Friday 16/12/22

  1. In MACROECONOMIC NEWS, interest rates get a 0.5% boost from the ECB, Bank of England and the Swiss National Bank
  2. In CONSUMER & RETAIL NEWS, US consumers spend less, UK consumer confidence hits a 50-year low, we look at the impact of the latest interest rate hike, Currys cuts profit forecasts and Inditex “beats” H&M
  3. In MISCELLANEOUS NEWS, Adobe Q4 revenues rise, Northvolt pushes Europe, the RMT gets isolated and there’s some important news regarding Mini Cheddars
  4. AND FINALLY, I bring you Donald Trump digital trading cards and that camping guy with all the gear..

1

MACROECONOMIC NEWS

So interest rates go up…

📢 I’m going to be doing my annual P/Review on Thursday 5th January where I will roundup the news of the year in 2022 and then outline predictions for themes in 2023. In order to attend that, you need to register HERE. The idea is that this will set you up for the year by putting everything into context for you and giving you a heads-up of what to expect in the coming year! This will be backed up by publication of Watson’s Yearly, which is the more detailed written version of the presentation that also contains a roundup of every G20 country and how my predictions from the previous edition performed! There is nothing like this anywhere else, and it will help your understanding of what’s going on enormously so if you’d like a spot, please sign up!

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

In ECB raises rates to 2% and warns of more increases to come (Financial Times, Martin Arnold and George Steer) we see that the ECB followed the lead of the Fed and increased its interest rates by 0.5% to 2%. The ECB president Christine Lagarde warned that there would be more rises to come and that they would continue into next year. She specifically said that there would be at least two more 0.5% increases in February and March.

Watson’s Daily will be going into Christmas/New Year hibernation until the beginning of January. During this time I will be a) spending more time with family,  b) mostly getting up later than 4am (yay!) and c) writing Watson’s Yearly. Watson’s Yearly is a huge undertaking, but it will be ready for you to access at the beginning of January. This does a month-by-month review of 2022, has a calendar of key events for 2023 and identifies themes to watch out for in 2023. It also has a review of each G20 country and key information for 2023 as well as me doing a review of what I said last year and whether I was right or not! There is nothing like this anywhere else. In the meantime, I will be publishing other content on here and on social media – so please watch out for this! I’d like to say an absolutely massive thank you to you all because subscribers are what keeps Watson’s Daily alive! There are more developments in the pipeline that will continue to enhance what you already get on Watson’s Daily! For now, though, I hope that you have a very merry Christmas and a Happy New Year! Happy Holidays one and all!

Bank of England raises interest rates to 3.5% in ninth increase in a year (The Guardian, Phillip Inman) shows that the UK also raised interest rates for the ninth time in a year – this time by 0.5%, as per the Fed earlier in the week. The base rate is now 3.5%, the highest it’s been for 14 years. It also warned that more rate rises were likely in the new year. Governor Bailey conceded that there was “the first glimmer” that inflation had started to ease with the annualised inflation rate falling slightly more than the market had been expecting. Some people are interpreting his comments to mean that rate rises will peak below the currently-expected 4.5% by the end of next year.

Then in Swiss central bank lifts interest rate by 50 basis points (Financial Times, Sam Jones) we see that the Swiss Central Bank also increased interest rates by 0.5%, its third consecutive rise to take it to 1%. * SO WHAT? * It seems that pretty much all central banks are now on the same page and I think it’ll be interesting to see who cracks first in terms of who will be the first one to CUT interest rates. For the moment, everyone is trying to curb inflation at the same time. As I keep saying, an end to the Ukraine war next year could change things completely, depending on how it actually ends and who is in charge of Russia.

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

2

CONSUMER & RETAIL NEWS

Consumers feel the heat, Currys limps on and Inditex “beats” H&M…

American shoppers cut spending (The Times, Callum Jones) highlights the fact that US retail sales fell by 0.6% last month, which was more than the market was expecting. It seems that inflation is hitting sentiment at the start of the holiday shopping season. Spending was cut most notably in electronics, clothing and cars.

Meanwhile, back home, UK consumer confidence at its lowest sustained level for nearly 50 years (Financial Times, Valentina Romei) cites the GfK consumer confidence index which shows that UK consumers are resigning themselves to a sustained recession. The study measures how people feel about their personal finances and wider economic prospects. What the interest rate rise means for borrowers and savers (The Guardian, Rupert Jones) does a decent job of spelling out what the interest rate means in practical terms for individuals but, TBH, it’s not exactly rocket science! Basically, debt is going to cost you more, whether that’s in the form of mortgages (if you are on a tracker) or credit cards (the average interest rate on credit cards increased from 18.96% in September to 19.31% in October – the highest since records began!). Tricky times.

In retailer news, Currys says more customers using credit in cost of living crunch (The Guardian, Kalyeena Makortoff) highlights current consumer trends as some customers are spending less and opting for cheaper models to help them get that retail therapy

high with less pain. Interestingly, though, the retailer noted that customers were making more tech purchases than they were before the pandemic hit and some were buying more energy-efficient appliances to cut down on their gas and electricity usage. 17% of customers are buying goods on credit versus around 12.1% last year. The company fell into a loss in the six months to the end of October, with the biggest impact coming from the writedown it had to make on the value of its 2014 Dixons Carphone Merger. Currys: impairment confirms costly Dixons deal (Financial Times, Lex) says this writedown just confirms that it overpaid in the 2014 deal but also observes that the performance of its Nordic business has been disappointing, something which will continue to hold back progress as will the ongoing cost of living crisis. * SO WHAT? * Given the economic backdrop and a weakening housing market, the attractions of a white goods and electricals retailer are going to be limited. If consumers can weather the storm, though, I suspect that there will be a lot of pent-up demand to boost the firm’s prospects when interest rates eventually start to fall (and they will)!

Then in H&M/Inditex: inventory overhang weighs on profit outlook (Financial Times, Lex) we see how the performances of both apparel retailers differed. On the one hand, H&M has suffered because it was stuck with big inventory and the cost of exiting its Russian business whereas Inditex has put in a solid performance. * SO WHAT? * This just goes to show how important inventory control can be (H&M made the mistake of over-ordering, for instance) and Inditex appears, for the moment, to be doing a better job.

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

3

MISCELLANEOUS NEWS

Adobe sees strong demand, Northvolt puts the pressure on, RMT looks increasingly isolated and Mini Cheddars embody shrinkflation…

In a quick scoot around some of today’s other interesting stories, Adobe fourth-quarter revenues up 10% as demand remains strong (Wall Street Journal, Sabela Ojea) shows that the company announced profit guidance above market expectations for the current quarter, which was particularly impressive as other software companies – like Salesforce, Okta and others – have reported that customers were getting more cautious and taking longer to sign deals.

In Europe, Northvolt’s new chair urges Europe to follow US lead on battery subsidies (Financial Times, Richard Milne) shows that Europe’s biggest battery sector player named a very experienced chair (former chair of Siemens and CEO of SAP) who will put pressure on the EU to put up as many subsidies as the US has done to make sure green companies don’t go stateside. The company already has over $55bn of orders from customers

including BMW, VW and Volvo. Oooh. Things just got very interesting after we saw the other day that the EU is having trouble with this

Meanwhile, RMT left isolated as fellow union ends strike (Daily Telegraph, Oliver Gill) highlights the fact that another union representing railway workers, the Transport Salaried Staffs Association (TSSA) has agreed to take a deal from Network Rail that was offered to the RMT on Monday and rejected. Maybe this suggests there’s light at the end of the tunnel in the current rail misery?

Then in More mini, less cheddar as Mini Cheddars shrink in size (Daily Telegraph, Daniel Woolfson) we see the shocking news that Mini Cheddars have had their package size reduced and have less cheese in them as they – along with Twix, Magnum, Flora and Cadbury Dairy Milk – have become victims of “shrinkflation” where manufacturers try all sorts of ways to take the edge off rising ingredients and energy costs. Bags have become 8-10% smaller. Oh the outrage!

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

4

...AND FINALLY...

…in other news…

So far, I have suggested a few Christmas gift ideas (actually, not as many as I normally do at this time of year), but for that special someone in your life, maybe you want to take it up a notch and buy them Donald Trump NFTs to bring some much-needed light in the current gloom in Former US President Donald Trump launches $99 NFT collection (BBC News, Annabelle Liang). I don’t know what gift would be worse – this or one of those Putin calendars with the Russian leader parading around with his shirt off! Let’s hope that British politicians don’t use this as inspiration. Mind you, maybe Matt Hancock might try something along these lines after his

recent jungle success (actually I just checked and there is a Hancock calendar, but the language used in its promotion may be a bit inappropriate, even for this section 🤣)…

If this is too much for you, maybe put this video on in the background. It’s that Korean guy again with all those amazing camping gadgets that I featured a few months back. He seems like the sort of bloke you would want to go camping with if you don’t really like camping! Interesting way of reheating a pizza…

Watson's Daily is a hard-working start-up striving to help people get a better understanding of the business world. I would really appreciate your involvement in spreading the word and recommending it to your friends, colleagues, relatives etc. by clicking and sharing on the links below. Please help me to help you and I will throw in a small thank-you!

Some of today’s market, commodity & currency moves (as at 0633hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq*DAX *CAC-40 *Nikkei **Shanghai **
7,426 (-0.93%)33,202.22 (-2.25%)3,895.75 (-2.49%)10,810.53 (-3.23%)13,986 (-3.28%)6,523 (-3.09%)27,513 (-1.87%)3,168 (-0.02%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
$75.701$80.807$1,781.431.220611.06540137.2331.1456717,395

(markets with an * are at yesterday’s close, ** are at today’s close)