Monday 29/03/21

  1. In MACRO, MARKETS & VACCINE NEWS, the US aims for a massive infrastructure bill, UK economic data keeps surprising on the upside, a New York fire sale makes waves, Asia tech scramble, Moderna springs to our aid and consumer confidence rises as a result
  2. In CORONATRENDS NEWS, the UK makes special dispensation for alfresco dining, Deliveroo continues to get shunned but cosmic wings could be the way forward
  3. In MISCELLANEOUS NEWS, the Suez gets slightly unblocked, cheaper batteries have positives and negatives and what3words garners interest
  4. AND FINALLY, I thought I’d leave you with a hot cross bun burger and an attempted Colin the Caterpillar…

1

MACRO, MARKETS & VACCINE NEWS

So the US aims to spend even more money, UK data continues to outperform, a share fire sale hits stocks, Asia tech tries to surf the wave and Moderna comes to the UK…

Democrats confident they can pass $3tn infrastructure bill (Financial Times, James Politi) shows that president Joe Biden is embarking on his next big initiative after having passed his $1.9tn stimulus bill earlier this month. He is aiming to get a $3tn economic package passed through Congress that will fund long-term infrastructure, education and childcare financed at least partially by tax increases – and he reckons he can do it without having to cajole Republicans into supporting it. He is expected to announce details on his plan this Wednesday. It is possible that a number of tax rises could help to fund this – namely an increase in corporation tax from 21% to 28%, a minimum tax on overseas income for US multinationals, some tax increases for individuals as long as they’re in households earning under $400,000 per year and capital gains taxes for those earning over $1m per year. I guess if Biden’s going to do it any time, he’s got to do it now while he has positive momentum from the $1.9tn stimulus and the feelgood factor from the accelerated vaccine rollout.

UK economic data confound forecasters and beat expectations (Financial Times, Valentina Romei) highlights the fact that a lot of the recent economic data has proved to be way better than economists’ expectations, reflecting a potentially more robust base from which households and companies could rebound economically. Data so far this year on things like output, employment, business sentiment and public finances have all been pretty positive and hopes are high for an economic recovery. Economists are having to revise their forecasts upwards as businesses and consumers have been getting increasingly better at dealing with lockdown. Long may this continue!

In markets, Traders brace after fire sale of stocks linked to Archegos (Financial Times, Ortenca Aliaj, Eric Platt, Kaye Wiggins and Katie Martin) shows just what happens when traders smell blood! Private investment firm Archegos Capital, which had big exposures to ViacomCBS and a number of Chinese tech stocks, saw massive drops in their shareholdings as Goldman Sachs and Morgan Stanley sold massive blocks of shares worth $19bn at discount prices during trading on Friday after share prices fell earlier in the week. * SO WHAT? * Once traders know there is a big seller in the market (and that they’ve probably got more to sell) share prices can plunge pretty quickly as no one wants to

be left naked. It does sound, in this case, like it is a bit of a technical thing rather than an underlying problem with the companies that were sold off themselves, so if this is the case, I would have thought a pretty good bounceback will be on the cards when traders think that the seller has been flushed out.

Then in Asia tech groups tap global equity markets at record pace (Financial Times, Mercedes Ruehl, Stephanie Findlay and Hudson Lockett) we see that companies in the Asia-Pacific region are falling over themselves to get on the fund-raising bandwagon as others in the region have already raised over $47bn so far this year, according to Dealogic data. If you include follow-on share placements and equity-linked instruments, that figure is more like $120bn – a record first quarter for Asia. Coupang of South Korea did a pretty impressive job earlier this month but there are plenty of Chinese companies waiting in the wings, ready to join the IPO party. Didi Chuxing, Megvii and potentially ByteDance are all looking to float, but then so are east Asian ride-hailing group Grab, Indonesian ecommerce player Tokopedia, Zomato (the Indian food delivery app) and Kakao Bank (South Korean payments app). The listing destinations of choice are generally the US and Hong Kong, although some are electing to list domestically (especially in India). * SO WHAT? * When the market’s hot, companies need to do as much as they can to take advantage which is probably why SPACs have proved to be so popular as the path to market becomes much shorter via this method. Companies that may usually have had to wait a few more years to beat a path to market (because they have to show more of a track record for growth) are able to do so much sooner via SPACs. If you couple that with investors thirsty for the next big thing and a more relaxed attitude towards risk, you have a heady mix right there.

In vaccines, UK to roll out Moderna coronavirus vaccine in April (Financial Times, Jasmine Cameron-Chileshe) shows that the UK will get another vaccine to distribute from next month, becoming the third coronavirus vaccine to be rolled out after the BioNTech/Pfizer and Oxford/AstraZeneca jabs. If it reported to have an efficacy rate of 95% and will come as welcome news against a backdrop of supply delays and a third wave in Europe. With the prospect of more easing in sight with restrictions lifting today, it’s not hard to see why spirits are lifting, as per Consumer confidence leaps on success of the jab (Daily Telegraph, Tom Rees), which cites data from the Bank of America that shows that household confidence is now returning to pre-Covid levels. The question is how much of their “saved” money are lockdowners going to unleash on the high street? I’d say – a LOT.

2

CORONATRENDS NEWS

Alfresco dining hits the UK, Deliveroo faces more resistance but cosmic wings may prove to be inspirational…

Talking of lockdown lifting, UK towns and cities to make room for return of alfresco dining (The Guardian, Sarah Butler) shows that urban areas across Britain are looking at ways to increase outside space to maximise money-making potential for pubs and restaurants. Birmingham, Manchester and London are among the cities looking at temporary road closures and pavement widening to help pubs, bars and restaurants over the summer. Given that only 40% of licenced premises currently have permanent space to trade outdoors at the moment, this should be a decent help. It’s not going to help everyone, but at least it will help some.

Meanwhile, Deliveroo snubbed by star tech investor (The Times, Patrick Hosking) shows that yet another big profile

investor is giving the Deliveroo IPO a wide birth, following a whole raft of others last week. James Anderson, manager of Scottish Mortgage, the UK’s biggest investment trust, said he didn’t like the company’s focus on slower-growth markets and London. Anderson is known for having built big stakes in other food-delivery platforms like Meituan in China, Delivery Hero in Asia and Grubhub in America but he thinks that Deliveroo is going to find it tricky to keep its momentum going. Mind you, maybe These cosmic wings you had delivered? They’re really from Applebee’s (Wall Street Journal, Heather Haddon and Preetika Rana) is something our own takeaway-friendly restaurants need to take inspiration from as virtual brands where online-only products keep customer interest piqued could be the key to stopping a massive potential decline in takeaway orders as lockdown lifts. * SO WHAT? * In America, these virtual brands have mushroomed on food delivery apps like Uber Eats and DoorDash and I would have thought we will need to see more of this over here to stop what I think will be an inevitable decline in takeaway orders as people elect to go out to casual dining venues. Cheetos-coated fried chicken, anyone??

3

MISCELLANEOUS NEWS

The Suez Canal gets unblocked, cheaper EV batteries face scepticism and a British mapping app looks to the future…

In a quick scoot around some other big stories today, Ship blocking Suez Canal is partially freed (Wall Street Journal, Rory Jones, Costas Paris and Summer Said) shows that the Ever Given has now been moved slightly, meaning that the Suez Canal has been partially unblocked, which could mean that a key trade route could be opened up much sooner than had been feared. This will allow a number of smaller ships to get through. I really like this report from the BBC which shows you what the current situation is and why the Suez Canal is so important.

Elsewhere, Elon Musk likes this EV battery and it costs less – but the US isn’t sold on it (Wall Street Journal, Yang Jie) talks about a low-cost battery that has a low risk of catching fire and is cheaper to make because it uses iron instead of expensive and scarce materials cobalt and nickel. This battery, known as LFP (lithium ferrophosphate), also has downsides, though – lower range and a tendency not to work well in cold weather. In China last year, makers of LFP batteries took 47% market share of the EV and hybrid markets and it has led to an increase in the prevalence of cheaper mass-market EVs like the

Hongguang Mini, which has a $4,300 starting price for the base model. OK, so the range is only 75-105 miles but it means a much cheaper car. The batteries are made by Contemporary Amperex Technology (aka CATL) and Gotion High-tech. * SO WHAT? * Tesla now uses LFP batteries on one version of its China-made Model 3 cars but not for cars destined for the US and VW said earlier this month that it was concentrating on LFP batteries being a leading technology for entry-level vehicles. Clearly the tech is not perfect, but given that iron is way more plentiful than lithium or cobalt, you can see why some makers are trying their best with it.

I thought that Mapping a start-up’s future with true pinpoint accuracy (The Times, Rebecca Burn-Callander) was really interesting because it told a story about the start-up what3words, which is continuing to raise money from the likes of Ingka Investments, the investment division of IKEA, in order to expand. Basically, what3words divides the world’ surface into 57 trillion 3mx3m squares, each with its own three-word code. It is more accurate than a postcode and has been a key part of Britain’s coronavirus response by getting people to testing centres and ambulances to the right entrances at Nightingale hospitals. The company is also testing out drone navigation and is potentially going to licence out its tech to big automotive companies and ride-hailing providers. I think this is definitely a company to watch!

4

...AND FINALLY...

…in other news…

I thought I’d leave you today with a couple of food ideas – starting off with the ridiculously huge burger in Woman makes hot cross bun burger but people can’t tell if it’s ‘genius or scary’ (The Mirror, Paige Holland) and then, for dessert, Parent leaves people in stitches with ‘horrific’ attempt at Colin the Caterpillar cake (The Mirror, Luke Matthews). I’d stick with the shop-bought Colin, if it’s all the same with you…😁

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Some of today’s market, commodity & currency moves (as at 0740hrs 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 **
6,741 (+0.99%)32,627.97 (-0.71%)3,913.10 (-0.06%)13,215.24 (+0.76%)14,749 (+0.87%)5,989 (+0.61%)29,385 (+0.71%)3,435 (+0.50%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
$59.85$63.65$1,726.891.375981.17810109.531.1691655,364.67

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