Monday 12/12/22

  1. In MACRO, ENERGY & CRYPTO NEWS, China eases Covid restrictions further, UK manufacturing contracts, France and the UK struggle with electricity and investors withdraw money from digital coins
  2. In CONSUMER & RETAIL NEWS, we look at house and EV price trends. Mango’s decision to shift production out of China and Monsoon’s revival
  3. In INDIVIDUAL COMPANY NEWS, Apple looks vulnerable, Twitter does the tick thing and there’s a massive biotech deal in the offing
  4. AND FINALLY, I bring you Christmas gift and roast potato ideas…

1

MACRO, ENERGY & CRYPTO NEWS

So markets get optimistic, the EU tries to up its game, Opec braces for change, Posco suffers, Brazil looks to lithium and the yen strengthens…

📢 I’m going to be doing my annual P/Review on Thursday 5th January where I will roundup the news of the year in 2022 and then outline predictions for themes in 2023. In order to attend that, you need to register HERE. The idea is that this will set you up for the year by putting everything into context for you and giving you a heads-up of what to expect in the coming year! This will be backed up by publication of Watson’s Yearly, which is the more detailed written version of the presentation that also contains a roundup of every G20 country and how my predictions from the previous edition performed! There is nothing like this anywhere else, and it will help your understanding of what’s going on enormously so if you’d like a spot, please sign up!

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:

In Beijing eases zero-Covid restrictions on transport to revive economy (Financial Times, Primrose Riordan and Gloria Li) we see that China has now lifted tight restrictions on transport workers that have been limiting the flow of freight in the country as part of the overall easing of Covid measures. The State Council said that long-haul truckers no longer had to operate under “closed loop arrangements” which involved long quarantines or undergo constant PCR testing. Roads and ports have been peppered with checkpoints that have monitored drivers – but it’s not just the rules on the ground that are changing. It has also relaxed restrictions

on air crew, according to Cathay Pacific in that members will only have to spend three days in Hong Kong before flying back to the mainland, instead of seven. * SO WHAT? * This does sound good but I think that one of the main reasons why Chinese markets aren’t booming is because investors will be worries that the current outbreak + easing restrictions + poor vaccination rates + poor vaccine efficacy rates + mass exodus from the cities at lunar new year = potential nightmare scenario. I maintain that Xi Jinping should swallow his pride and order a load of vaccines from the West.

Meanwhile, back home, UK manufacturing investment set to fall as recession looms (Financial Times, Daniel Thomas) cites the latest quarterly Make UK/BDO Manufacturing Outlook survey which points to the first such drop in almost two years as companies look to cut spending ahead of a widely predicted recession. The report also reflected that more manufacturers reported a decrease in orders versus those reporting an increase. No doubt a lot of this is due to manufacturers having to deal with higher costs, especially in energy-intensive industries. The pressure continues to build on the government to provide more support and guidance…

Talking about energy, ‘Don’t take the lift’: French alarm rises over risk of winter power cuts (Financial Times, Sarah White) shows that France has unveiled its own measures to combat potential power cuts – including the warning not use lifts. It’s interesting to note that may countries have been making contingency plans although some, including Germany and Italy, have seen their situation improve with a combination of mild weather and gas storage levels at full capacity. Others, including the UK, who rely on France and its normally reliable energy supply (which is itself largely reliant on a creaking nuclear power infrastructure), are more vulnerable to the possibility of blackouts. It all sounds concerning but I guess the situation is all going to be dependent on the weather. Meanwhile, Power prices break record high as cold weather bites (Daily Telegraph, Tom Rees and James Warrington) shows that UK power prices are at record levels thanks to low wind speeds reducing the amount of electricity being generated by renewable sources. Wind generated just 5% of the UK’s electricity yesterday versus the 28.5% average over the last year.

Then in crypto news, Investors withdraw record levels of coins from crypto exchanges (Financial Times, Nikou Asgari) shows that investors are selling record levels of bitcoin from crypto exchanges as the repercussions of FTX’s collapse continue to flow. FTX’s internal controls have been criticised as being poor and investors are concerned that other exchanges could be similarly useless, hence the sell-off. I still think it’s pretty amazing that bitcoin has remained around the $16,500-$17,000 area despite all the bad press and pessimism. I’m not an expert on crypto but I think there is something a bit funny going on here…

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!

2

CONSUMER & RETAIL NEWS

We look at house and EV prices trends, Mango’s production decision and Monsoon’s revival…

Biggest fall in asking prices on property for four years (Daily Telegraph, Melissa Lawford) cites findings by the property website Rightmove which show that asking prices have fallen by their largest monthly amount for four years. That said, asking prices were still above what they were a year ago but the annual growth rate has slowed down and there are signs that things have improved in the last two weeks. I suspect that this one-month fall was probably due to the shock of the mini-Budget.

It was also interesting to see Electric car costs draw level with petrol and diesel (Financial Times, Peter Campbell) as automotive lease provider LeasePlan says that rising fuel costs have meant that owning and running an electric car is now cheaper than it is for petrol or diesel cars. Although battery-powered vehicles remain more expensive than traditional cars to buy, running costs are less. * SO WHAT? * This is particularly interesting given that the company’s data compares a number of cars across different segments in 22 countries although this does run counter to recent findings from Compare the Market which took into account the latest set of government tax rises, coming to the conclusion that EVs will not be cheaper to own and run versus their petrol-powered counterparts in the UK. Also, I would have thought that last week’s revelation that battery prices rose for the first time since 2010 is

also going to have an impact if car makers decide to pass these prices on.

In the world of retail, Fashion Factory: Mango brings production closer to home in rethink on China (Financial Times, Barney Jopson) is a really interesting article about how Spanish apparel retailer Mango came into being (it’s pretty impressive!) and how it is now reacting to supply chain issues seen over the last couple of years by looking at ways to reduce its reliance on Chinese suppliers. Other brands like Levi’s and Dr Martens have already been reducing their sourcing from China and rival Inditex already uses Turkey and Morocco while Mango is also thinking about Romania where it already has three factories. No doubt other retailers are also thinking the same thing although maybe they will perhaps now postpone any big moves out given China’s easing of Covid restrictions.

Then in Monsoon to open more stores as it defies retail gloom (Financial Times, Jonathan Eley) we see that the womenswear retailer that almost collapsed in the pandemic has since risen from the ashes to the extent that it is planning on opening more stores next year thanks to customers returning to the high streets! Founder Peter Simon bought it back after it went into administration under lockdown and although its store portfolio shrunk from 230 (including its “Accessorize” sister brand) when it went into administration to 154 now, it’s looking to open 22 next year! What a return from the (almost) dead!

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!

3

INDIVIDUAL COMPANY NEWS

Apple looks like it’ll falter, Twitter reintroduces the tick and Amgen lines up a massive deal…

In a quick scoot around some of today’s other interesting stories, Covid, protests and demand fears (The Times, Emma Powell) shows that Apple’s unrelenting success could be knocked off course by the production disruptions at its supplier Foxconn, weakening demand for its products because of faltering economies denting discretionary spending and regulators clamping down on how it uses its App Store. Then Twitter relaunches blue tick service – plus gold for business (The Guardian, Dan Milmo) highlights the relaunch of Twitter’s subscription service that will confer users with verified status for $8 a month or $11 on their iPhone in exchange for getting access to extra features. Subscribers to the TwitterBlue service will get more prominence than non-payers and this will now be available in the US, Canada,

Australia, New Zealand and the UK. Other new features include a gold tick for businesses and government accounts having a grey one. It’ll be interesting to see what the take-up is like now!

Then in Amgen in advanced talks to buy Horizon Therapeutics (Wall Street Journal, Ben Dummett, Dana Cimilluca and Laura Cooper) we see that US biotech company Amgen is in advanced talks to buy Horizon Therapeutics (which is NASDAQ-listed by based in Ireland) in a takeover that could be valued at well over $20m. * SO WHAT? * Amgen is going to be seeing a lot of patent expiry among its drugs soon so buying Horizon will instantly improve its pipeline. Horizon’s specialisation in treatments for rare diseases makes it an extra-attractive target because its drugs can command high prices. A deal could be finalised by the end of today. If it was finalised, it would be the biggest healthcare merger this year!

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!

4

...AND FINALLY...

…in other news…

As we are fast-approaching the big day, I thought this had some pretty interesting ideas: Christmas gift guide from light up pillows to glowing gin to add some festive sparkle (The Mirror, Natasha Wynarczyk) and then there’s something to help you with the all-important roast potatoes in Chef shares little-known roast potato cooking hack that makes them taste ‘epic’ (The Mirror, Courtney Pochin). Not long to go now!

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Some of today’s market, commodity & currency moves (as at 0633hrs 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 **
7,477 (+0.06%)34,476.46 (-0.9%)3,934.38 (-0.73%)11,004.62 (-0.7%)14,371 (+0.74%)6,678 (+0.46%)27,824 (-0.29%)3,179 (-0.87%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
$71.599$76.491$1,786.641.222481.05133137.0371.1627816,931

(markets with an * are at yesterday’s close, ** are at today’s close)