Monday 06/11/23

  1. In MACRO & OIL NEWS, Wall Street experts fear global recession, Trump is ahead in the polls, Shell defends its strategy and Sunak is to unveil a North Sea plan
  2. In TECH & CHATBOT NEWS, Tech firms pour money into cloud capacity while X, NatWest and Cleo introduce their respective chatbots
  3. In FINANCIALS NEWS, Klarna aims for the stock market and Clara takes on pensioners
  4. In MISCELLANEOUS NEWS, Tesla pays up for German workers, LVMH is to buy Barton Perreira and sustainable fashion remains a tricky goal
  5. AND FINALLY, I bring you a recipe that will probably “trigger” Italians…



So the Middle East could tip the world into recession, Trump pulls ahead of Biden in the polls, Shell justifies its choices and Sunak is about to announce a North Sea bill…

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Middle East war could spark global recession, say Wall Street experts (The Guardian, Simon Goodley) shows that the chief exec of the world’s biggest asset manager and the chair of America’s biggest bank believe that a global recession could be sparked by conflict in the Middle East at a time when a fragile global economy is just starting to recover from the major shocks of Covid and the Russia-Ukraine war. Larry Fink of BlackRock and Jamie Dimon of JP Morgan paint a gloomy picture of the state of the global economy just as the ONS is due to publish an update on the UK economy’s performance in Q3. Dimon said that geopolitics is now shaping the future of the world in terms of freedom, democracy, food, energy and immigration. * SO WHAT? * The risks are real and with America seemingly in limbo as Biden remains powerless to do anything bold because a) he doesn’t have a proper majority and b) he’s got an election to think about next year, American-led resolutions to any of the conflicts are not likely to be coming about any time soon. Traditional powers and relations in Europe, the Middle East, Asia and Russia continue to shift as a result of these major developments, making things even harder to predict! Mind you, if Biden actually DOES manage to “solve” the Middle East and Russia-Ukraine, it will do wonder for his credibility come election time. I don’t see that happening though!

Talking of which, Trump leads in 2024 polls as fears over war and economy hurt Biden (Financial Times, Felicia Schwartz) highlights that two polls on Sunday (from the New York Times/Siena and CBS) showed Biden slipping further behind Trump thanks to doubts over his handling of the economy and national security while voters also believe that they would be better off financially if Trump returned as president. There’s still a way to go to elections and, who knows, maybe he could get lucky and Israel-Hamas and Russia-Ukraine may solve themselves without too much of his intervention. It’s not looking good at the moment, though!

In oil-related news, Shell boss backs ‘leaner’ operation in defending renewables strategy shift (Financial Times, Tom Wilson) shows that Shell’s chief exec, Wael Sawan, is keen to defend his move away from eco-friendly business areas that had been established under his predecessor Ben van Beurden. Last month, the company announced 200 job cuts in its low carbon solutions business but it is also scaling back its work on hydrogen technology and looking to sell its retail energy business in the UK and Germany whilst also exiting some of its renewable power generation investments in Europe. At the same time, the company is going to be investing more in its gas business to increase sales of LNG by 20-30% by 2030! * SO WHAT? * The fact of the matter is that Shell is an oil and gas company! Expecting it to be some kind of New Age eco-warrior is fantasy IMO. Of course it can fund green initiatives with the money that it makes from carbon fuels but I have to say that I think it will never be carbon neutral. Same with BP, I’m afraid! The best they can do is to fund green initiatives IMO.

Then in Sunak to unveil North Sea annual oil and gas licensing bill (Financial Times, Lucy Fisher and Gill Plimmer) we see that Rishi Sunak is to unveil new legislation that will allow companies to bid for new licences to drill for fossil fuels in the North Sea on an annual basis. The argument is that this will protect jobs and strengthen Britain’s energy security by making us a bit more energy-independent. * SO WHAT? * This is quite interesting because it will put an even bigger divide between the Conservatives and Labour ahead of next year’s general election. Labour has said that it will honour existing commitments to new licences but won’t grant any new ones. Sunak will argue that his stance is more realistic, but then the North Sea Transition Authority, the regulator, has admitted that any new licensing will have a negligible effect on our dependence on oil imports given that reserves in the basin are falling and that oil is traded on the international markets. Hmmm.

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!



Big Tech pours money into the cloud to “make it rain” while X, NatWest and Cleo unleash chatbots…

Tech giants pour billions into cloud capacity in AI push (Financial Times, Camilla Hodgson) shows that Amazon, Microsoft and Alphabet are looking to pour even more money than they have been doing in the last few years into cloud computing in order to ensure they have enough capacity to cope with the rising demand for AI. * SO WHAT? * Capital spending increased by a whopping $42bn in the quarter to September, almost 20% more than the equivalent period in 2021 and it sounds like that will keep increasing as demand for AI continues to grow.

It seems that chatbots are developing apace in Elon Musk releases new AI chatbot ‘Grok’ in bid to take on ChatGPT (Financial Times, Tim Bradshaw and Hannah Murphy), which heralds the advent of a new chatbot for X that will have real-time access to information from X and have a bit of personality about it! Users of X can now apply to try out Grok, which will be available to subscribers of X’s new “Premium+” service that will cost around $16 a month once it has completed testing. * SO WHAT? * Musk is clearly using this launch to make the premium service more attractive and give sceptics more reason to move over to the paid service. It comes not long after rival Meta announced the launch of around 30 AI chatbots across its Instagram, Facebook and WhatsApp apps. FWIW, I think that the problem with AI is always going to be that the bots are only as good as the information that they ingest. Given the amount of 💩 that there is on X, it can’t be taken seriously until there are better quality controls IMO. That said, the battle of the bots has definitely started!

NatWest turns to AI as branches shut (Daily Telegraph, Matthew Field) shows that NatWest is going to launch an AI chatbot using

tech from IBM to provide more human-like interaction with customers as a way to mitigate the effect of massive branch closures in recent years. The bot, called Cora+ will be able to explain details about products and services to customers in a conversational style. * SO WHAT? * This sounds pretty good but I bet there will be a fair few number of people who will not like this – it’s frustrating enough trying to talk to a human in a call centre! At the end of the day I’m sure that the bots will continue to improve and, because it’s “only” going to be speaking about bank products and services, you would have thought that it will be pretty decent (whilst probably a bit dull) in terms of the quality of information. It may even be better than a human in spotting cross-selling opportunities.

Then in AI and financial advice is a laughing matter for Cleo (The Times, Patrick Hosking) we see that a UK-based financial advice company, Cleo, which is actually getting decent traction in the US, is returning to its backyard to offer its “humourous” financial advice bants to British consumers. Cleo first launched a service in the UK in 2017 but it got more traction stateside from 20-somethings who like the banter style and use the “roast me” service where users ask to be criticised for the spending and be given specific recommendations on how they can sort their finances! Customers sign up to Cleo, give it access to their bank accounts and get gag-filled advice based on their spending and savings habits. They can also sign up to other services. It has ten female stand-up comedians and comedy writers on the payroll who come up with amusing ways to give advice that ends up as AI-generated text conversations with users! * SO WHAT? * I think that this sounds hilarious! I think that people are crying out for a) advice and b) better delivery – and it may be that people like this kind of thing because a bot insulting you may not be taken as personally as a real human criticising you! Mind you, I think that giving a third party app like this access to your bank accounts could be a bit of a security concern (although I’m sure Cleo has that covered!).

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!



Klarna edges closer to a listing and Clara takes on pensions…

In Klarna stakes step towards stock market (The Times, Tom Howard) we see that Klarna is setting up a new holding company registered in the UK, presumably aimed at giving it more corporate credibility before a widely-expected IPO. The move could make it easier to list and attract more international investors who are generally more familiar with the regulatory infrastructure over here. The company will still need the approval of its shareholders and there is speculation that a listing could happen early next year, market conditions permitting. * SO WHAT? * Although it may register here, it is widely expected that the company will list in New York as it is more likely to get a higher valuation over there, which means the company can raise more money. Things could get pretty interesting in this area soon, though, as the FCA is due to start regulating the Buy Now Pay Later market. I think that if the company wants longevity it should list in London but if it just wants as much money as possible (whilst running the risk of failing) then it should go to New York.

Then in Clara superfund to take on Sears pensioners (The Times, Patrick Hosking) we see that Clara-Pensions, a start-up that aims to consolidate the UK’s 5,000 traditional pension funds, has just agreed its first deal as it has taken on the pensions of 10,000 former workers at Miss Selfridge, Warehouse and Wallis who are in the £600m Sears Retail Pension Scheme. * SO WHAT? * The idea behind Clara-Pensions is to consolidate a highly fragmented pension scheme sector and use its scale to push down costs and improve investment returns before then selling the scheme on to an insurance company at a profit. It seems like Clara-Pensions is getting a free go at turning things around, because if they don’t succeed the pension fund gets passed to the Pension Protection Fund, which guarantees most of the members’ benefits. I think that this sounds like a very good business to be in – as long as they succeed more than they fail!

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!



Tesla pays up, LVMH buys sunglasses and fast fashion is losing the fight against consumer behaviour…

In a quick scoot around some of today’s other interesting stories, Tesla Raises Wages for German Workers Amid Union Pressure (Wall Street Journal, William Boston) shows that Tesla is trying its best to fend of the expansion of unions by offering workers a 4% pay rise effective in November and a €1,500 bonus in December, followed by €2,500 rise in February intended to make them less inclined to unionise. * SO WHAT? * No doubt the UAW in the US will be very interested to see how this pans out, but I bet that Musk will do as much as he can to keep the unions out, particularly as Tesla is the only major carmaker in Europe that does not have union representation on the shop floor! Can Musk hold out?!? If he fails, overheads will rise and that will either squeeze margins or have to be passed on to the end customers…

In LVMH to Buy Eyewear Brand Favored by the Stars (Wall Street Journal, Nick Kostov) we see that the French luxury goods giant has agreed to buy LA-based eyewear maker Barton Perreira, in a further expansion of its eyewear division. The brand was founded

in 2007 and its frames are manufactured in Japan. LVMH aims to expand the brand outside the US. * SO WHAT? * Eyewear is quite an interesting category to be in as luxury goods companies are increasingly getting involved as it is often the first “luxury” product that people can buy as purchasing them is achievable. It’s already interesting to note that people are buying glasses more often to be in line with trends, so that is another positive!

Then in Fashion’s efforts to go green cancelled out by shopaholics (The Guardian, Zoe Wood) we see that a report by NGO Wrap says that despite the fashion industry’s efforts to lessen the environmental impact of the clothing it sells, it is fighting a losing battle against its customers! * SO WHAT? * When you consider that the average Briton buys around 28 items each year, you can appreciate the scale of the task! Efforts to reduce carbon intensity and the volume of water per tonne used in manufacturing processes are just not enough – and textiles and fashion account for up to 10% of global carbon emissions! Hmm. Tricky. Apparel companies need customers to buy their wares, so telling them to buy less probably doesn’t sit right! At least they seem to be doing what they can…

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!



…in other news…

If you are Italian, this might “trigger” strong emotions! Warning – the person in the video breaks raw pasta (so avert your eyes if you’re Italian 🤣!). It seems quite interesting but a bit of a faff to me but see for yourself in this recipe!

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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)