Watson’s Weekly 03-10-2020

This is an amalgamation of the “best bits” of the daily weekday newsletter/blog woven together to form a concise and coherent view on the things that matter in the commercial and economic news of the week. 

THE DAY IN BRACKETS REFERS TO THE EDITION WHERE THE STORY APPEARED IN WATSON’S DAILY. Clicking on the day will take you to the appropriate edition of Watson’s Daily.


  • On the consumer side of things, the latest data from the Office for National Statistics says that Britons have been saving at record levels (Thursday), which sounds good in a way but on the other hand, one of the economy’s biggest drivers is consumer spending. If they aren’t spending, they are saving – and things get a bit unstuck. Another driver/indicator of consumer sentiment is the housing market. Housing-related searches on Google appear to be slowing down versus their peak (Monday) which would imply that interest is on the wane, but then again the latest Bank of England figures show that mortgage approvals are at 13-year highs (Wednesday) and people are still looking to move because/ahead of a coronavirus second wave (Wednesday). I am inclined to think that the current housing boom is due to factors that may lose momentum in the coming months – specifically, pent-up demand that was frustrated by lockdown, Sunak’s stamp duty holiday and “new” demand from people who want to get abodes with extra rooms and maybe a garden in the ‘burbs. Given that we are expecting an increase in unemployment and continued economic uncertainty, I would expect the housing market to lose steam. However, if you are fortunate enough to have kept your job, continued to be paid and want to move, mortgages are dead cheap and there’s a lot of property to choose from!
  • So where does a consumer go to spend money? If they venture out onto the high street, they will notice that Côte Restaurants was given a lifeline by an investor (Tuesday) but Pizza Hut (Tuesday), Greggs (Wednesday) and Burger King (Wednesday) all announced cuts. Interestingly, Burger King is looking to make more drive-ins, but whether or not interest in drive-throughs will continue past the end of the pandemic is a moot point. The consumer could also go to the supermarket! A consortium comprising of TDR Capital and EG Group bought a majority stake in Asda from Walmart at the end of the week. Walmart has been trying to offload Asda for the last few years after owning it since 1999 as its international expansion plans have changed to concentrate on growth markets. It tried to sell it to Sainsbury’s last year, but that all fell through. Elsewhere in the sector, Aldi (Tuesday) and Morrisons (Thursday) announced that they were employing more people and discounter B&M is winning new customers (Wednesday). Meanwhile, Ocado overtook Tesco to be Britain’s most valuable retailer (Wednesday) but then again it lost its shine as Norwegian rival AutoStore took it to court (Friday) saying that Ocado had violated a number of its patents. Meanwhile, in the US, grocers are starting to stockpile (Monday) in anticipation of potential panic buying in another lockdown
  • Meanwhile, in online retailing, Boohoo put in an impressive performance (Thursday) despite all that Leicester sweatshop scandal over the summer! It seems that consumers aren’t too worried at the moment about where clothes come from if they spot a bargain as the company’s profits easily beat market expectations…


  • TikTok is still going despite Trump’s best efforts to ban it (Monday) as a federal judge blocked his attempts to shut it down just four hours before the deadline
  • SMIC, China’s #1 chipmaker weakened further (Tuesday) as Washington put it onto the “entity list” which means that US companies will now need licences to export anything to SMIC, meaning that its current access to US software and equipment will be severely restricted. This is all part of Trump’s efforts to strangle Chinese tech and although he is clearly playing to voters here, this is not just a question of US vs China. The fact is that a third of SMIC’s suppliers are American, so Trump is shooting himself in the foot to some extent! For instance, Qualcomm – the US chip designer – uses SMIC to make some of its chips
  • Germany is about to impose new restrictions on telecom equipment providers (Thursday) which will effectively exclude Huawei from Germany’s 5G network. The bill has not been finalised yet, so there may still be changes – but it’s not looking good for Huawei
  • Google’s purchase of Fitbit is approaching EU approval (Wednesday) despite the EU authorities having deep initial reservations. Rival makers are now ramping up their objections to the deal arguing that it would be anti-competitive and a threat to privacy. It has made promises to restrict its use of data but the objectors argue that it is unclear how this could realistically be policed
  • Amazon is testing a palm reader (Wednesday) where you will be able to pay for goods at shops just by using your hand on a contactless pad! Needless to say, many retailers are interested in this technology but it will first be tested at Amazon Go stores


  • China’s annual motor show opened on the weekend (Monday) and all the major motor manufacturers are targeting China. Not surprising really, considering that China is the biggest car market in the world. China is particularly interested in being at the cutting edge for electric vehicles but EVs only make up 5% of all vehicle sales currently. Interestingly, VW announced a €15bn joint investment in EVs over four years (Tuesday) with SAIC Motor, FAW Group and JAC Motors. Tesla announced a new lower price for its Model 3 in China (Friday) due to its use of a domestically-sourced battery. There was some more good news for the recently-embattled company at the end of the week as it announced better-than-expected quarterly deliveries
  • Nikola saw its share price fall further to 80% below its recent peak (Tuesday) as the scandal continued to deepen. Allegations surfaced of the company using truck designs from a third party (Monday) and it had to postpone its showcase event (Thursday)


  • GAMBLING – Caesars Entertainment is looking to buy William Hill (Tuesday) in a deal where it can take advantage of William Hill’s expertise in online gambling and sports betting and William Hill can get access to a major growth market – something that is increasingly hard to come by in the UK. It looks like rival Betfred is keen to buy William Hill’s portfolio of shops as Caesars is not interested in this
  • BUSINESS INTERRUPTION – The FCA lost in its bid to get insurers to pay “business interruption” claimants after last week’s judgment (Thursday), which no doubt means that more businesses will go under due to lack of money
  • TRANSPORT IN LONDON – TfL sent a begging letter to the Treasury (Thursday) to get it through current nightmarish conditions. Unsurprising and it will no doubt come with major strings attached. Sadiq Khan’s job will get that much harder as a result IMO
  • THE RISE OF E-COMMERCE/BREXIT PROSPECTS – Warehouse rents are rising (Friday) as e-commerce activity continues to be brisk and companies seek to stock up ahead of Brexit


  • President Trump and his wife tested positive for coronavirus (Friday) casting some uncertainty over what will happen re the presidential election. What happens if a candidate must withdraw from a presidential election (Financial Times) is an excellent article which looks at the options if Trump doesn’t make a swift recovery. If he has to withdraw before polling day there would have to be a vote of a new candidate – and it doesn’t necessarily have to be the vice president. It’s also possible that the presidential election could be delayed – Trump already raised this prospect in July due to his concerns about fraud – but he can’t decide this, it’s up to Congress (but they’d have do change the law to do this). Whatever happens, the current presidential term has to come to an end on January 20th – so there is a limit to how long things could be delayed. If Trump dies, vice-president Mike Pence will take over – something he would also do if Trump became unable to perform the duties of office due to being incapacitated in some way. However, as I type this, Trump appears to making a swift recovery so maybe things could get back on track. Having said that I would have thought that he’d do his best to delay the election given that he has been trailing Joe Biden in the polls. We’ll just have to see how it goes!


  • Watson’s Yearly updates: watch this space!