- In MACROECONOMIC NEWS, China GDP grows, Europe faces a double-dip and fund managers back Biden to win
- In TECH NEWS, it looks like Big Tech will suffer whoever wins the election and Facebook could get a big fine
- In RETAIL NEWS, UK shops close at a record rate and Hamleys cuts jobs
- In MISCELLANEOUS NEWS, the US appeals to developing nations to supply networks, increasing electric car adoption is leading to a tussle for charging control while Europe is set to decide on vegan “burgers” or discs
- AND FINALLY, I bring you the latest trend in handbags…
So China’s GDP grows, Europe faces tricky times and fund managers back Biden…
China economy grows 4.9% as rest of world struggles with coronavirus (Wall Street Journal, Jonathan Cheng) highlights the contrast between China’s improving fortunes and the sluggish performance of the rest of the world. Official figures show that GDP growth hit 4.9% in the third quarter versus the previous year. This actually fell short of analyst expectations but the country is nevertheless back on track to be there or thereabouts with growth forecasts made at the beginning of the year of between 5.5% and 6%. The International Monetary Fund (IMF) believes it will be the only major world economy to grow this year. Other official figures showed that unemployment was down and that retail sales are rising.
On the other hand, Europe’s second wave raises threat of double-dip recession (Financial Times, Martin Arnold) shows that Europe’s economy looks increasingly likely to
contract again as Germany, France, Italy, Spain and the UK have all put measures in place recently to control the second wave of Covid-19 infections following a recent rise in cases. Interestingly, Q3 GDP figures are to be published at the end of this month and are expected to reflect record growth in the eurozone – but now economists are starting to cut their Q4 figures. * SO WHAT? * This latest setback is likely to dent ECB hopes that the eurozone economy will bounce back to pre-coronavirus levels by 2022. Most do not expect across-the-board lockdowns given the extent of economic damage that wrought the first time around, but partial lockdowns will certainly slow any progress.
Then in Fund managers overhaul portfolios on ‘blue wave’ bet (Financial Times, Attracta Mooney and Siobhan Riding) we see that portfolio managers including Janus Henderson, Schroders, Invesco and Candrian have said that their portfolios now reflect a loss for Trump in the upcoming presidential election. * SO WHAT? * If this turns out to be the case, monetary easing is expected, Biden is expected to spend big and to invest in green energy. Investors are ditching tech stocks and buying into housebuilders and regional banks as a result.
Big Tech looks like facing resistance whoever wins and Facebook may get a big fine…
Talking about elections, Political rage boils over for US Big Tech amid election (Daily Telegraph, James Titcomb) shows that the likes of Facebook, Google and Twitter in particular are likely to be in the crosshairs of whoever makes it to the White House following the presidential elections – but for different reasons. Republicans complain that the liberals of Silicon Valley are restricting free speech – especially that of ardent right-wingers – and Democrats are more concerned about the sheer economic power of Google, Facebook and Amazon, privacy issues and how they suck oxygen from their competition. * SO WHAT? * So far, the only big fine against Big Tech has been the $5bn
fine from the Federal Trade Commission (FTC) against Facebook for breaching users’ privacy last year. However, the fact that both sides of the political spectrum want to “do something” about Big Tech – albeit for different reasons – would suggest that the next four years is going to be more difficult than the last four as an enforced break up and revision of business models looks entirely possible.
Talking about Facebook, Facebook facing EU fine over child privacy breach (Daily Telegraph, James Titcomb) shows that Facebook may be in line to pay a massive privacy fine in the billions of dollars. Ireland’s Data Protection Commissioner (DPC) has commenced two separate inquiries into allegations that Instagram made the email addresses and phone numbers of users under 18 public. Instagram has a minimum age of 13 but over 20% of British kids aged between 8 and 12 use it. * SO WHAT? * If Facebook is deemed to have breached European data protection laws, Facebook may have to pay a fine of up to 4% of its annual revenue. Ouch!
UK shops close at a record rate and Hamleys cuts jobs…
Carnage on the high street continues in Stores close at record rate as shoppers change their habits (The Times, Gurpreet Narwan) as a study by PwC showed that shops closed down at a record rate during the first half due to the outbreak. Although things have improved over the summer, tightening restrictions on socialising and movement are likely to continue to weigh heavily on the UK high street.
Interestingly, over 5,000 shops actually opened during the first half of this year, which would imply that there is still some demand in there for physical shops.
Hamleys to cut more than a quarter of London staff (The Guardian, Zoe Wood) is another sad reflection of what is going on in retail at the moment as the toy specialist announced it would be cutting over 25% of its staff – something particularly noteworthy given that we are approaching the peak Christmas trading season. Fewer tourists and a lack of office workers continue to hit sales and a planned refurbishment has also been put on hold. On a positive note, web sales at Hamleys have been strong and it is going to be opening up 11 pop up shops between now and Christmas.
The US turns to developed nations for networks, US operators scramble over EV charging supremacy and Europe is set to decided on burger terminology…
Having done a massive hatchet-job on Huawei getting involved in the rollout of 5G networks around the world over the last year or so, US to offer loans to lure developing countries away from Chinese telecom gear (Wall Street Journal, Stu Woo) shows that the Americans are now making a push into developing countries to use alternative telecoms gear rather than that of the Chinese. They are offering financial assistance to use their services that they say are safer and have fewer conditions (Chinese finance agencies offer finance that can trap them). The US Agency for International Development is leading the push and will send out politicians and regulators who will slag off Huawei and ZTE and big up makers like Nokia, Ericsson and Samung instead. * SO WHAT? * This sounds pretty outrageous, don’t you think? Whether you believe what they say or not, a concerted campaign by the Americans to decimate Chinese business whilst recommending alternatives is pretty brazen. Mind you, given the success the huge negative-PR campaign against Huawei this is the next logical step as China continues to be strong in Africa and the Middle East.
Meanwhile, Spread of electric cars sparks fight for control over charging (Wall Street Journal, Rebecca Elliott) shows that the increasing uptake of electric cars is prompting a scramble for who controls the charging networks to power them in the US. Utilities companies such as Exelon Corp and Southern California Edison are looking to invest
millions in upgrading their infrastructure to accommodate charging but want to get some control. They argue that there will be quicker EV adoption if utilities get involved because they already have an infrastructure to build, something that other private companies lack. Their opponents say that they should not be allowed a monopoly on car charging but acknowledge they’ll have to play a prominent role. * SO WHAT? * I suspect that progress here will be monitored closely as other countries think about the spread of electric vehicles.
Debate over vegan ‘sausages’ and ‘burgers’ heats up ahead of EU vote (Financial Times, Emiko Terazono and Mehreen Khan) shows that MEPs are scheduled to vote this Wednesday on whether words like “steak”, “sausage”, “escalope” and “burger” will be allowed to be used with products that don’t contain meat. If they decide against letting them use such terminology we will be subject to such foodstuffs to be called “discs” and “fingers” (really??). Funnily enough, the move has been backed by Europe’s meat and livestock industry and the European Parliament’s agricultural committee. * SO WHAT? * Farmers are understandably fearful of the continued rise of meat-alternatives and forcing them to call their products by different names is obviously designed to make them less appealing. Their argument that referring to meat alternatives with names associated with meat would be confusing is patently ridiculous! The vote hangs in the balance and there has been form in this kind of thing before as the European Court of Justice in 2017 banned the use of the words “milk”, “butter” and “yoghurt” for marketing non-animal products. The agricultural lobby is very powerful, so it’ll be interesting to see what happens here. All this talk of food makes me want to eat a vegan cylinder 😋. Yum.
…in other news…
There’s nothing I like more here at Watson’s Daily than to identify important trends. Today is no different – and to that end I bring you Rubber chicken handbag everyone is obsessing over and where to buy it (The Mirror, Paige Holland). You heard it here first!
Some of today’s market, commodity & currency moves (as at hrs 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 **|
|Oil (WTI) p/b||Oil (Brent) p/b||Gold Per t/oz||£/$||€/$||$/¥||£/€||$/₿|
(markets with an * are at yesterday’s close, ** are at today’s close)