Monday 19/07/21

  1. In ENVIRONMENTAL & OIL NEWS, Merkel emphasises the environment, the UK races to improve battery storage, the billionaire space race comes at huge cost and Opec reaches agreement
  2. In CONSUMER/RETAIL NEWS, consumer confidence returns to pre-Covid levels and we are happy to shop, house prices continue to rise, Morrisons tests cashierless, Ocado fights a fire and the CBI teams up with M&S on the pingdemic
  3. In MISCELLANEOUS NEWS, Zoom buys Five9, rising materials prices make construction bids tricky and secondhand cars go for a profit
  4. AND FINALLY, I bring you cat ears and tactics to stay cool in the current heatwave…

1

ENVIRONMENTAL & OIL NEWS

So Germany faces tragedy, the UK faces battery storage challenges, the space race has big environmental costs and OPEC comes to an agreement at last…

Angela Merkel says the country must do more to fight climate crisis (The Guardian, Philip Oltermann) highlights Chancellor Angela Merkel’s reaction to the tragic floods that occurred in Germany, Austria and Belgium at the end of last week and over the weekend. She remarked that “We have to up the pace in the fight against climate change”. * SO WHAT? * First of all, I would like to say that my thoughts go out to everyone affected by this terrible disaster. However, Watson’s Daily is all about giving you the commercial spin on events, so please excuse me if I concentrate on this particular aspect. Clearly, we’ve all been pretty horrified by the terrible scenes on the news and it occurs just two months before federal elections will find Merkel’s successor. There is a risk here that the floods could be politicised and that the Greens could make up ground, but I have to say that I think Merkel is at her most impressive in a crisis. My mind goes back to when Fukushima happened. Merkel was flailing at the polls and then, suddenly, she went from being one of the most pro-nuclear power generation supporters to changing tack completely and going full-speed ahead with alternative power. She judged the public mood perfectly and swept to another term in office. Also, more recently, until Covid hit, Merkel was again flailing in the polls and she just seemed to be going through the motions and seeing out her time. But then her anointed successor, Annegret Kramp-Karrenbauer, resigned and her party was in limbo. But as the Covid crisis grew, so did her popularity as she flipped back into her role of elder stateswoman and chief holder-togetherer of Europe. If Merkel can “do a Merkel” again, and judge the public as she has done in the past, her party, the CDU, may yet benefit. Mind you, pictures of the CDU’s leader – and frontrunner to take over from Merkel – Armin Laschet sharing jokes with bystanders didn’t go down well…

In Race to bring battery storage up to speed with renewable energy (Daily Telegraph, Rachel Millard) we see that the UK is facing up to the challenge of trying to get electricity storage to catch up with advances in wind-generated power. Fun fact: did you know that wind farms are regularly paid to turn off during particularly windy days so that they don’t overload the grid?? As things stand, the supply of renewable power is growing way faster than the

early stage battery market can cope with but, outside the village of Minety in north Wiltshire we now have the biggest storage battery in Europe that helps to avoid blackouts and volatile costs. More of these batteries will be needed if we are to reach our goal of generating at least 75% of our power from renewable sources. This is going to be an uphill task given that research by National Grid ESO suggests that we’ll need 43GW of electricity storage in 2050 versus the rather paltry 3.5GW we have today. As “Doc” Emmett Brown might say, “Great Scott!”. * SO WHAT? * Clearly, there is massive upside potential here for companies that tap into this. Lithium-ion battery developer Zenobe and vanadium-flow battery developer Invinity Systems are already involved, as is utilities company EDF, which recently bought battery storage start-up Pivot Power. Although there are some pretty tricky hurdles to overcome, the good news is that battery costs continue to drop as tech improves – according to Bloomberg, for instance, battery costs fell by 85% between 2010 and 2018. This is a very interesting area and definitely one to watch!

On the other hand, How the space race could be one giant leap for pollution (The Guardian, Katharine Gammon) highlights the major environmental costs of the current billionaire 🍆-swinging contest re going into space. * SO WHAT? * Virgin Galactic, SpaceX, Blue Origin and Space Adventures are among the companies competing for rich people to buy tickets to go to space so they can boast to their friends at dinner parties (“Going to the Maldives is just so – last century, daaahling!” etc.). However, Elouise Marais, an associate professor of physical geography at UCL London, reckons that when rockets launch into space they release 200-300 tons of carbon dioxide versus a long-haul flight which releases 1-3 tons. OK, so there’s not much space travel going on right now but as it increases, so could the environmental costs. Emissions from rockets are released into the upper atmosphere, which means that they stay there for a very long time. Time for regulation??

Then in Opec+ reaches deal to raise oil production (Financial Times, David Sheppard) we see that OPEC and its allies have, at last, reached a deal to raise oil production by 400,000 barrels per day from August. * SO WHAT? * This represents a victory for Abu Dhabi, which threatened to upset a deal thrashed out earlier this month at the latest OPEC meeting. Ultimately, though, an agreement means that OPEC has managed to stay together and a production free-for-all has been averted (something that may have happened if the cartel had splintered). As far as consumers are concerned, though, the production increases are actually quite modest and demand is expected to rise as economies continue to open. I suspect that ongoing buoyant fuel prices will continue to result in upward pressure on inflation…

2

CONSUMER/RETAIL NEWS

Consumer sentiment continues to gain momentum, Morrisons tests out cashierless, Ocado has a fire problem and the CBI and M&S team up on the pingdemic…

As we continue to delve into the psyche of the consumer, Confidence surges back to pre-pandemic levels (Daily Telegraph) cites research from Deloitte which shows that consumers are feeling positive about their own financial situation and that of the wider economy. They are more confident about spending, eating out and going on holiday than they have been since the start of the pandemic despite rising cases of the virus. Happy shoppers eager to open wallets (The Times, Patrick Hosking) echoes this view, citing PwC’s Consumer Sentiment Index, although this was even more positive as it showed its highest reading since 2008. Confidence has improved across age groups and across the whole of the UK. ‘Frenzied buyer activity’ drives prices to new high (The Guardian, Hilary Osborne) will also make consumers feel richer as property portal Rightmove says that the average asking price for a home in Britain reached a hew high in June, the busiest month on record for sales. * SO WHAT? * It’s great to see all this positivity after such a terrible year last year, but it will also no doubt put further upward pressure on inflation. How long will the Bank of England be prepared to hold out for?

In terms of the retailers themselves, Morrisons tests stores without checkouts (Daily Telegraph, Matthew Field) highlights Morrisons testing out what it calls Project Sarah (?!?) in an Amazon Fresh-style format. It is working with US tech company AiFi, which uses cameras to track objects and customers and charges them through a smartphone

app. * SO WHAT? * I think this is particularly interesting given that Morrisons has already teamed up with Amazon by providing its entire product line-up on its site and Amazon already has this tech in Amazon Fresh and Amazon Go stores. Does this mean that Morrisons is protecting itself from Amazon dropping them in future or does it mean that it’s more likely that we’ll see some kind of Morrisons/Amazon Fresh rollout? It’s an interesting development and it’ll be interesting to see whether other supermarkets go down this road as well…

Meanwhile, Ocado fighting to ensure its orders do not go up in smoke (Daily Telegraph, James Cook) highlights Ocado’s current difficulties as it had to deal with two fires at its biggest automated warehouse in Erith over the weekend. The incidents were caused by three robots colliding. * SO WHAT? * In the short term, this means thousands of orders being cancelled. In the longer term, though, it could cause confidence wobbles in potential customers for its technology if concerns are not addressed quickly.

As lockdown restrictions lift, CBI and Marks & Spencer join calls for government to tackle ‘pingdemic’ (The Guardian, Gwyn Topham) shows that the pressure is increasing on the government to amend the self-isolation policy for people notified by the NHS test-and-trace app. The increased numbers of people being “pinged” has been resulting in staff shortages and although the government plans to amend self-isolation rules on 16th August, the CBI is pushing for the abolition of the 10-day quarantine rule for the double-jabbed. * SO WHAT? * This is a serious problem as M&S’ chief exec said that as the number of Covid cases is doubling every week, three times the number of staff are being pinged, worsening the existing problem of staff shortages. If businesses are to take full advantage of the current consumer feelgood factor, something needs to be done about this pronto.  

3

MISCELLANEOUS NEWS

Zoom goes shopping, rising materials prices cause construction headaches and the used car frenzy continues in the US…

In other interesting news from today, Zoom to buy Five9 in all-stock deal valued at $14.7billion (Wall Street Journal, P.R. Venkat and Newley Purnell) shows that Zoom Video Communications is making a major acquisition of a company that provides cloud-based customer service software that will help Zoom to expand its corporate and enterprise client offering. It will also help the company to tap into the $24bn contact-centre market. * SO WHAT? * This is Zoom’s biggest ever acquisition and will help to support its existing Zoom Phone business which is a cloud-based alternative to office telephone systems. Nice, but is this sort of thing really enough to fend off the likes of Microsoft with its all-powerful and all-pervasive Teams?

Escalating materials prices turn construction bids into a gamble (Wall Street Journal, Bob Tita) shows that construction companies are having a very difficult time at

the moment pricing up jobs as rising materials costs risk tipping them into loss. The number of projects in the US is increasing as the economy bounces back from a disastrous year, but higher prices for steel, copper, brass, lumber, laminate sheeting and things like PVC pipe are making life very difficult for them. * SO WHAT? * I think that this is a very tricky situation that does not have an easy solution. In effect, companies are really having to guess commodity prices correctly but still run the risk of being undercut. Ultimately, I think that this will result in companies going out of business as they guess incorrectly, but the fact that the underlying demand for their services is strong means that there could be a lot of consolidation in the sector in the medium term IMO.

Selling your used car? You could turn a profit (Wall Street Journal, Nora Naughton) just highlights the continued red-hot second-hand market for cars in the US at the moment. It gives the example of one guy who went to a dealership to buy some floor mats and ended up selling his one-year old truck for $3,000 more than he bought it for last spring! The chip shortage has been choking supply of cars but if TSMC is right in its predictions that the worst is over, now might be the right time for Americans to offload their vehicles before supply starts to normalise!

4

...AND FINALLY...

…in other news…

I’ve seen some interesting inventions of things-you-didn’t-know-you-needed in my time, and these things rank right up there: Japan’s brain wave-reading cat ears are back, with a brand-new twist! (The Mirror, Casey Baseel) 😱. I think that we should get together and campaign to try to get these things in all offices up and down the land. The office environment would be so much more fun if we all wore cat ears that wiggle when you are feeling a mix of focus and relaxation and stand up when they are concentrating, no? Goldman Sach’s trading floors would never be the same again if everyone wore these 😂. Who’s with me??

Then I thought I bring you this given the weather we’re having at the moment: Property expert’s tips to keep your house cool – and how to sleep in a heatwave (The Mirror, Paige Holland). Watson’s Daily always has your interests at heart 😍

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Some of today’s market, commodity & currency moves (as at 0727hrs 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 **
6,986 (-0.37%)34,687.85 (-0.86%)4,327.16 (-0.75%)14,427.24 (-0.8%)15,500 (-0.83%)6,440 (-0.83%)27,637 (-1.31%)3,540 (+0.02%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
$71.10$72.91$1,805.191.375061.18025109.961.1651$31,750.00

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