Friday 27/11/20

1. In BIG PICTURE & BITCOIN NEWS, Merkel suggests closing ski resorts, economic sentiment improves and Bitcoin suffers
2. In RETAIL/HIGH-STREET NEWS, hopes are high for Black Friday, Klarna benefits, Mulberry does better in Asia and UK pubs warn of more hurt
3. In TECH NEWS, social media pressures rise, the UK introduces a new digital watchdog and Salesforce/Slack gathers momentum
4. AND FINALLY, I bring you some impressive dad dancing (not me 😁)…

So Merkel plays party-pooper, UK economic sentiment improves and Bitcoin falls…

*** 📣 Watson’s Daily is going to start a monthly competition for SILVER members. The prize will be three weeks of commercial awareness sessions with me. More details to come…***

Merkel calls for closure of ski resorts across EU (Financial Times, Guy Chazan and Sam Jones) shows that Germany’s mum is appealing to the EU to close all ski resorts over the Christmas and New Year period to limit the spread of the virus. In a speech to the Bundestag, she said that “The ski season is approaching, [and] we will push for a vote in Europe to close all ski resorts”. Austria is dead against it as its winter sports industry is a key part of its economy and says that this is an individual country thing and not a Brussels thing. The ski sector accounts for 4% of Austria’s GDP and almost 8% of winter employment. Elsewhere, Italy’s PM wants to see all ski resorts closed but France is currently keeping resorts open at Christmas although ski lifts are be closed (so you will still be OK to ski if you are incredibly fit and can walk up the mountains and/or if you own a helicopter 😂). Many of Switzerland’s largest ski areas are already opening. * SO WHAT? * This is a tough call as both sides have a point. You can understand Merkel’s appeal for unity on this  given that the Austrian ski resort of Ischgl was a notorious coronavirus hotspot during the first wave. Then again, you can understand the other side of this as well because those involved in the industry need to keep things going.

UK’s economy suffers in November but Covid vaccine hopes ease gloom (The Guardian, Richard Partington) is an interesting article that sums up a number of economic indicators that gauge current economic sentiment. It talks about concerns of rising infection rates, lower traffic levels reflecting movement restrictions, vaccine hopes lifting spirits, clothing and secondhand car prices rising, our economy sinking into a double-dip recession as new restrictions hit, rising unemployment, the UK consumer’s last hurrah before Christmas and fast-rising house prices – among other things. FWIW, I think that things will pick up as we head towards Christmas but there could be an almighty hangover in the new year as reality hits – although a thumping “headache” may be avoided if there is more positive vaccine news.

Bitcoin slumps after rallying to all-time high (Financial Times, Eva Szalay) shows that the cryptocurrency fell by as much as 13% to $16,320 in trading yesterday after reaching a new all-time high of $19,510 the day before. * SO WHAT? * Bitcoin has shot up by 50% in the last three months – and by 140% this year – so you have to see this fall in context. This could be a “correction” as traders take profits but it feels different to the boom-bust it had in 2017/8 because the cryptocurrency is becoming more mainstream.

There are high hopes for Black Friday, Klarna benefits, Mulberry sees an Asian uptick and pubs announced more cuts…

Black Friday expected to beat UK online sales records (The Guardian, Zoe Wood) suggests that Black Friday 2020 is going to be a good one for retailers. Since its introduction by Amazon in 2010, Black Friday has become the biggest shopping event of the year and many retailers have jumped on the bandwagon with a range of discounts to tempt shoppers to part with their cash (for instance, Asos is offering up to 70% off and Boohoo up to 90% off!). The internet industry body IMRG said last week that online sales were 56% higher than they were in 2019 and money.co.uk research found that 10% of shoppers were planning to spend much more on Black Friday than last year – £350 on average. * SO WHAT? * While online is clearly going to do well out of this as almost all shops are currently closed, let’s hope that people have enough left over to spread the retail joy when they DO open again. This Christmas, of all Christmases, is going to be the key to survival for many shops.

Shoppers’ online surge pays off for Klarna (The Times, Katherine Griffiths) shows that it’s not just the retailers who stand to benefit from all this Black Friday frenzy. Klarna, the buy-now-pay-later specialist, has seen a huge upswing in the usage of its platform as customers continue to spend more under the pandemic. It said that it saw a 43% hike in the value of transactions in the first nine months of this year and income rose by 37% over the same period. * SO WHAT? * I really am concerned about Klarna. It just sounds to me like a potential disaster waiting to

happen as it is most exposed to the most economically vulnerable group there is right now – young people. These are the same young people who are seeing way higher unemployment levels than their elders and if there’s no money coming in, you do wonder what will happen when they can’t pay. This really needs to be monitored IMO. Payments processing company Worldpay says that buy-now-pay-later is the UK’s fastest growing online payment method – surely that can’t be good right now. Great in a growing economy no doubt, but when all sorts of 💩 is hitting the fan economically I just don’t think it’s good to see this kind of credit rising. 

Meanwhile, on the high street, Mulberry’s push into Asia bears fruit but sales drop by a third (The Times, Tom Ball) shows that sales at Mulberry (where a handbag will set you back £475 to £1,295) have fallen by almost a third in the last six months but its Asian expansion has helped stem the rot. Tiffany also saw a boost from its Asian (specifically, Chinese) operations – so it seems that a pattern may be forming here. It is currently a potential takeover target for Frasers Group, which will be compelled to make a formal offer by the middle of next month after building up a sizeable stake in the company.

Then in UK pubs announce heavy losses and job cuts as Covid curbs bite (The Guardian, Joanna Partridge) we see that companies including Mitchells & Butlers and Fuller, Smith & Turner have all announced major losses and cut about 1,700 jobs between them as the effects of the coronavirus continue to bite. * SO WHAT? * What with this latest tier system and uncertainty about when this is going to end, you can understand the gloom hanging over the industry. IMO, the government is really going to have to step up here because no-one else is going to be able to save them.

Social media faces more pressure, the UK introduces a new watchdog and Salesforce/Slack talk excites…

I think that Social Media’s liability shield is under assault (Wall Street Journal, Ryan Tracy) is really interesting because Section 230 of the Communications Decency Act – the law that has governed social media and other internet businesses and overseen their massive rise – looks like it could be under threat for the first time in its 24-year history. The law has been giving them broad immunity for user-generated content which critics say has resulted, over the years, in companies being allowed to ignore the spread of false and dangerous information. There seems to be a growing sentiment in Washington that this law needs to have a serious overhaul – but for different reasons. Republicans say it’s because it gives the outlets too much power to restrict free speech because they are not liable for removing content but Democrats say that it doesn’t do enough to stop the spread of false news. Tech companies themselves realise the need for better content moderation without admitting to having a major problem. * SO WHAT? * There is clearly a problem here and it’s not immediately obvious who is going to resolve it. Both Biden and Trump have called for its revocation, Congress COULD do it and although the Supreme Court has never really got involved in Section 230, some have said that it is about time it did. Major changes are highly likely to result in a massive and sudden need to employ armies of moderators – or they could stop hosting user posts completely. This is going to be VERY interesting to follow IMO and could have massive implications on all social media companies.

Britain tries to break Big Tech stranglehold (Daily Telegraph, Ellie Zolfagharifard) shows that the Britain has just created a new tech regulator – called the Digital Markets Unit – that will sit within the Competition and Markets Authority as a specialist division that will focus on the stranglehold that Big Tech has on the UK’s £149bn digital sector. It will also cover the news publishing industry. The new regulator will start work in April. * SO WHAT? * It seems to me that pressure is really building against Big Tech, what with the Section 230 thing I just mentioned and other moves to crack Big Tech’s dominance in so many areas. It will be interesting to see whether anything concrete comes of this – I certainly hope so!

Salesforce talks to buy Slack foreshadow showdown with Microsoft (Financial Times, Richard Waters) just builds on what I was talking about yesterday. It makes the interesting point that Salesforce looked at buying Slack last year when it floated last year, but the view at the time was that it would be prudent to wait until its share price got weaker. Salesforce’s share price has risen by 57% since Slack floated whereas Slack’s has fallen by almost 25% in the same time period. Slack has been continuously fighting against the “free” service offered by Microsoft as part of “Teams”. Salesforce/Slack: smells like Teams spirit (Financial Times, Lex) makes the point that a deal would be about broadening the product range rather than saving costs and Slack could definitely do with access to Salesforce’s client base!

…in other news…

I thought I’d leave you at the end of this week with something that will hopefully lift your spirits in Dad hilariously dances in daughter’s video – unaware it’s being sent to teacher (The Mirror, Luke Matthews). Gotta love a bit of dad dancing 🕺!