Monday 22/05/23

1. In TECH NEWS, China boots Micron, Facebook eyes Magic Leap while getting fined for mishandling user info, speculation surrounds Apple and the metaverse and we see the battle between iMessage and Snapchat
2. In LEISURE NEWS, Ryanair has designs on Europe, workations boost leisure names and hospitality pay gets a boost
3. In REAL ESTATE NEWS, sellers perk up while buy-to-let suffers
4. In MISCELLANEOUS NEWS, G7 disappoints, A&O engages in a massive merger and the vegan boom loses momentum
5. AND FINALLY, I show you how to write a techno song (no ChatGPT needed)…

So China kicks Micron out, Facebook eyes Magic Leap whilst getting fined, speculation that Apple could save the metaverse gains momentum and we look at iMessage vs Snapchat…

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:

China bans Micron’s products from key infrastructure over security risk (Financial Times, Eleanor Olcott and Demetri Sevastopulo) shows that the Cyberspace Administration of China announced yesterday that US chipmaker Micron Technology’s products posed “serious network security risks” and banned infrastructure operators from buying its products. * SO WHAT? * This will hurt Micron as 25% of its sales come from China and Hong Kong – but this is the culmination of a seven-week investigation by the CAC, so everyone saw this coming. Obviously, the US Commerce Department opposed the action and although no-one’s saying it officially, this is clearly Chinese retaliation for US sanctions on Chinese companies. Observers say that Micron was an easy target because its products are easily substituted by chips from rivals such as Samsung and SK Hynix. This may create a delicate problem as the US asked South Korea to encourage its chipmakers NOT to fill the gap if Micron was targeted.

In Meta Platforms-related news, Facebook parent in talks with Magic Leap over augmented reality deal (Financial Times, Hannah Murphy and Patrick McGee) shows that Meta is currently looking

at signing a multiyear agreement with AR start-up Magic Leap to help advance its ambitions in the metaverse. Magic Leap makes custom components, included specialist lenses and related software, that help build the components of the metaverse. At the moment it seems that the agreement would stop short of a Meta-Magic Leap headset, but I guess you never know! Mark Zuckerberg’s metaverse vision is over. Can Apple save it? (The Guardian, Alex Hern) is a really interesting article that brings you up to speed with the metaverse story thus far and the recent report from Deloitte, commissioned by Meta, which looks at the opportunities that the metaverse could bring (it reckons it could add between £40bn and £75bn to UK GDP alone by 2035, but clearly this is just pie-in-the-sky stuff) in education, healthcare and live entertainment, among other areas. It contends that Apple could rejuvenate interest in the metaverse as it is, as I have said before, widely expected to launch its own virtual reality headset. In the meantime, Facebook to be fined £648m for mishandling user information (The Guardian, Dan Milmo) shows that Facebook is going to be fined a chunk of change by Ireland’s Data Protection Commission and suspend data transfers to the US for breaching Europe’s GDPR regulations, although the ruling is unlikely to come into force immediately. Facebook will be granted a grace period to comply with the decision but of course the company is bound to appeal, dragging the process out even longer. * SO WHAT? * Zuck is not abandoning the metaverse despite intensifying criticism of his initial eagerness (it was 18 months ago that he changed the name of his company!). Still, despite his best efforts, the metaverse just hasn’t taken off and it seems that speculation is increasing about Apple wading into the market and giving it an almighty boost. Now, if rumours of a headset that doesn’t just look like a “nerd helmet” and has very expensive price tag (around $3,000?) are correct, I don’t see it as being something that will be adopted by the mainstream. However, if Apple can get more people (and developers!) to board the metaverse fun bus, the NEXT iteration could be quite exciting. Still, it’s early days yet and they’ve still got to come out with iHeadset 1.0 first!

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!

Ryanair gets punchy, workations could power the leisure sector and hospitality pay increases…

Ryanair’s O’Leary pledges growth push by stealing European market share (Financial Times, Philip Georgiadis) shows that the airline is aiming to take market share from rivals and double passenger numbers in the next ten years. This comes not long after Ryanair announced that it was buying $40bn-worth of planes from Boeing and flies in the face of those who doubt that there is that much growth potential in the continent. CEO Michael O’Leary disagrees and says that there are also growth opportunities in central and eastern Europe. Fun fact: Ryanair is Europe’s biggest airline by passenger numbers. * SO WHAT? * This is all good, but the fact of the matter is that recent massive growth has occurred because Covid restrictions have eased and so it is unlikely that recent growth numbers will be sustainable. That said, Ryanair still thinks it can eat everyone’s lunch AND make inroads into other parts of Europe, so it could be possible.

Re airline travel, I have often commented on leisure travel versus business travel in terms of what drives airlines. Well Workations: good for leisure stocks – if employers tolerate absences (Financial Times, Lex) offers another option – the “workation”,

which involves taking a trip away but doing some work while you’re there. Pre-Covid, Americans took an average of 17.4 days of vacation per year versus the EU which stipulates at least 20 vacation days for all employees and UK workers who get 28. What is also pretty surprising is that almost half of US workers who get paid time off don’t use all of it, according to the Pew Research Center! * SO WHAT? * Workations have become more of a “thing” under lockdown thanks to the rise of hybrid working and it is thought that while business travel is unlikely to recover fully to pre-pandemic levels, workations could actually pick up some of the slack…

Then in Brexit pay boom for hospitality staff (Daily Telegraph, Oliver Gill) we see that average pay for hospitality staff has gone up by 9.5% over the last year, outpacing the national average of 6.6%. This is due to a super-tight labour market which has also been squeezed by the lack of foreign workers following Brexit. * SO WHAT? * Yes this is higher than the average, but then I’d say this comes from a low base. As consumers seem to continue to be keen to spend money on getaways and experiences more than “things”, you would have thought that wage growth will continue, although it will surely hit a limit soon.

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!

Sellers cheer up while buy-to-let sees an exodus…

Sellers have spring in their step as house prices rise (The Times, Emma Powell) cites the latest Rightmove stats which show that sales prices have risen at their highest rate so far this year in May, with the biggest increases shown in London and the southeast. As things stand currently, the discount from the final asking price to the agreed sale price has remained steady at a nationwide average of 3.1%. * SO WHAT? * It looks like the warnings of a house market crash thanks to booming interest rates were overdone and that these fears have been replaced by a widening optimism about the prospects of an improving economy.

Then in Buy-to-let exodus risks future house building (Daily Telegraph, Melissa Lawford) we see that the falling number of buy-to-let landlords is actually starting to affect future housing developments as the off-plan buying activity of flats has also slumped. Research by Hamptons estate agents shows that 34% of new homes in England and Wales were sold before they were completed last year compared to a peak of 46% in 2018. This is the lowest it’s been since 2013. * SO WHAT? * The difficulty here is that housebuilders often use off-plan sales to fund developments, so with the current cooling of the buy-to-let market, this model is looking somewhat wobbly. Some are now saying that this slowdown in off-plan sales will lead to fewer homes being built this year. This is all bad news for renters in particular because they will have to pay higher rents.

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!

The G7 disappoints, A&O announces a major merger and the vegan bubble bursts…

In a quick scoot around some of today’s other interesting stories, G7 disappoints on climate progress without deadlines on gas and coal use (Financial Times, Camilla Hodgson) shows that although the G7 countries said that they were committed to a fully or “predominantly” decarbonised power sector by 2035, they didn’t set a deadline for the phaseout of coal power. Germany wanted more public investment in Gas and Japan resisted calls to phase out coal power generation. There had been hopes that the G7 would lead the way in phasing out fossil fuels – but I guess that reality is kicking in here.

Meanwhile, Allen & Overy and Shearman plan merger to create $3.4bn law firm (Financial Times, Kate Beioley) highlights a huge deal in the legal sector as magic circle law firm Allen & Overy announced that it would be merging with New York’s Shearman & Sterling. This will be one of the biggest legal tie-ups ever – and the first transatlantic merger since 2000, when Clifford Chance joined up with Rogers & Wells in 2000. The enlarged entity, to be called Allen Overy Shearman Sterling, will have almost 4,000 lawyers in 49 countries! It will get over $1bn in revenues from the US, 30% from the UK and 40% from the rest of the world. * SO WHAT? * In terms of what each side will get from it, A&O will get much better access to American clients while Shearman will get a much better “rest of the world” offering. Shearman had lost a lot of lawyers after it abandoned merger talks with Hogan Lovells earlier this year and it seems that this should be a reasonable-enough fit as A&O has been looking to grow its US presence while Shearman Sterling has

wanted to grow its overseas presence. This mega-merger will undoubtedly prompt a LOT of high-up meetings at law firms today and may even be the catalyst to consolidation in the legal sector. I am sure that everyone will be drawing up lists of consolidators and consolidatees! The deal will be put to the vote by both sets of partners before the summer with a deal likely to complete in somewhere between six and 12 months.

Then in Has the vegan bubble burst? Sales stagnate in UK as brands withdraw plant-based products (The Guardian, Jon Ungoed-Thomas) we see that the whole alt-protein market has been taking a massive hit recently as products are being withdrawn after the “vegan gold rush” of 2019. Oatly’s drinks range remains popular but it announced last week that it was withdrawing ice-cream tubs from the UK market. Nestlé announced in March that it would withdraw its plant-based Garden Gourmet and Wunda brands from the UK while Innocent Drinks (now owned by Coca-Cola) said it would be discontinuing its dairy-free coconut, almond and hazlenut smoothies and sausage maker Heck announced that it was cutting its vegan range earlier this month from ten products to just two! * SO WHAT? * One of the main problems has been that the products have just proved to be too expensive in a cost-of-living crisis. The share prices of vegan standard-bearers like Beyond Meat and Oatly have crashed badly since their highs and the market also probably suffered from overcrowding in the initial rush. I guess that now is the time for consolidation to get economies of scale so that prices can come down to more realistic levels. At least with a more comparable price point, products will get a better chance of success. However, I think that prices need to go further to really boost popularity – they need to be CHEAPER than the meat or daily equivalent.

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…

Just in case  you were feeling a bit creative, I thought I’d show you how to write techno tracks – no AI needed! Why not give it a go??