Friday 22/10/21

  1. In MACRO, ENERGY & CRYPTO NEWS, the US drops its tariff threat, Brazil hits difficulties and the UK’s chief economist, manufacturers and consumers fret while Putin talks gas pressure and over 100,000 go wild for free crypto
  2. In FIN/TECH NEWS, we take another look at PayPal/Pinterest, Facebook’s issues pile up, Google cuts Play Store fees and Snap suffers from Apple-itis
  3. In M&A AND IPO NEWS, FirstGroup offloads Greyhound, WeWork debuts in New York and quantum computing accelerates
  4. AND FINALLY, I bring you Karen’s Diner and a potential weekend project…



So the US calms down on digital tax retaliation, Brazil has problems, the UK continues to wobble, Putin turns the screws and there’s crypto for the masses…

US drops tariff threat after digital tax deal with European nations (Financial Times, Emma Agyemang) highlights an agreement by the US to withdraw the threat of trade tariffs against five nations (UK, France, Italy, Spain and Austria) who have introduced their own digital service taxes on US Big Tech companies. This concession came as the five nations agreed yesterday to give multinationals affected by the changes a credit that could be offset against future tax bills. The US had originally demanded that these countries remove their digital taxes as soon as the OECD deal on minimum tax rates and other rules had been agreed – which happened this month. * SO WHAT? * This seems like a workable compromise, but there is still a danger that the OECD agreement will not be ratified by Congress – and this will lead to renewed trade wars.

Then in Brazil economy officials quit and investors unnerved by welfare spending plans (Financial Times, Michael Pooler) we see that the increasingly unpopular President Bolsonaro, who has his eye on the election next year, has been abandoned by four of his top officials in the economy ministry because it looks like he’s going to breach public expenditure caps in order to boost welfare payments to some of the nation’s poorest families. Before you start to feel sympathy, though, it does look like he is willing to circumvent the rules in order to buy voters and look benevolent in the process. * SO WHAT? * Given that Brazil’s inflation is now in the double-digits and unemployment is still high, many economists are worried that Bolsonaro’s handout will just make things even worse. These are just the latest in a string of resignations in Brazil’s economy ministry and they just pile more pressure on someone who the Senate committee has recommended face criminal charges for alleged offences linked to his handling of Covid.

Back in the UK, BoE economist warns UK inflation likely to hit 5% (Financial Times, Chris Giles) shows that the Bank of England’s new chief economist, Huw Pill, reckons that inflation could hit or even go higher than 5% early next year! The Bank’s latest forecast was for inflation to exceed 4% by the end of this year. The pressure to raise interest rates at

the November meeting continues to ratchet up as UK consumer and manufacturing sentiment takes ‘turn for the worse’ (Financial Times, Valentina Romei) shows how all the rising costs are killing the mood according to a survey by GfK. This is a bit of a shocker in that it is a real contrast to sentiment that we saw over summer that was getting almost boringly positive. On the other hand, when you consider all the supply chain issues and ongoing squeezing of household budgets, you can understand why sentiment has changed.

Talking of increasing pressure, Putin says Russia could deliver 10% more gas if Nord Stream 2 approved (Financial Times, Max Seddon and David Sheppard) shows that Putin is tightening the negotiation screws by saying that his country could boost gas supplies to Europe as soon as the new Nord Stream 2 pipeline is approved by Germany. This would provide significantly more gas at a time of record prices in Europe. * SO WHAT? * In my opinion, Putin knows that he is in a strong position and he is willing to make the most of it! I would do the same if I was in his position. I think that the Americans can bleat all they want about not letting Europe become more dependent on Russia, but it’s just noise as they aren’t doing anything to help the situation apart from whinging. European nations, meanwhile, face increasing economic difficulties and suffering consumers. All the while, the Germans are fiddling about with multi-party coalition that will probably find it hard to decide where to hold its Christmas office party, let alone whether or not it will allow Nord Stream 2 😂.

I thought I’d include More than 100,000 people have had their eye scanned for free cryptocurrency (Financial Times, Miles Kruppa) because it is very intriguing!!! Apparently, a LOT of people have had their eyes scanned using around 30 iris-scanning devices (called “orbs”) that create a unique ID that can be used to collect free digital tokens called Worldcoin. The team behind Worldcoin will be distributing many more orbs over the next few months and the cryptocurrency network (which is built on the ethereum blockchain) is due to debut early next year. They have not revealed how much of the cryptocurrency that users can expect to receive. The whole project is about distributing crypto to the world’s population in a similar way to universal basic income where people are provided on a regular basis with free money. Worldcoin plans on issuing 10bn tokens overall, with 80% going to users, 10% to Worldcoin’s investors and 10% to a foundation that manufactures the orbs and develops the network. * SO WHAT? * I think this sounds really interesting, but the details seem to be suspiciously sketchy to me! Still, it goes to show that the ethereum blockchain continues to evolve…



We look again at PayPay/Pinterest, Facebook’s issues, Google’s “largesse” and Snap’s stumble…

Further to yesterday’s news about PayPal looking to buy Pinterest, PayPal/Pinterest: stick a pin in it (Financial Times, Lex) says that a deal between the two makes strategic sense as it fits in with PayPal’s plan for a “superapp”, 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. PayPal will want to nurture and develop Pinterest’s potential but a $45bn price tag may be a high price to pay.

Criticisms of Facebook just keep on coming and Facebook is so toxic it’s no wonder Zuckerberg wants to drag us into his ‘metaverse’ (Daily Telegraph, Ben Wright) is a pretty damning assessment of the story so far at the social media giant. After the recent outage and damaging revelations from a whistleblower US politicians are once again making noises about breaking the company up and limiting future acquisitions – and now we are hearing that the attorney-general for the District of Columbia is planning on taking Zuck to court on matters pertaining to the Cambridge Analytica scandal a few years back, a rare instance where regulators are going for the founder himself. There is a really interesting chart in this article which also highlights Facebook’s failure to attract a younger audience and the article also suggests that it is increasingly becoming a place where Boomers go to vent

false news and conspiracy theories. If this turns people off going to work for Facebook, the company could be in real trouble. * SO WHAT? * Although Facebook wants to be the major shaper of a meta-future it remains for society to wonder whether it wants a company that plays fast and loose with user data, makes insufficient efforts to moderate its content, encourages discord via is algorithms and undermines democracy to be part of building the future. As for now, Facebook is criticised for high-profile exemptions (The Times, Callum Jones) shows yet another instance where Facebook has been flexible in its morals and How many users does Facebook have? The company struggles to figure it out (Wall Street Journal, Sam Schechner and Jeff Horwitz) highlights yet more failings at the company as the way it counts the number of users may lead to it overstating its reach, thus calling into question what it charges advertisers. This phenomenon is referred to internally as “SUMA” (Single Users Multiple Accounts) and could put a real spanner in the works. Lawyers will be licking their lips at the prospect of some fee-generating action if this really does become a bone of contention…

Meanwhile, Google cuts Play Store fees on subscription services to 15% (Financial Times, Patrick McGee) shows that the company is going to cut its fees for all subscription services to a maximum of 15%, to take effect from January 1st (it was 30%) and Snap’s stock plummets as it blames Apple’s privacy changes for hurting its ad business (Wall Street Journal, Sarah E. Needleman) shows that Snap’s share price fell by 20% after it turns out that Apple’s tightening of privacy rules has clipped – and will continue to clip – Snap’s ad revenues. The rules have limited the ability of Snap to collect as much data, which makes it harder to target advertising. Facebook complained about this recently as well while Apple, of course, did quite well out of it!



FirstGroup sells Greyhound, WeWork debuts in New York and quantum computing gathers pace…

In a quick scoot around some of the other interesting stories in today’s newspapers, FirstGroup announces £125m sale of its Greyhound bus services in the US (The Guardian, Gwyn Topham) shows that FirstGroup has now fully pulled out of the US market to leave it 100% focused on the UK as it sold the intercity coach service to German operator FlixMobility – a net loss of $19m. FirstGroup said that it was not averse to international expansion in the future, but it did say that it would be concentrating on its UK business for now. The company is now the UK’s #2 bus operator outside London and runs a number of the UK’s rail networks including GWR, Avanti, South Western, TransPennine, Hull Trains and Lumo.

Then in Wall Street hands floor to WeWork (The Times, Robert Miller) we see that WeWork had a great debut yesterday on the New York Stock Exchange just two years after its previous attempt fell apart in disastrous fashion. Since then Adam Neumann and the family members he recruited have been booted out and its big backer SoftBank has had to perform major surgery on the company before the IPO eventually became possible via a SPAC merger with BowX Acquisition Corp. Neumann still holds a stake in the business and got a nice $1bn windfall from the flotation. The company has yet to make a profit 🤣.

I thought I’d finish with Quantum computing comes out of shadows into public markets (Financial Times, Madhumita Murgia) because it highlights the advances being made in the future of computing! Already this month, two start-ups with plans for a working quantum computer have either made their stock market debut (IonQ on the NYSE) or announced plans to do so (Rigetti Computing, via a SPAC). Other companies in this space include PsiQuantum and Honeywell, which merged its quantum unit with the UK’s Cambridge Quantum Computing. Quantum computing has been going for 35 years or so and the tech has now advanced to a stage where current quantum machines can perform the same tasks as “classic” computers, only way faster. There are still challenges ahead, but investors are lining up to get involved!



…in other news…

Do you feel like venting but have no outlet? Well Sydney-dwellers can rant all they want in Pop-up restaurant Karen’s Diner opens with ‘rude staff and poor service’ (The Mirror, Emma Rosemurgey) as this is a place where complaining is actively expected! Interesting, fun no doubt – but still a bit weird, no? I also thought I’d include this as an idea for a weekend project: Want to turn Ikea shelves into an awesome Nintendo interior? Japanese game fan shows how (SoraNews24, Casey Baseel). Great for all you retro fans out there!

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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)