Monday 08/11/21

1. In MACRO NEWS, Biden gets his funding through, China ups the coal imports and UK business output continues to fall while the labour market remains tight
2. In ELECTRIC VEHICLE NEWS, EV charging gets a Biden boost, Tesla goes on Twitter, Rivian faces a tough task, UK gigafactories are going to require more space and EV battery prices are set to rise
3. In POST-CORONATRENDS NEWS, UK airlines are betting on Greece and restaurants advance their technology
4. In MISCELLANEOUS NEWS, paint supply issues hit home and Hopin rides the pandemic high
5. AND FINALLY, I bring you a giant 3D cat and skateboarding dogs…

So Biden gets a win, China imports more coal, UK biz output continues to weaken and the jobs market remains tight…

Biden seeks course out of doldrums after US legislative victory (Financial Times, James Politi and Lauren Fedor) shows that President Biden managed to get his $1.2tn infrastructure bill through the US House of Representatives following months of negotiation, after initially trying for a bigger $1.75tn package. * SO WHAT? * This is good news for the old duffer as he has had to endure a tough time of late in local elections and a drubbing in the approval ratings due to Covid worries, inflation concerns and the 💩-show that was the withdrawal from Afghanistan. Interestingly, his approval ratings reached their lowest level of any modern-day president since Donald Trump in August – and they’ve got worse! Trump must be loving this…

Given the backdrop of COP26, China turns up the coal imports during nationwide power cuts (Daily Telegraph) just goes to show that environmental concerns go out of the window when leaders are dealing with a nationwide power shortage. Official figures show that China’s imports

of coal almost doubled in October! Mind you, that could potentially get higher as this level was still below levels in September and demand for electricity continues to rise strongly, especially among exporters. The figures did not give a breakdown between thermal coal (used by power plants) and coking coal (used by steel mills), so it is difficult to discern a pattern. If China is increasing imports, that means that coal is going to be more expensive for everyone…

Back home, UK business output falls for sixth month in a row (The Guardian, Jasper Jolly) cites data from accountancy firm BDO which shows that rising costs due to supply chain bottlenecks, higher energy prices and labour shortages have taken their toll on business output, which has now fallen for six consecutive months. The manufacturing sector is suffering particularly acutely given difficulties in sourcing raw materials and delivery delays and, combined with Hiring problems despite end of furlough risk spike in interest rates (Daily Telegraph, Russell Lynch), which cites data from job site Indeed that show that staff shortages continue to abound despite the end of furlough, mean that inflationary pressures on the Bank of England continue to build.

EV charging in the US will get a boost, Musk does a Twitter poll, Rivian faces up to rivals, UK gigafactories will need more space and EV batteries could get more expensive…

Further to what I said above, Electric vehicle charging stations win jolt of energy in Congress (Wall Street Journal, Jennifer Hiller) highlights the fact that Biden’s new infrastructure package has earmarked $5bn to expand EV highway charging, which would enable drivers to take longer road trips. However, the remit also goes further in that it also includes funds to overhaul the country’s electric grid by upgrading high-voltage transmission lines and other infrastructure. There is an additional $2.5bn in federal funds to go towards other types of charging, such as hydrogen and the electrification of school buses. * SO WHAT? * This is a big deal and will provide a meaningful boost given the size of the nation. However, analysts say that much more money will be needed to build a charging infrastructure that will be on a par with the current network of petrol stations. Still, this is a step in the right direction!

Then I have to mention Elon Musk’s Twitter poll results favor Tesla stock sale (Wall Street Journal, Rebecca Elliott and Laura Sanders) because, well, it’s just Elon Musk’s most recent controversial move on Twitter! Elon Musk asked his Twitter followers whether he should sell 10% of his shares in Tesla to pay his taxes – and said that he’d follow what they said either way. About 58% voted that he should sell and 42% said that he shouldn’t. Musk currently owns over 17% of Tesla and a tenth of this holding could be worth about $21bn based on Friday’s closing price. * SO WHAT? * Given that capital gains tax looks like it’s about to go higher under Biden, now looks like a good time for Musk to sell – plus the fact the share price has shot up by about 75% in the last three months! Mind you, it is possible that such a share sale could weaken Musk’s hold on Tesla given that it doesn’t have a dual-class share structure.

Meanwhile, Truck makers pick up on electric revolution (The Times, Robert Lea) highlights the world of electric pick-up trucks as Rivian heads towards a stock market flotation this week. Since its formation over ten years ago, the company has undergone quite the evolution and a number of name changes to get where it is today, seeking

to raise up to $10bn, which would imply a $60bn valuation on a company that has only sold a handful of cars. This would put it on a par with Stellantis, which owns the Peugeot, Citroën, Fiat, Vauxhall, Opel and Chrysler marques and not far behind BMW. Rivian’s RIT is aimed at an audience that loves pick-up trucks, but punters will have to pay an entry-level price of $74,000 (£55,000) for the privilege of going electric. There are other operators in this space in the UK: namely, Tevva, which is making 7.5 tonne and 12 tonne 100% electric mid-sized lorries for companies like UPS and Arrival, which is making all-electric vans – also for UPS – and buses for First Group. * SO WHAT? * Sentiment is red hot for this sector, but revelations of a toxic “bro” culture last week may prove to be a thorn in the side of Rivian as one of its ex-employees is suing for gender discrimination. Will this take the edge off the share price??

Meanwhile, Gigafactories need 2,500 acres for new warehousing (Daily Telegraph, Russell Lynch) cites research by Savills which says that the UK will need up to 50m sq ft of warehousing space by 2040 in order to accommodate new battery factories that will help the government to hit zero emissions targets by 2035. This is roughly equivalent to an area three times the size of the Square Mile. South Wales and the North East have been identified as potentially suitable locations for new sites given the amount of land that was vacated as heavy industries died a death there. Savills emphasises the need for space not only for the factories themselves, but also for the industries that support them.

Talking about batteries, Electric car buyers face battery price rises (Daily Telegraph, Rachel Millard) shows that drivers are going to be facing a rise in prices as the cost of lithium ion battery cells is now going up after years of falling. Chinese battery producers are writing to customers to renegotiate contracts and away from fixed price structures. * SO WHAT? * One of the main hurdles to buying an EV is the high up-front costs involved. They are cheaper to run, but it takes years before the buying costs can be recouped and Benchmark Mineral Intelligence, the price reporting agency, reckons this could affect vehicles coming to market between 2022 and 2024 in particular. The price of lithium ion cells has dropped from $290 per kWh in 2014 down to $105 this year, but it is thought that this could go up to $115 next year as lithium supply shortages continue to bite.

UK airlines increase flights and restaurants take lessons from lockdown…

In signs that the aviation industry is on the path to recovery, BA and Virgin Atlantic put aside rivalry for return of leisure flights to US (The Guardian, Gwyn Topham) shows that the two rivals have taken off simultaneously this morning for the first transatlantic flights carrying leisure travellers to the US since the country closed its borders in March 2020, in a development that was described as a “pivotal moment” for the industry. UK airlines to increase flights to Greece in anticipation of tourism boom (Financial Times, Alice Hancock and Philip Georgiadis) shows that Jet2 and easyJet are among those adding capacity between the UK and Greece next summer in anticipation of more overseas holidays. Recovery in the aviation industry continues! The real recovery that airlines will be looking for, however, is a rebound of business travel given its profitability IMO.

Meanwhile, Technology on the menu for Covid-hit restaurants (Financial Times, Alice Hancock) is a really

interesting read because it asserts that tech in restaurants has advanced by a number of years thanks to Covid restrictions, according to the chief exec of Corbin & King, the company behind restaurants such as The Wolseley and The Delaunay. He said that customers using QR codes on their tables to pay the bills had meant less waiting around and a higher table turnover – and is something that would have been quite unthinkable pre-Covid! One app that has been developed by restauranteurs, called Sunday, has managed to at least halve commissions that restaurant owners have to pay to credit card companies to process payments and it has the added advantage of enabling waiting staff to spend more time with their clientele, increasing the amount they are likely to receive in tips. Other apps that are being used by restaurants include Zapaygo and Round for ordering and payment, while Stint is being used increasingly to fill labour shortages in a distinctly gig-like way (it matches students with restaurants who need labour for basic tasks like polishing glasses or laying tables). * SO WHAT? * In adapting to circumstances and changing customer behaviours via technology, I think that restaurants have adapted rapidly through necessity – but it is possible that the benefits of this evolution will last for some time to come!

Paint suffers but Hopin benefits…

In yet another illustration of the effects of supply chain shortages, Gloomy picture for paint highlights depth of supply chain crisis (Financial Times, Harry Dempsey) highlights difficulties in the paint industry, which has a very complex supply chain. Pretty much every sector needs paint but supply chain constraints, increased DIY under lockdown and post-extreme weather events in places like Louisiana and Texas have conspired to give the likes of Akzo Nobel, Europe’s biggest producer of paint, no choice but to jack up their prices. The chief exec of PPG said that costs had shot up by 25% over the year and the variety of ingredients in paint have proved to be particularly problematic. Tough times – and they are likely to continue…

I thought I’d mention Hopin rides high on pandemic-led videoconferencing wave (Financial Times, Tim Bradshaw) as it is one of the many examples of a business that has prospered under lockdown. The company only incorporated in June 2019 and now counts the likes of Unilever, WPP and IDG among the customers that use its virtual conference software. Although its valuation rocketed to $2bn by November 2020, it now faces the challenge of adapting to a “hybrid” world of online/offline events. * SO WHAT? * This is an interesting company forged out of necessity and is more capable of supporting bigger events than Zoom is capable of, so you could argue that it may be more insulated from the threat of things like Teams, for instance. Will this be another flotation candidate in the near future??

…in other news…

I thought I’d leave you today with a balance of cats and dogs! Marvel at Shinjuku’s giant 3-D cat reappears with a Roomba for shedding season (SoraNews24, Shannon) – which I think looks a tad disconcerting – and the sheer talent on show in Meet Chowder and Maddie – skateboarding bulldogs who can’t get enough of their wheels (The Mirror, Edward Kay). Amazing 🛹🐶😱!