Watson’s Weekly 05-09-2020

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.

• CHINA manufacturing activity grew at its fastest rate since January 2011 (Wednesday), which is encouraging because it was the first country to go into lockdown and others are watching closely to learn about what may happen in their respective countries
• INDIA’s GDP fell by 24% in the latest quarter during lockdown (Tuesday) – and to give you an idea of how that happened, construction output halved and manufacturing output fell by 40%. India’s chief economic adviser is talking a good game about a v-shaped recovery but others are more sceptical, saying that the rate of recovery is slowing down
• BRAZIL fell into recession (Wednesday) and experienced its worst quarterly GDP fall in the nine recessions it’s had over the last 40 years. The outlook could be a bit shaky as well because the current finance minister doesn’t get on with President Bolsonaro, so it’s anyone’s guess as to who will take over from him – meaning potential uncertainty, which isn’t really what you need at a time like this
• In FRANCE, President Macron pledged €100bn in a recovery fund for the country (Friday), 40% of which could be coming from the EU! It’s a four year plan, so it’ll be interesting to see whether it hits the spot
• Markets fell sharply in trading late on in the week (Friday) as investors took profits in tech stocks that have been going bananas over lockdown (even Tesla fell by 9%!). I don’t see any drivers having changed particularly, so I would have thought that this is most likely a short-term blip. What is interesting, though, is that this move shows just how important tech is to all indexes these days – not just the Nasdaq

• Apple continues to strengthen following its recent stock split (Tuesday) and it became more valuable this week than all of the FTSE100 companies put together 😱! Mad, huh?! It also said this week that any costs related to digital taxes that it has to pay will be passed on to developers (Thursday), much in the way that Google said it would pass the costs on to advertisers (Wednesday)
• TikTok’s future is looking tricky (Wednesday) because the Chinese government issued new restrictions at the end of last week on the export of AI tech from China – which would include TikTok’s algorithms that recommend videos to users. I think that, in the best case, this will lower the ceiling on the potential selling price of the viral video app and, in the worst case, it could completely spoil the chances of a deal being done at all. TikTok’s algorithms are what makes it work so well – and so without that, you have to question the value of buying into it
• India decided to ban 118 Chinese apps (Thursday) including those from Tencent, Alibaba and Baidu and accused them of “stealing and surreptitiously transmitting” Indian user data to China. This happened not long after other Chinese apps were banned following fatal skirmishes between Indian and Chinese troops on the Himalayan border and heralds a real worsening in relations between the two countries. I wonder whether this could leave the door open for non-Chinese companies such as Google and Microsoft who are looking to make more inroads into what many see as the market with most growth potential in the world
• Elsewhere, Zoom decided to lift its full year outlook (Tuesday) for the second time during the pandemic. It seems to have successfully shrugged off any security scares that it had towards the beginning of lockdown (remember “Zoombombing”??) and prospered ever since…

• It seems that, after a bit of a hiatus, we are spending on houses and cars again! UK mortgage approvals rose to pre-pandemic levels (Wednesday), which is benefiting sales at furniture retailer Dunelm (Wednesday) as furniture retailers, DIY stores and electrical retailers are among those who tend to do well in a buoyant housing market. It does not, however, seem like landlords are having a great time (Tuesday) – especially those who are individuals. Although the pain is real, I would have thought that the government will not keep them uppermost in their list of priorities. Car sales seem to be doing well as car finance applications were up by 25% in July and August versus the same time last year (Tuesday), which sounds great, but they are traditionally weak months, so the comparatives are boosted by the fact that they benefited from seeing a bit of pent-up demand (the industry shut down during lockdown). We also spent money on Lego under lockdown (Thursday), with online sales being particularly strong. Digital sales overall have powered pretty much all e-tailer specialists, leading to Amazon announcing that it would employ another 7,000 staff in the UK (Friday)
• The latest figures published by Eurostat said that Eurozone retail sales are losing momentum (Friday) and it seems that, as consumers we are not spending on travel by air – Heathrow announced it would be cutting 25% of its workforce (Thursday), Virgin Atlantic is cutting 1,000 (Friday) as part of its recently-agreed rescue deal and United Airlines announced it would be letting 16,000 staff go. We’re also not travelling by rail – Department of Transport figures showed train journeys last week were at 38% of the level they were at at the same time last year (Thursday) and there have been reports that TfL is considering a new scheme to offer Londoners free bus, tube and train travel to get them using their services again

• Tesla, like Apple has done enormously well since its stock split (Tuesday) and it subsequently decided to raise $5bn (Wednesday) for no apparent reason apart from well, it just can. Scottish investor Baillie Gifford took some profit off the table (Thursday) after Tesla’s stellar performance, but the share price fell by 9% later in the week as Big Tech stocks were sold off
• This week heralded the new partnership between Ocado and Marks & Spencer (Tuesday) but there were some hiccups along the way (Wednesday). As far as I’m concerned, it’s early days yet and there were bound to be some teething problems. Let’s hope that they get ironed out sooner rather than later!

• Watson’s Yearly updates: watch this space!

This week, I brought you burger-in-a-can in Gourmet Japanese hamburger steak in three-year-shelf-life can: Genius or madness? Let’s find out! (SoraNews24, Casey Baseel), a McDonald’s fries hack I never knew in McDonald’s show right way to eat ketchup and fries – and we’ve all been doing it wrong (The Mirror, Paige Holland) and an introduction for those who have not yet met him, the brilliant Uncle Roger. Although the latter is a comedy character, I share his feelings on rice 😁