Friday 22/04/22

  1. In TECH & STREAMING NEWS, an imminent new law is about to hit Big Tech, Musk ups the stakes for Twitter, Netflix ponders its future and CNN+ gets cancelled
  2. In CONSUMER NEWS, UK consumer confidence drops and investment loses momentum but Hays reckons the job market will boom and the travel industry is confident for next year
  3. In MACRO & COMMODITIES NEWS, governor Bailey eats humble pie and metal prices look set to rise
  4. In INDIVIDUAL COMPANY NEWS, Nestlé does nicely, Amazon relents and JBS has shocking emissions
  5. AND FINALLY, I bring you a weekend idea if you like dressing up…

1

TECH & STREAMING NEWS

So the EU gets punchy, Musk ups the ante, Netflix mulls the future and CNN+ gets cancelled…

EU to unveil law to force Big Tech to police illegal content (Financial Times, Javier Espinoza) shows that the EU is due to unveil a new law today, the Digital Services Act, that will shift the onus of responsibility onto Big Tech to do a proper job of policing illegal content. Under the new law, targeting users based on their religion, gender or sexuality will be banned and it will detail rules on how Big Tech will keep online users safe. This will include the banning of dark patterns, which are manipulative techniques that draw people into clicking on certain content. Medium-sized platforms will be given a bit longer to comply with the new legislation but the likes of Google and Amazon will have to comply straight away. The whole thing will be funded by Big Tech, who will pay in €20-30m in annual fees and if they are in breach of the laws they can be fined up to 6% of global turnover. * SO WHAT? * Details can still change at the last minute, but momentum has been gathering on this for a while. It will be interesting to see whether the Biden administration pushes back on this, complaining that it “unfairly” targets American interests. Having said that, he is not averse to cracking down on Big Tech either, but given his rather precarious position at the moment, it depends on how much he needs Big Tech to be onside.

Elon Musk unveils $46.5bn financing package to fund Twitter bid (Financial Times, Antoine Gara, Eric Platt and James Fontanella-Khan) shows that Musk is not letting go of Twitter as he announced a major financing package to keep his takeover bid alive. He would himself be responsible for financing over 70% – but then Elon Musk poised to collect $23bn bonus as Tesla beats targets (The Guardian, Rupert Neate) shows that he is going to be coming into a fair amount of money (!) soon as his results-based bonus kicks in. There has been no formal response from Twitter thus far. Twitter: the singular assurance of Elon Musk’s self-funded M&A blockbuster (Financial Times, Lex) talks about the finances of the deal and observes that Twitter really needs to take this seriously (because he is clearly not going away) and think about what it does next: hold out for a higher bid from Musk, find an alternative buyer or decided to continue as is. * SO WHAT? * I still wonder what Musk is going to get out of Twitter, which is currently a bit of a fading platform. As the saying goes, past performance is not always an indicator of future performance and although this is a man who is clearly a genius and made of stern stuff, I don’t think even he can run multiple massive companies equally successfully for a sustained period. Will Twitter develop on its own or will it become like a common denominator “hub” for his other interests in Tesla, SpaceX, The Boring Company?

I’ve been talking a lot this week about the demise of Netflix and Billionaire Ackman cancels Netflix (The Times, Callum Jones) at once explains one of the reasons why the share

price has cratered so badly (his Pershing Square Capital Management hedge fund sold its stake at a $400m loss, according to some) and the doubts that cloud its future now that it has reached a strategic crossroads. Ackman said that it is very difficult to know how things may turn out given that everything is now up in the air and, therefore, he wanted out just three months after ploughing enough money into the company to become a top-20 shareholder! Netflix, facing reality check, vows to curb its profligate ways (Wall Street Journal, Joe Flint) is a really interesting article that does a decent overview of the story so far with Nextflix and mulls over its next moves. It is reviewing current production deals to prioritise programmes with the biggest return (it does this by using an internal metric: the ratio of a programme’s viewership to its budget), looking to introduce a new lower-priced version with ads (I don’t know whether subscribers will like this) and monetise households that share passwords (I bet they will lose LOADS of subscribers on this because when they are prompted, they will just bail IMO). It is also going to rein in the premiums it pays to licence content, review contracts with star producers that make content specifically for them, reduce the number of shows in second and third seasons and revamp their scheduling. * SO WHAT? * Netflix is still the biggest streamer with over 220m subscribers, but then its closest rival, Disney+ already has 130m subscribers and is targeting 230-260m by the autumn of 2024. All streamers are finding it harder to win (and keep) new subscribers these days. I really think that one thing they SHOULD do – but aren’t – at the moment is to revert to releasing series slowly rather than all at once. If the series gathers pace, then you can get real excitement behind it by releasing, say, one a week (think things like Game of Thrones, Bodyguard, Vigil etc.). I know this is somewhat old school but I think that it will reduce churn because, otherwise, you’ll just get subscribers hopping from one provider to another.

Talking about streamers fading, CNN cuts streaming service after a month (Daily Telegraph, Giulia Bottaro) shows that the CNN+ streaming service only recently touted as being the future for CNN, is going to shut down on April 30th – a shocker considering that it only launched on March 29th 😱! It has been offering a mix of lifestyle shows and traditional news, but was only used by fewer than 10,000 people at anyone time for the princely sum of $5.99 per month. * SO WHAT? * As this shows, streaming is NOT the answer to everything. The initiative was championed by the old guard of the company who essentially became victim to the new-boss-comes-in-sacks-everyone-and-then-gets-his-mates-in schtick. I think that there soooooooo many news sources out there that a standalone service is always going to be a tough one to crack. 

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 NEWS

Confidence worsens but it’s not all bad…

UK consumer confidence even lower than in 2008 financial crisis (The Guardian, Larry Elliott) cites the latest GfK research which shows that the cost of living crisis is continuing to destroy consumer confidence and Investment falls back as cost of living increases (The Times, Patrick Hoskings) shows that even those with money to play with are putting less money into the stock market, according to investment platform AJ Bell in its latest trading update.

It’s not all bad, though! Recruiter Hays predicts strongest jobs market since Lehman collapse (Financial Times, Leke Osos Alabi) shows that volume generalist recruiter Hays reckons that there will be a jobs boom post the “Great Resignation”. The battle for talent has remained red-hot and Hays has been raking in the placement fees over the

last quarter. Tech is particularly hot and those in some specialist areas like cloud and software engineering have seen packages rise by 25-40%. * SO WHAT? * This certainly seems to be the case at the moment and I really do think that things could rebound very strongly IF the war ends sooner rather than later – but particularly so if Putin ISN’T Russia’s leader for whatever reason. Employees who really are suffering from below-inflation pay rises need to look at jobs elsewhere as that seems to be one of the only ways to beat inflation at the moment.

Then in Travel to hit 2019 levels next year (Daily Telegraph, Charles Hymas) we see that a report by Oxford Economics for the World Travel and Tourism Council (WTTC) reckons that travel and tourism will be back where they were pre-pandemic as continued vaccine rollouts help to prise open borders. Meanwhile, the industry continues to push for a more universally-accepted system of verifying travellers’ health status. Hooray for holidays!

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

MACRO & COMMODITIES NEWS

Governor Bailey warns of higher inflation for longer and metals prices look set to rise…

Given the way that Bank of England governor Andrew Bailey batted away repeated signs and warnings about rising inflation last year, Lifting interest rates too quickly risks triggering recession, says Bank chief (Daily Telegraph, Tim Wallace) shows that he’s now concerned about going too far the other way as UK inflation heads towards 8% – four times more than the Bank’s 2% target. Its Monetary Policy Committee (MPC) has raised interest rates three times on the trot from 0.1% in December to the current 0.75%. Meanwhile, US Fed chief Jay Powell said at an IMF event that a 0.5% interest rate rise is “on the table for the May meeting”. * SO WHAT? * TBF, interest rate changes take a few months to filter down to the “real”

economy, but I am of the opinion that Bailey needs to get his big boy pants on and keep on with the increases as he has proved to be so spectacularly wrong so far. God knows what the ECB is going to do as it sticks with its “genius” zero interest rate policy. ECB chief Christine Lagarde must love the taste of sand as she’s got her head stuck so far in, it will be tricky for her to extricate herself 🤣.

Then in Metal prices to rise as miners warn of slump in production (Daily Telegraph, Rachel Millard) we see that mining giants Anglo American and BHP have been the latest in their industry to announced tepid production results and cuts in full-year guidance. Copper and iron ore will be hit the most and the news comes just a day after rival Rio Tinto simultaneously unveiled a 15% drop in iron ore shipments and the steepest rise in raw material costs since the 1973 oil crisis. More price rises.

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

INDIVIDUAL COMPANY NEWS

Nestle feasts, Amazon relents and JBS emits…

In a quick scoot around other interesting stories today, Nestlé boosts sales with 5% price increase (Financial Times, Judith Evans) shows that yet another consumer goods company is raking in the money thanks to pushing prices up by over 5% in Q1 (P&G announced strong results earlier this week thanks to the same thing) and Nestlé/food inflation: on a Swiss roll pushing through prices (Financial Times, Lex) reckons that the prospects for this company – and others, including P&G, L’Oréal, Danone and Heineken – are going to continue to be good as demand is inelastic. However, they will still have to be careful about how they pass on costs because they can’t keep jacking up prices in perpetuity!

Amazon Prime subscribers will be allowed to buy direct (Daily Telegraph, Giulia Bottaro) is a story that highlights a new development whereby Amazon will let retailers sell directly to Prime subscribers from their own websites as the e-tailing giant tries to fend off growing competition from Shopify. “Buy with Prime” is to be rolled out in the US and will have various others perks such as no-cost fast delivery and free returns. All retailers will have to do is pay

a fee and then display the Prime logo on their online stores. * SO WHAT? * I think it’s really interesting to see that there is a bit of a trend going on with powerful digital shop windows being forced to open up access (e.g. the App Store, Google Play etc.). Given the amount of flak that Amazon has been taking for how it treats third party sellers, I’m surprised it’s taken them it long to do something like this!

Then in Meat firm’s emissions under fire (Daily Telegraph, Hannah Boland) we see that the world’s biggest meat processor, JBS (not to be confused with former/kind-of-reforming boyband JLS), has come under more pressure to sort out its emissions after the latest report from the Agriculture & Trade Policy said that the Brazilian meat company’s emissions have shot up by over 50% in the last 5 years thanks to massive expansion. JBS is now processing 54% more cattle, 67% more pigs and 40% more chickens as a result of this expansion, but JBS says that the reports has got its sums wrong. The company maintains its commitment to get to net zero by 2040 by reducing emissions and offsetting. If it could come up with new anti-flatulence measures for cows, that may help as well…

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!

5

...AND FINALLY...

…in other news…

Stuck for ideas of what to do on a weekend? Don’t worry, I have your back. How about this: Whitby seeks to break new world record for largest gathering of vampires (The Mirror, Julia Banim). I guess you have to be into wearing vampire costumes, though…

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Some of today’s market, commodity & currency moves (as at hrs 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 **
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

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