Monday 24/04/23

1. In MACRO, MARKETS & COMMODITIES NEWS, UK inflation speculation continues, Wall Street comes up with a new fear gauge, BP is going to feel the pressure and central banks buy gold
2. In TECH NEWS, the US increases chip pressures re China, Big Tech reports this week as owners invest in fusion, Twitter gives blue ticks to dead people and the UK is close to creating a new tech regulator
3. In UK REAL ESTATE NEWS, landlords abandon London and first-time buyer homes hit new highs
4. In MISCELLANEOUS NEWS, Bed Bath & Beyond files for bankruptcy, PepsiCo tries to be clever, carmakers get a taste of China’s progress and lab-grown meat continues to face an uphill struggle
5. AND FINALLY, I bring you news of a new “alternative” job and and unusual leaving cake…

So Haldane expects inflation to halve, Wall Street comes up with a new Vix, BP is under pressure and central banks buy gold…

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:

UK inflation will fall rapidly, says ex-Bank of England economist (The Guardian, Jasper Jolly) cites Andy Haldane, who left the Bank of England in 2021, as saying that he was confident that inflation will halve in the next six months. This is quite interesting as, from recent memory, he’s been more right than the governor of the Bank of England! He thinks that the Bank’s focus should now be on sparking GDP growth. No rain in Spain blamed for olive oil drought (Daily Telegraph, Matthew Field) explains why one component of our food baskets has shot up by over 60% in 21 months as the world’s biggest producer of olive oil had one of its driest years in 2022 and its hottest since records began! Italian olive oil prices have also jumped by 46% over the same time period but it’s interesting to note that prices charged in the supermarkets have not gone up by quite as much. For instance, the price of a bottle of Filippo Berio increased by 33% in the last 12 months as rival brand La Espanola increased by around 26%. Still, it’s a chunky increase!

Meanwhile, New Wall Street ‘fear gauge’ to track short-term market swings (Financial Times, Nicholas Megaw) shows that the Vix – aka “Wall Street’s fear gauge” – is having a major overhaul with the creation of a new one-day volatility index (called Vix1d) that will measure expected volatility in the S&P500 over the next day of trading as opposed to the next month, which is what the current Vix does. The new gauge will be launched by exchange group Cboe (Chicago Board Options Exchange) today in order to capture volatile market movements better. * SO WHAT? * Short-term options trading volumes have almost quadrupled since the

📢 I’m going to be doing the monthly round-up NEXT WEDNESDAY 3rd MAY at 5pm. If you would like to attend, you will need to register HERE. See you then!

beginning of 2020 and so a new measure was needed. Vix consolidates thousands of different options contracts into one number that is seen to reflect investor expectations of market volatility. It generally goes up when share prices go down but it can suddenly jump up if investors expect a rapid improvement in conditions. The new Vix1d is expected to be more volatile than the existing Vix.

In commodities news, BP facing green rebellion at annual shareholder meeting (The Guardian, Jillian Ambrose) shows that a green rebellion is brewing ahead of the company’s annual shareholder meeting this Thursday, something I alluded to last week. Some of Britain’s biggest pension funds are looking to band together push back on BP’s plans to de-emphasise its commitment to previously-stated climate goals. * SO WHAT? * It would be great if they made the oil supermajor change its course, but you do also think if you’re an investor and bang on about the environment, what are you doing buying shares in an oil company?? Sure, you might do it for performance reasons not to miss out on companies benefiting from higher-for-longer oil prices, but then surely that makes you a hypocrite? Many investors say that at least part of their job is to force companies to act properly but the cynical side of me says that investors’ primary goal is to make the money they manage grow. Not investing in oil risks poor performance, but if they buy in they also have to get their heads around the idea that they are buying into an oil company…

Then in Central banks load up on gold in response to rising political tensions (Financial Times, Daria Mosolova) we see that central bankers have been buying into gold as geopolitical tensions around the world ratchet up. Bullion tends to get popular in times of instability and demand has been rising over the last year and looks like it will continue to do so at least for the moment. Geopolitical risk is top of the list of investment manager concerns while inflation comes in second, according to the HSBC Reserve Management Trends Survey published by Central Banking Publications.

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 US tries to turn the screws on chips, Big Tech has a big week ahead, Twitter makes another blue tick boo boo and the UK gets ready to unleash a new tech regulator…

US urges South Korea not to fill China shortfalls if Beijing bans Micron chips (Financial Times, Demetri Sevastopulo) shows that the Americans are now asking South Korea not to supply their chips to the Chinese if China goes ahead and bans Micron’s chips. China recently launched a national security review into Micron, presumably in retaliation for all the sanctions the US has imposed. Micron is one of the biggest three DRAM memory chip makers in the world, along with Samsung Electronics and SK Hynix. Talk about putting South Korea in a difficult position! It is not currently clear as to whether either company got the memo as yet! * SO WHAT? * This threat may actually have teeth because the US gave South Korean companies with chip making facilities in China a waiver to let them export from there – but this will need to be renewed later on this year, so this could be a pain point the Americans could use for persuasion purposes. It sounds pretty desperate to me, but it’ll be interesting to see how the Chinese react (and the South Koreans, for that matter!).

Amazon, Facebook, Google Headline Busy Earnings Week for Tech (Wall Street Journal, Sabela Ojea) shows that tech companies including Alphabet, Amazon, Microsoft and Meta Platforms are among the plethora of US companies reporting this week. Tech companies continue to shed workers in an effort to “right-size” after the lockdown hiring frenzy. Investors will want to see how they emerge from the other side of this, what sort of plans the companies have and how AI will be part of them. In the meantime, Tech Billionaires Bet on Fusion as Holy Grail for Business (Wall Street Journal, Jennifer Hiller) shows that big hitters like Bill Gates and Jeff Bezos are really intensifying their bets on the harnessing of nuclear fusion as the future of energy as they feel we are tantalisingly close to making it a reality. Companies like Helion Energy and Commonwealth Fusion Systems are benefitting from an inflow of money as hopes heighten for what is seen to be the

ultimate clean energy source. I thought Vinod Khosla, co-founder of Sun Microsystems said it best when he described investing in nuclear fusion as “financially either you lose one times your money or you can make a thousand times your money…that’s the math of fusion”! I guess he could have said the same about crypto 🤣. Still, it seems like real progress is within touching distance, and if Big Tech billionaires throw in their money, we could get there sooner rather than later!

Elsewhere, Musk U-turn gives Twitter blue ticks to dead stars (Daily Telegraph, Matthew Field) made me laugh as some of the legacy blue check marks that were taken away last week in a bid to “encourage” users to go for the paid option have been hastily reinstated. However, some – such as Anthony Bourdain, Pélé, Michael Jackson, Chadwick Boseman and Jamal Khashoggi – are no longer with us. Many of those who are with us and got their check marks back were quick to virtue signal and say that they had returned but had not paid to do so. Great publicity for those who have over 1m subs as it just gives them another reason to flex 🤣. Somewhat hilariously, Jack Dorsey (former co-founder of Twitter) does not have his blue check mark reinstated as yet! * SO WHAT? * A part of me wonders whether Twitter is mucking things up on purpose to get more publicity and more people onto the platform. It may also be a good excuse for Musk to try things out and blame teething troubles if they fail and take credit for innovation if they really fly…

Then in UK set to legislate to create new regulator to tackle Big Tech (Financial Times, Kate Beioley and Jim Pickard) we see that the British government is shortly expected to introduce legislation within the next few days that will create a new regulator specifically targeted at overseeing/containing the ongoing dominance of companies like Google, Amazon and Facebook. The new regulator will sit within the Competition and Markets Authority and will have specific powers to bring to bear on Big Tech. It will target companies generating at least £25bn in global turnover or £1bn in the UK. If they breach rules, they could be fined up to 10% of global turnover! This sounds very interesting, no? I’ll let you know when this comes out 👍.

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!

Landlords quit London and first-time buyer homes get more expensive…

Landlords flee London as mortgages erode profits (Daily Telegraph, Melissa Lawford) shows that, according to Zoopla, buy-to-let landlords are selling up at the fastest pace in the country thanks to rising mortgage costs and falling rental yields making them less financially viable. The trend is expected to continue, particularly in London, because of the higher average house prices. * SO WHAT? * Fewer landlords = more rent rises, which is probably going to push up entry level property prices as disgruntled renters 

compromise and buy smaller properties rather than line the pockets of a landlord.

Talking of which, First-time buyer homes hit record £225,000, Rightmove finds (The Times, Ben Martin) shows that the average house price for a first-time buyer (generally one or two-bedroom properties) has hit a new high this month despite the continued rise in interest rates, which has made mortgages more expensive. * SO WHAT? * Household budgets remain tight – but as I said just now, activity at this end of the market is more likely to continue to be robust given how expensive renting is becoming.

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!

BBB goes under, PepsiCo tries to be clever, carmakers get a taste of China’s progress and lab-grown meat still faces difficulties…

In a quick scoot around some of today’s other interesting stories, Bed Bath & Beyond files for bankruptcy (Wall Street Journal, Suzanne Kapner and Soma Biswas) shows that the embattled retailer has finally had to bite the dust and file for bankruptcy protection. This has been well-flagged but despite its best efforts at trying to raise money and close tons of stores, it all came to nothing. Filing for Chapter 11 bankruptcy will give the retailer some breathing space to make some “closing down” sales at its physical stores and time to attract potential buyers of all or some of the business. Tough times…

Pepsi’s New Healthy Diet: More Potato Chips and Soda (Wall Street Journal, Jennifer Maloney) is a really interesting article which highlights PepsiCo’s interesting strategic direction. Under the previous chief exec, the company tried to diversify into healthier products, but now it’s going back to selling the snacks it’s known for – but making them healthier (e.g. less salt, less sugar etc.). * SO WHAT? * This is a really interesting article and I think that this makes absolute sense to me. After all, it was a bit like when McDonald’s started offering more salads and healthy options – most people don’t go there to have a healthy meal, they go there because they fancy a dirty burger! I think they just need to understand what customers want from them and provide that rather than try to change the customer! Sounds simple but it’s probably difficult to execute!

Meanwhile, Foreign carmakers confront ‘moment of truth’ in China (Financial Times, Wang Xueqiao, Edward White and Gloria Li) shows that when the world’s carmakers came together this month

to the first Shanghai Motor Show since lockdown they were surprised to see how much better Chinese cars were versus pre-Covid. There are way more new models and some great tech and now China is on track to take Japan’s spot as the number one global car exporter in terms of volume this year. * SO WHAT? * China has tons of EV makers, control of the battery materials supply chain and now superior in-car tech. This is going to be very difficult to challenge IMO, but I would say that consumers will still have to be won over. As I’ve said before, people tend to go ultra safe with brands they know and have known for a long time when they choose cars, so spending a lot of money on a car you’ve never heard of is a big leap. Also, I guess if people really wanted to, they could allude to Chinese car tech, whilst convenient, could be used for nefarious purposes in collecting data – there was an interesting piece I highlighted last week about how your car may already be spying on you! Workers at Chinese state-controlled companies have been banned from driving Teslas because of a perceived security risk, and there’s nothing stopping Western companies doing the same back…

Then I thought I’d include Inside the Struggle to Make Lab-Grown Meat (Wall Street Journal, Kristina Peterson and Jesse Newman) as it is an interesting insight into the practicalities of growing meat. The FDA has approved cultivated chicken as being officially safe to eat – but at the moment, the difficulty is being able to make it in sufficient volumes to make it financially viable! Companies like Upside Foods, which makes this chicken, and Eat Just have been working hard towards this goal, but are not there yet. * SO WHAT? * The idea is that meat can be grown to feed a growing population, save animals and have less impact on the planet. However, the practicalities of providing it are very difficult. The struggle continues!

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…

Do you feel unsatisfied at work? Feel like a change? Maybe you’d like to do something that’s a bit more out-doorsy. Look no further than this: Zoo recruiting human ‘seagull deterrents’ who will dress up in bird costumes (The Mirror, Julia Banim). And if you’ve decided to take the plunge and do the seagull job, maybe your current workmates will give you this cake: Baker in stitches over ‘petty’ cake that company ordered for employee who quit (The Mirror, Courtney Pochin) 🤣. Ahhhh – there’s nothing like having supportive colleagues, eh?!?