Monday 18/07/22

  1. In AVIATION NEWS, Farnborough goes ahead, Rolls-Royce tries hydrogen – as does Johnson Matthey
  2. In COST-OF-LIVING-IMPACT NEWS, younger people abandon streaming, Tesco gets price-matched and VeeTee threatens to take manufacturing abroad
  3. In MISCELLANEOUS NEWS, Musk’s Starlink passes the Ukrainian test, PwC rejects a split and London property developers plough on with more big buildings
  4. AND FINALLY, I bring you an inspirational CrossFit athlete…

1

AVIATION NEWS

So the Farnborough Airshow goes ahead while Rolls-Royce and Johnson Matthey engage with hydrogen…

📢 BTW, I put all the Weekly roundup videos with myself and Ralph onto the video section of the website – so if you wanted to see them in all their glory, they are now in the archive 👍

Farnborough airshow to focus on cleaner flying and potential fighter-jet deal (The Guardian, Jasper Jolly) shows that the massive event will be going ahead for the first time in four years (it normally happens every two years, but Covid…). Although it doesn’t sound like much, this is a major event for the aviation industry because it brings bigwigs from the entire aviation industry together and it’s often where very big deals get done. After a torrid couple of years, all eyes will be on what goes on here and on any discernible trends that emerge. Companies like GKN Aerospace and Embraer are talking about planes flying on cleaner fuel while there are expectations that BAE Systems might make an announcement that Japan will join the Tempest fighter jet project, which would help to spread development costs. * SO WHAT? * I think that the whole industry will take comfort from the return of this airshow and, given the uptick in passenger numbers and need for cleaner aircraft, I suspect that there are lots of deals to be done!

Rolls-Royce to run engine tests with hydrogen as pressure mounts to cut emissions (Financial Times, Sylvia Pfeifer) shows that the engineering company is testing out whether hydrogen can safely power a small aircraft using two of its engines. They will take the form of ground trials and won’t involve flying an aircraft. * SO WHAT? * This sounds like quite an interesting technology, but has quite a way to go to becoming reality. In the shorter term, Rolls-Royce reckons that the best way for the aviation industry to cut emissions is to use sustainable aviation fuels (SAFs) as hydrogen is quite expensive at the moment.

And yes, although this isn’t an aviation company, it is about hydrogen power: Engineer targets carmakers with hydrogen gigafactory (Daily Telegraph, Howard Mustoe) shows that Johnson Matthey (famed for making catalytic converters for cars) is about to sign a deal to build an £80m hydrogen fuel cell gigafactory in the UK. It will make bits for hydrogen fuel cells and already has customer orders lined up. * SO WHAT? * This is particularly interesting given that Johnson Matthey pulled out of battery development last year in order to focus its efforts on hydrogen technology and utilise its knowledge of catalytic converter technology. This new gigafactory will mean that just shy of two thirds of fuel cell components will actually be manufactured in the UK, meaning that we could get big in hydrogen. If we go down this road, hydrogen can be used in steel making to replace coal and in trains and HGVs as a substitute for diesel.

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

COST-OF-LIVING-IMPACT NEWS

Streaming takes a hit, Tesco gets price-matched and VeeTee thinks about moving abroad…

Younger people abandon streaming to save money (The Times, Katie Prescott) shows that more people are cancelling their video subscriptions as they tighten their budget in the cost-of-living squeeze. This trend is particularly prevalent among younger audiences who are turning to free options such as BBC iPlayer, ITV Hub and TikTok, according to research by Kantar. * SO WHAT? * I did say that this was going to happen a while ago now – and I was also correct in saying that Amazon Prime will do well in such an environment as it is seeing the biggest share of new subscriptions – at 37.9%. This is down to its long free trial period, plus the fact you get lots of other services thrown in. As I have said before, the thing with Amazon is that it doesn’t just earn from the subscriptions – the fact that you have Amazon Prime means that you are probably more likely to buy from Amazon. This means that you will probably spend a lot with them, so I’d argue they benefit more per subscriber than any “pure” streamers!

Then in Tesco Clubcard deals have fresh rival in Amazon (The Times, Tracey Boles) we see that Amazon is now price-matching Tesco on hundreds of groceries in a bid to boost its own Amazon Fresh business. * SO WHAT? * I think that this is what

supermarkets have been frightened of ever since Amazon dipped its toe into the shark-infested waters of grocery retail! Now it’s come to fruition! It does make me think, however, that Aldi is now arguably the most powerful influence in grocery shopping! Why? Because Tesco is price-matching with Aldi! Everyone is trying to copy everyone else. This can’t go on forever, but for now this is probably good news for consumers who now have more choice. I think that, ultimately, grocers with the deepest pockets and/or the leaner supply chain/most efficient business model are going to win because everyone else is probably taking the pain by effectively paying for the discounts themselves.

Supermarket supplier threatens to move manufacturing abroad (Daily Telegraph, Laura Onita) shows that one of the UK’s biggest rice companies, VeeTee, is thinking about moving manufacturing abroad because of the massive hike in gas and energy prices. VeeTee, which supplies most big supermarkets with dry and microwaveable rice, has seen its annual gas bill rise from £600,000 to £2.4m and electricity bill go from £600,000 to £1.3m. This is just another example of how rising costs are filtering through to the real economy.

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

MISCELLANEOUS NEWS

Musk aces the Ukraine test, PwC refuses to demerge and London property developers are still feeling pretty punchy…

In a quick scoot around other interesting stories today, Ukraine leans on Elon Musk’s Starlink in fight against Russia (Wall Street Journal, Yaroslav Trofimov, Micah Maidenburg and Drew Fitzgerald) shows that Elon Musk’s Starlink service (owned by SpaceX), which provides internet connectivity via a constellation of satellites, is getting put through the ultimate test in Ukraine, where one platoon commander on the Izyum front said “Without Starlink, we would have been losing the war already”. Starlink works by portable satellite dishes on the ground communicating with Musk’s satellites that beam down the internet. * SO WHAT? * This is a pretty incredible endorsement of what Starlink can do as it is keeping an army’s communications together when a lot of commercial cellphone towers have been knocked out. Ultimately, this may not win Musk any friends in Russia – and it may stop friends of Russia from using the Starlink service for fear of Russian reprisals – but I think it looks like it’d be pretty good for everyone else. Amazon and Britain’s OneWeb, which is similar to Starlink, may also benefit given that the technology is proving itself in difficult conditions.

Given all the pressure for the Big Four accountants to separate their businesses, PwC set for record revenues as it rejects audit and consulting split (Financial Times, Michael O’Dwyer) shows that there is some overt resistance to the idea. The company said that the current structure was key to attracting staff and the pluses of the structure outweighed the minuses. * SO WHAT? * Although I think that it is morally better for PwC to separate its businesses, there are so many practical benefits for keeping it all under one roof – not least the massive cross-selling opportunities (which, TBH, is what got the accountancy firms in trouble in the first place). EY is TALKING about splitting, but I will believe it when I see it.

Then in Property developers bet on City of London’s appeal with new towers (Financial Times, George Hammond) we see that property developers Topland Group and Axa IM Alts are going ahead with plans to build two new towers in the City in a bet that companies will still pay-up for environmentally-friendly offices. Neither developments have tenants signed up but they remain confident that the demand will be there. * SO WHAT? * This all sounds great, but although office occupancy hit its highest level in March since the beginning of lockdowns in 2020, it hasn’t gone up that much since then. The ongoing phenomenon of WFH still looms large, but I guess they are right to rely on their environmental credentials. Still, they’ve got to be feeling a bit nervous, no?

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…

I do CrossFit when I can, although I most definitely have a lot of room for improvement! For those who don’t know, it’s a mix between HIIT, gymnastics and weightlifting and it is an absolute nightmare! So what this woman has achieved is nothing short of astounding: Woman ‘pinching herself’ with CrossFit world final spot after devastating diagnosis (The Mirror, Harry Ingham and Tim Hanlon). Best of luck to her!

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Some of today’s market, commodity & currency moves (as at 0632hrs 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 **
7,159 (+1.69%)31,288.26 (+2.15%)3,836.16 (+1.92%)11,452.42 (+1.79%)12,865 (+2.76%)6036 (+2.04%)HOLIDAY3,278 (+1.55%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
98.56102.421,715.701.189471.00946138.2351.1783221,601.9

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