Monday 12/02/24

1. In MACRO NEWS, Trump edges ahead of Biden and gives his view on Russia while the UK awaits a growth verdict
2. In CONSUMER/EMPLOYMENT NEWS, China’s consumers spend less, UK employment weakens, firms fret about hiring and employers race to sort visas
3. In LISTINGS NEWS, Tod’s looks delist while Shawbrook’s owners consider an IPO
4. In MISCELLANEOUS NEWS, we see that Musk isn’t the only billionaire pushing back against Delaware and Zizzi’s owner wants to expand its Mexican food offering
5. AND FINALLY, I show you how to do one-arm pull-ups…

So Trump edges Biden and rings alarm bells while the UK awaits a recession verdict…

Did you know that there is a podcast to go with Watson’s Daily? In this podcast, I discuss two stories from the day’s edition in a bit more depth with a Watson’s Daily Ambassador, my mate Ralph (on the Weekly podcast) or a special guest. The idea of this is to help to give you more of an idea of what talking about this stuff could sound like 👍 You can find the podcasts on the buttons below:

Donald Trump has 11-point polling lead over Joe Biden on handling of economy (Financial Times, Lauren Fedor and Eva Xiao) cites a new survey for the FT and University of Michigan Ross School of Business which shows that 42% of Americans believe that Trump would be best candidate to drive the economy while 31% believe Biden would and 21% said that they’d trust neither! Biden had a tricky week last week after he was described in a critical judicial report which described him as an “elderly man with a poor memory”. This is particularly interesting when you consider that more voters said in the same poll that they are actually seeing improvements in their financial situation and

believe that the economy is improving versus how they felt in November! Meanwhile, Trump says Russia can do what it wants to Nato allies who pay too little (Financial Times, James Politi, Lauren Fedor and Henry Foy) shows that Trump is of the opinion that Russia can do “whatever the hell they want” if NATO’s members don’t hit defence spending targets, which will no doubt be causing alarm at NATO – particularly as he’s leading in the polls at the moment for the presidential race in November. It is believed that “at least half” of NATO’s members will be aiming to spend 2% of their GDP on defence.

Back home, Recession verdict for UK economy will be no laughing matter for Hunt and Sunak (The Guardian, Phillip Inman) shows that official figures for GDP, wages and inflation are due out this week. It’s widely expected that Q4 GDP will turn out to be -0.1% after shrinking in Q3 (this was revised down from the initial estimate of zero growth), which means that the UK will have actually dipped into a very mild recession. Still, that will be ammo for the government’s opponents! The opposition will focus on the fact that UK manufacturing was in recession for the entire year and that corporate insolvencies are rising. * SO WHAT? * That all being said, it looks increasingly likely that 2024 is going to be a better year with interest rates falling, signs of a real estate market recovery and confidence rising. It may well happen just as we are heading into the final straits of a general election!

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!

China’s consumers spend less, UK employment weakens and employers rush to get visas…

China’s consumers tighten belts even as prices fall (Financial Times, Thomas Hale, Wang Xueqiao, Nian Liu and Andy Lin) shows that Chinese consumers are still proving to be very cautious despite the country being in deflation for the last four months, as the latest figures showed that consumer prices fell at their steepest annual rate in 15 years in January! * SO WHAT? * The property market continues to be problematic and that is hurting sentiment and confidence, meaning that even though spending power is rising, actual spending isn’t. There is a danger that this state of mind becomes entrenched (like it did in Japan for a loooooooong time!) – and if it does, it will take the edge off any initiatives the government makes to get the country out of an economic rut. As I keep saying (sorry!), China needs to announce something big and wide-ranging to get the country going again. The longer it leaves it, the more likely it will be that the population will fall into a deflationary mindset – and that can be extremely difficult to shift.

Back home, UK employment rate falls to lowest in a decade (The Times, Jack Barnett) cites the latest employment index from BDO which shows that private sector employment has fallen to its lowest level since August 2013 as other recent data points suggest that the labour market is cooling. The REC and KPMG’s

latest workforce snapshot showed that starting salary growth fell to its slowest pace in almost three years while permanent hiring has been falling since October 2022. That all being said, Workforce crisis deepens as firms fail to fill vacancies (Daily Telegraph, Madeleine Ross) shows that 21% of employers are finding it hard to fill job vacancies while 10% say that they plan to cut headcount. It was also interesting to see that fewer employers are using wage rises to fill vacancies and are instead going to cut staff numbers or recruit fewer people. Meanwhile, UK employers race for staff visas ahead of new immigration rules (Financial Times, Delphine Strauss and Amy Borrett) highlights a race among employers who are trying to beat the deadline for visa applications for skilled staff! In December, the home secretary said that the main salary floor for skilled worker visas would rise significantly from £26,200 to £38,000 from April. The changes are designed to make it more expensive to hire overseas and immigration lawyers are saying the some clients are already withdrawing job offers due to having to pay workers much higher salaries. Other companies have brought hiring plans forward but some lawyers are saying that this is resulting in a logjam of applications. * SO WHAT? * Sectors like hospitality and manufacturing are expected to suffer particularly acutely and some companies are having to rethink their graduate recruitment plans. It is also thought that this will hit smaller and regional firms more than big bad London ones as they will be less likely to afford the salary 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!

Tod’s wants to delist while Shawbrook seeks a listing…

Tod’s plans to delist from Milan stock exchange (Financial Times, Adrienne Klasa) shows that Italian luxury bag and shoemaker Tod’s is looking to go private in a deal with LVMH-backed PE firm L Catterton, which would see the latter have a 36% stake and let LVMH keep its existing 10% stake in Tod’s. The deal is being done at an 18% premium to Tod’s closing price on Friday. * SO WHAT? * Rumblings of going private after two decades on the Milan stock exchange started in August 2022 as part of an initiative to turn the company around as interest in its brands – including Roger Vivier, Fay, Hogan and Tod’s itself – weakened. The plan was subsequently shelved after the family controlling the group, the Della Valle family, didn’t hit the ownership threshold it needed to take it private. It’ll be interesting to see what it does behind closed doors when it turns its back on being publicly listed.

Then in Shawbrook owners explore float in boost for London stock market (The Times, Ben Martin) we see that the private equity owners of Shawbrook, the specialist savings and lending bank, are thinking once again of an IPO after abandoning previous plans to do so in 2022 because of tricky market conditions. BC Partners and Pollen Street Capital bought the bank in 2017 for £868m. * SO WHAT? * OK so talks are at very early stages at the moment but if it did list it would be a rare bit of good news for the London Stock Exchange which has been seeing a big exodus of late (unless Shawbrook decides to list on the NYSE of course 🤣)!

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!

Billionaires take on Delaware and Zizzi’s owner wants to expand its Mexican restaurants…

In a quick scoot around some of today’s other interesting stories, Elon Musk Isn’t the Only Billionaire Fighting Delaware (Wall Street Journal, Theo Francis and Erin Mulvaney) shows that it’s not just Elon Musk who’s trying to free himself from the shackles of Delaware as Tripadvisor’s chief, Greg Maffei, and the billionaire founder of the Fox Broadcasting Company and USA Broadcasting, Barry Diller, are looking to reincorporate in Nevada and Texas respectively. Musk is still smarting from the recent judgment handed down by a Delaware judge who ruled against awarding him a massive pay package. Interestingly, Musk’s brain implant company, Neuralink, incorporated in Nevada last Thursday. * SO WHAT? * Delaware courts have reigned supreme in US corporate law for a very long time, which is why so many companies incorporate there. However, Nevada and Texas are some of the states that want a piece of the pie and are hoping to appeal to companies to set up shop there so they can establish an alternative.

Then in Zizzi owner plans Mexican restaurant expansion amid sale rumours (The Times, Dominic Walsh) we see that the Azzurri Group, which also owns the ASK and Zizzi chains, is looking to open its first Boojum Mexican restaurant on the British mainland. It currently has 17 Boojum restaurants mainly in Belfast and Dublin and will open its first one on the mainland in Leeds in April. There are plans to have two more before the summer. * SO WHAT? * Boojum is the #1 Mexican fast-casual brand in Ireland, so it is hoped that this success will be repeated over here! There are rumours that this is a precursor to its PE owner, TowerBrook Capital Partners, selling out from the investment it made in 2020 when it bought the restaurant business via a pre-pack administration.

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’ve ever wondered how you go about doing a one-arm pull-up, here’s how to do it! Amazing! If I ever manage to do one myself I shall let you know!