer to buy domestic, but older (and probably more affluent) Chinese still like a bit of foreign luxury, which helped Benley’s sales there (Friday).

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story this week was most definitely Japan’s brain wave-reading cat ears are back, with a brand-new twist! (SoraNews24, Casey Baseel). A great invention that we never knew we needed!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

• GLOBAL MARKETS had a wobble at the start of the week (Tuesday) on fears of the impact of the delta variant, but then they bounced back on optimism about the US economy (Wednesday).
• IN OIL – OPEC managed to hammer out an agreement to increase oil production (Monday), deciding to raise production by 400,000 barrels of oil per day. This was good (for OPEC) because it keeps everyone together, meaning that the price won’t start getting all volatile when rebel members just go out and produce whatever they want.
• VACCINE/HEALTH PASSPORTS FEATURED THIS WEEK – as vaccine passports became law for the first time in England (Tuesday). BoJo said that from the end of September anyone going to a nightclub would have to prove that they’d been double-dosed. It’s likely that this will spread to pretty much anything with a crowd (e.g. concert venues, theatres, sporting events etc.). Over on the Continent, the French government is introducing “health passes” (Tuesday) that will be needed to enter bars, restaurants, shopping centres and long distance trains. Failure to check health passes will result in €45,000 fines and a year in prison 😱. Governments don’t need to make it illegal to make people get vaccinated – but they can make you life much more miserable if you don’t.

• The week started off with the tragic floods in Germany (Monday) and Chancellor Merkel said that “We have to up the pace in the fight against climate change”. The German government pledged €200m in flood aid (Thursday), which is in addition to the €250m promised by regional governments. Given the fact that the government hasn’t covered itself in glory in the handling of one of Germany’s biggest natural disasters for the last 100 years, it’s surprising that the opposition parties have not made much ground.
• It was perhaps rather poignant to see a report by British insurer Aon saying that insurance payments were going to be at a ten year high this year (Thursday) due to claims resulting from the sheer number of natural disasters so far this year. How ironic, then, that billionaires were playing spaceman (Monday) in rockets that belch out 200-300tons of CO2 into the atmosphere per flight versus long-haul flights that emit 1-3tons! Branson and Bezos seem to be keen on damaging the planet. OK, so Musk is also partaking in this galactic 🍆-swinging contest, but at least he’s offsetting his jaunts with EVs and businesses like Tesla Energy!
• There was a really interesting article on the urgent need for the UK to narrow the gap between power generation and power retention in battery technology (Monday) in order to smooth out the provision of electricity – but it seems that the Americans may already have a solution in the form of a four-year-old startup called Form Energy (Friday) which makes cheap batteries that can discharge power for days using iron! Given that wind farms in the UK are regularly paid to switch off on particularly windy days because the grid can’t cope with the sudden surge (!), you can see just how much a necessity it is to be able to hang on to the electricity that we do generate.
• It was interesting to see that Mercedes has bought British electric motor start-up Yasa (Friday) for an undisclosed sum, in its ongoing effort to boost its technological expertise. Yasa’s axial flux motors are smaller and more efficient than other designs and it will now supply its motors across a range of new electric models in Mercedes’ AMG range.

• Consumer confidence is returning to pre-Covid levels (Monday) according to a Deloitte study and a PwC report said that consumer sentiment is at its highest levels since 2008 (Monday)! And if that wasn’t enough positivity for you, a survey from GfK showed that households are feeling increasingly confident about their own finances and the wider economy (Friday)! This may be due in part to house prices rising to new highs in June, according to Rightmove (Monday), something backed up by HMRC data which showed that June was the busiest month on record (Thursday) for residential sales.
• On the other hand, we’re not spending money on Netflix as it reported one of its weakest ever quarters for new subscriber numbers (Wednesday). I think that Netflix – unlike, say, Disney+ – has been around for quite some time and it’s entirely possible that lockdown was a double-edged sword in that more people wanted it, but they also had more time to consume the contents. This means that people may now be jaded with its current offering which means that it might be a good idea for Netflix to buy a studio (Thursday) to get a sudden injection of good quality new content. On the other hand, HBO Max announced that the number of new subscribers on its platform increased (Friday).
• It wouldn’t be a Watson’s Daily without some chat about inflation 😂 and so, in order not to disappoint you, I thought I’d mention the fact that Unilever said that it is facing the biggest cost rises in a decade, and they’re squeezing operating margins (Friday). At the moment, it’s absorbing these costs, but it sounds like price rises are going to be passed onto the customer very soon! More upward pressure on inflation, no??

• Kantar data showed for the first time ever that online grocery sales actually fell (Wednesday)! Talking about online grocery retailers, Ocado had to deal with two big fires at one of its warehouses (Monday), which wasn’t a good look given that it is trying to sell its tech expertise to other retailers around the world. I’d say this is a blip for now but Ocado will want to get that sorted in order to calm existing customers and stop making potential customers nervous. In other grocer-related news, Morrisons is testing out a cashierless format – not using Amazon tech – (Monday) and the Fortress offer for Morrisons got a shot in the arm from Apollo (Wednesday). In the meantime, Brexit red tape is becoming more serious in Northern Ireland (Thursday).
• In other retailer news, Next was confident enough to raise its forecasts (Thursday) and Wickes saw strong like-for-like sales growth over Q2 (Thursday) as it continued to benefit from the wave of DIY popularity powered by a red-hot property market.

• In IPO NEWS, Robinhood announced that it was going for a valuation of up to $35bn in its upcoming flotation (Tuesday) as it tries to take advantage of the retail investor hype it has created. Talking about companies trying to surf a wave of popularity, PureGym, the UK budget gym chain, is now seeing demand rising above pre-Covid levels and is considering a potential IPO (Wednesday). British private equity firm Bridgepoint had a strong market debut (Thursday), which no doubt goes some way to restoring the London Stock Exchange’s mojo that has taken a bit of a battering in the last few months.
• Meanwhile, in M&A, Tencent said that it was buying British games developer Sumo (Tuesday) and Zoom announced a $14.7billion deal to buy Five9 (Monday), a company that provides cloud-based customer service software.
• In TECH, Google and Jio have teamed up to make a smartphone for the masses in India (Wednesday). It’s called the JioPhoneNext, and it is thought that it will be priced at under $50. The Indian market clearly has potential but even a smartphone for under $50 is likely to be too pricey for mass-adoption.
• In SEMICONDUCTOR NEWS, Intel said that the current global semiconductor shortage could potentially run into 2023 (Friday) but that supply shortages should start to ease later on this year, something that was echoed by TSMC recently.

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story this week was most definitely Japan’s brain wave-reading cat ears are back, with a brand-new twist! (SoraNews24, Casey Baseel). A great invention that we never knew we needed!

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.

• In CHINA, exports shot up by 32.2% in June vs the previous year (Wednesday), way above expectations of 23% – a good sign, as China is seen as being the world’s factory. China’s GDP growth rate slowed down (Thursday) but was in line with expectations given that Q1’s growth rate of 18% was clearly unsustainable!
• Meanwhile, inflation chat continues to stay high on the agenda given that US inflation rose at the fastest rate since August 2008 (Wednesday), up by 5.4% vs consensus of 4.9%. Pressure continues to mount on Fed Chair Jerome Powell, but it’s also getting more intense on Bank of England governor Andrew Bailey as his deputy touted a year-end inflation level 33% higher than the official target (Thursday) – and that was shortly followed by one of the members of MPC saying that UK monetary policy needs to be tightened (Friday).

• The Great Tech Clampdown of China continues as Chinese authorities want to impose checks on overseas listings (Monday) as the Cyberspace Administration of China announced that Chinese companies that have over one million users will have to pass a security review before listing! This is going to mean that the vast majority of tech companies with overseas listing ambitions are going to face a huge bottleneck! Newly-listed ride-hailer Didi has already felt CAC’s wrath and is currently under investigation, a situation that rivals including Caocao, T3 Chuxing and Meituan are all trying to exploit (Wednesday)
• As if that wasn’t hard enough, the Chinese government’s new guidelines say that key industries like telecoms are going to have to spend at least 10% of their IT budgets on cyber security over the next two years (Thursday), so domestic players like Venustech and Nsfocus Technologies could potentially close the valuation gap on their American equivalents Fortinet and Palo Alto Networks. Cyber security is a hot area elsewhere – the UK’s Darktrace has seen its share price double since it listed in April (Friday) and London-listed Avast is seeing takeover interest from Norton (Friday) at a level that many think is likely to attract competing bids.
• Google was fined €500m by the French regulator (Wednesday) for violating an order to agree licensing deals with publishers. It now has two months to come up with a solution or face a fine of up to €900,000 a day.

• Household savings were up during lockdown (Monday) but they weren’t evenly spread as the richest 20% of households were four times more likely to have saved more under lockdown than the poorest 20% (but that really should be no surprise because it is waaaaay easier to make money if you’ve got money, no?). The middle classes were among the biggest winners because they were most exposed to rising property prices.
• In jobs, the latest ONS figures showed that Britain had nigh on one million job vacancies last month (Friday), powered by the shortage of delivery drivers, hospitality staff, agricultural workers, care workers etc. – which has led to higher pay rates in these areas (Monday). The shortage of workers in areas like hospitality is being made worse by increasing numbers of people being pinged by the NHS app (Friday) but recruiter Hays is pretty optimistic about the jobs market generally (Friday) although it warned of wage inflation. Confusion and frustration resulted from BoJo’s newly announced guidelines (Wednesday) but you can understand why neither side wants to take responsibility (if the government provides clear guidelines it will get sued if people get Covid, but if they leave it to businesses they will get sued instead). Magic Circle law firm Slaughter & May is providing a number of working options for its staff (Wednesday), but I think they are ultimately doomed to failure IMO because working conditions are often more of a reflection of what their clients expect rather than what they do themselves.
• SO HOW ARE WE SPENDING ALL THIS MONEY?? Barclaycard figures say that we spent 38% more at pubs during the Euros footy tournament (Tuesday) and because more bars, cafés and restaurants have been opening up Pepsi increased its full-year forecasts (Wednesday). The uptick in leisure travel is emboldening some – as Ryanair announced it was going to be hiring 2,000 new pilots over the next 3 years (Tuesday) and Center Parcs announced it was going to be developing a new UK site (Tuesday), presumably to take advantage of the uptick in staycations.
• As for retailers themselves, the latest BRC figures show that UK retail sales rose at the fastest rate in Q2 since at least 1995 (Tuesday) due to lockdown lifting, England at the Euros and general joy! Another sign that retail is recovering is that landlord British Land said that it is collecting more rent from more of its retail tenants (Wednesday). In terms of individual retailers, Kingfisher – the owner of B&Q and Screwfix – upped its guidance for the full year (Thursday) as the DIY wave continues, Topshop is to return to physical stores in the US (Tuesday) thanks to a deal between “new” owner Asos and Nordstrom but then Superdrug announced just how bad the previous year has been (Tuesday) and the John Lewis Partnership announced 1,000 job losses (Thursday) as part of its cost-cutting plan.
• In real estate, estate agent Knight Frank said that house sales were down 60% below average last month (Monday) as the end of the stamp duty holiday looms but then Bank of England figures said that house prices were still going up (Thursday). I think we’ll soon reach a point where sales will dry up as the stamp duty holiday ends and activity slows down overall as everyone waits to see what the effect the end of furlough will have. I think that if the expected sudden spike in unemployment doesn’t happen (of if it’s not as bad as everyone is expecting) the housing market could get a second wind. On the commercial property side of things, Blackstone appears to be shifting the weighting of its portfolio (Monday, Friday) and there’s particularly strong demand for drive-throughs in the UK (Monday), which I think is a bit puzzling because I just don’t think they make much sense in the UK. They take up too much room and if you get that “McDonald’s Feeling”, you either go there or get it delivered – why would you get in the car and get it? I think that standalone doesn’t make sense – but if it’s attached to something else (for instance what EG group will be doing with Leon restaurants), it may do OK. But that’s just my opinion!

• It was reporting week for US banks this week – and Goldman Sachs, JP Morgan (Wednesday), Bank of America, Citigroup, Wells Fargo (Thursday) and Morgan Stanley (Friday) pretty much all saw trading levels slow down but advisory fees on M&A and IPOs go up strongly. Investment manager Vanguard made its first ever acquisition (Wednesday) in order to broaden its product expertise. Elsewhere, it was really interesting to see that Apple is teaming up with Goldman Sachs to provide a “Buy Now, Pay Later” service (Thursday), which should get Klarna worried.
• In the UK, insurance company Admiral said that it expected higher profits as claims were really low under lockdown (Tuesday), Revolut got a fat valuation in its latest funding round (Friday), and the Bank of England announced that it is now going to allow shareholder payouts (Wednesday) because it feels that the UK’s biggest lenders are resilient enough to economic risks to resume such actions. This follows similar moves in the US and Europe.

• There was some particularly good news this week for automakers because TSMC said that we’ve now passed the worst of the semiconductor shortage (Friday) and that supplies will be rising. It was also interesting to see that Intel is thinking about making an approach to specialist chip manufacturer GlobalFoundries (Friday) in a bid to broaden its chipmaking expertise and production capacity.