Watson’s Weekly 09-01-2021

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.

• Trump reluctantly came to terms with the fact he’s leaving office. He “tried” to get Vice President Mike Pence to obstruct the handover of power (Wednesday), which didn’t happen, then incited supporters to riot to the extent that they managed to breach the Capitol (Thursday) which infuriated so many that Democratic leader Chuck Schumer and House Speaker Nancy Pelosi called for Trump’s removal (Friday) by invoking the 25th Amendment just two weeks before his term is due to end. He was banned, rather belatedly, from both Facebook and Instagram “indefinitely”, which is kind of hilarious because the damage was already done. What was rather less hilarious, though, was the fact that five people died in this needless escapade
• Lockdowns got much more restrictive this week with Boris Johnson addressing the nation on Monday night and closing schools for Lockdown 3.0 (Tuesday) while Germany’s existing lockdown got tighter (Wednesday) due to rising case numbers
• In markets news, the New York Stock Exchange (NYSE) initially decided not to delist China Mobile, China Telecom and China Unicom (Tuesday) as per their intention at the end of last year, but then they did a U-turn on their U-turn after US Treasury Secretary Steve Mnuchin gave them a call (Thursday). In the meantime, Chinese markets reached their highest levels since the 2008 crash (Wednesday)
• There was good news in oil this week as Opec and non-Opec countries came to an agreement (Wednesday) with Saudi Arabia agreeing to cut its own production but allow Russia and Kazakhstan to increase their respective production. This will take uncertainty out of the market for the meantime…
• Then Bitcoin went bananas, smashing through $40,000 (Friday). I think that this is due to increasing numbers of mainstream institutions getting involved. The more “legit” players get involved, the more this could snowball. I think many institutions will at least be thinking about getting involved in Bitcoin as its sheer momentum has to be taken seriously and we have already seen one, Ruffer, get involved in a meaningful way. If growing institutional interest takes hold, I do wonder whether this will take out some of the volatility that scares off some investors (because they are arguably more likely to hold onto it for longer than your average retail punter). IMO, one danger is that the wheels could fall off in a drastic fashion if central bankers and politicians get together to shut out Bitcoin. Although they can’t “go to the source” and negotiate, I think that they could potentially restrict its usage (e.g. they could prohibit banks from using it, for example) and pass laws that make it more user un-friendly. Just think – they got together to shut out Libra, so maybe they could do the same to Bitcoin! However, I don’t see that happening just yet because politicians have coronavirus to worry about. Then again, the longer they leave Bitcoin to run riot, the more problematic a shut-out could become…

• Fiat Chrysler and Groupe PSA (Peugeot Citroen) shareholders have approved of the biggest automotive merger so far this century (Tuesday) and the enlarged group will be called Stellantis. It will start trading around the 18th and 19th of this month. As with most mergers in the automotive industry these days, they want to join forces to eek out cost savings, work together on reducing emissions and pool R&D spend
• It’s probably just as well that the two companies are getting together considering that US car sales are at their lowest for 10 years and UK car sales are their lowest level since 1992 (Wednesday)!
• In terms of electric vehicles (EVs), General Motors CEO Mary Barra outlined how it would overtake Tesla (Thursday) via a slew a new models to be released this year. No doubt she wants to drown out the idiocy of her company’s now-abandoned tie-up with Nikola with something positive. It sounds like she is not so much polishing a t*rd – she is just rolling it in glitter 😂
• It was very interesting to see that Foxconn, well-known for putting together iPhones, announced a  a tie-up with Chinese EV maker Byton (Wednesday), which is aiming to bring its first EV to market within a year. It’s good to see that it is diversifying and maybe this could be a decent earner in years to come

• UK residential property continues to go from strength to strength with mortgage approvals at a 13 year high (Tuesday), according to the latest Bank of England figures. Presumably this is more a result of everyone trying to beat the end-of-March stamp duty deadline rather than “natural” demand

But then in office property,

• Law firms are among those thinking about cutting their office space needs dramatically (Tuesday) and I suspect that those who are currently wearing too much space are looking at how to sublet. This is all bad news for companies such as WeWork, who is currently trying to cut costs (Thursday) in order to survive because I would argue that companies who sublet their excess office space will be more inclined to let out the space at lower prices (they would just rather someone use the space rather than just leave it empty), thus lowering rents for all landlords in the surrounding area

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story this week is the ‘Revolutionary’ wrap hack loved by foodies will upgrade your lunch game in minutes (The Mirror, Courtney Pochin). I am definitely going to try this!