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.
IN BIG PICTURE NEWS...
In MACRO NEWS…
- Germany is a country that has been more affected than most by the semiconductor shortages and leading German thinktank, the Ifo Institute, says that the situation “remains critical” (Tuesday) as its closely-watched gauge of business confidence has fallen sharply since the three-year high in July. German parties to start three-way talks on coalition led by Social Democrats (Thursday) marked talks between Olaf Scholz’s SPD, the FDP and Greens to form a coalition government. If this came to fruition, it would be the country’s first three-party coalition since WW2 and would exclude the CDU, which has been in power for 52 out of the last 72 years! There’s going to be a lot of jostling going on as a result and the latest data from the country’s Federal Statistical Office showed that demand in the manufacturing sector fell by 7.7% after two months of growth (Thursday), so whatever coalition is formed will really be up against it.
In INTEREST RATE CHAT…
- Poland raises interest rates for first time since 2012 (Thursday), the first time its central bank has done so since 2012. This comes after recent rises in the Czech Republic, Hungary and Romania. Meanwhile, New Zealand raises rates in new blow for Ardern (Thursday), shows that the Reserve Bank of New Zealand had to raise interest rates from 0.25% to 0.5% – and all of these recent moves were made in order to rein in inflation. The pressure on the Bank of England to hike interest rates is intensifying – and markets are now betting inflation will hit 6pc (Thursday) shows that investors reckon the UK’s rate of inflation will hit 7% next year, which would be its highest level since the 1990s!
- Both the ECB and Bank of England are worried about prolonged inflation (Friday) as UK households face rising house prices, rail fares and second hand car costs.
In SUPPLY CHAIN NEWS…
- Staff shortages are becoming more widespread (Monday), according to findings from a report by accountancy firm BDO which shows that it’s not just blue-collar jobs that are seeing shortages – white-collar ones are as well (Monday), according to another report by KPMG and the Recruitment & Employment Federation. Accountancy, consulting, financial services, tech and law firms are all fighting over the best candidates. Recruitment agency Robert Walters echoed this trend (Friday).
- The UK’s biggest HGV driver training company is appealing for the revival of a loan scheme to help train drivers (Monday). The old scheme, which ended in 2019, used to offer candidates up to £10,000 for training with candidates footing 20% of the course costs and repaying the loan when they got jobs. On average it costs about £4,000 to train to become an HGV driver, so you can understand why such a scheme would be useful.
- It turns out that South Korea’s battery supremacy could be a problem (Friday) because it’s so dependent on China at the moment. The race is on for it to make its own materials or use other sources!
- Fuel Shortages are likely to carry on for a while longer (Tuesday) as the Petrol Retailers Association reported that 20% of forecourts in London and the South East were still out of fuel versus 8% across the rest of the country. This is due to higher population and fewer fuel stations per head.
- BDO’s survey said that British businesses are having to cut their product ranges (Monday) in order to better manage staff or stock shortages and more saying that they are going to have to start doing so “unless the situation changes within the month”.
- Supply chain shortages continue to hit all sorts of sectors in different ways and the pork industry is having problems. Farmers are having to cull pigs (Tuesday) because CO2 shortages and lack of workers are snarling up the supply chain stretching from abattoirs to meat processing plants. The problem is that the pigs are getting fatter and farmers are having to keep feeding them (on animal feed, which is continuing to rise in cost) as they aren’t being slaughtered at the normal time because of all the delays.
MEANWHILE, IN THE AUTOMOTIVE SECTOR...
- UK new car sales are continuing to crater (Wednesday) as punters can’t wait to get a new car and settle for second hand instead.
- Volvo is preparing to do an IPO (Tuesday), which just goes to show how far it’s come under Geely’s ownership. It’s also pretty good timing as well because it comes at a time when its EV subsidiary, Polestar, announced a SPAC deal.
- GM made a big noise about doubling sales (Thursday), thanks to increased EV sales.
- Chip orders from car manufacturers are strong (Wednesday), according to Europe’s biggest chip manufacturer, Infineon. The implication here is that once we get through this dry period, the production of new cars (and hopefully, sales!) will return to more normal levels.
THERE WERE SOME MAJOR DEVELOPMENTS IN SOCIAL MEDIA...
- Facebook, Insta and Whatsapp broke down this week (Tuesday), at once showing us how integral these services have become to us and highlighting just how much power is in the hands of one company!
- Facebook faced a lot of questions (Wednesday) following damaging revelations from ex-employee-turned-whistleblower Frances Haugen. Facebook decided to slow down new releases as a result (Thursday).
- Ofcom decided to announce new tighter guidelines in the Audiovisual Media Services Regulation (Wednesday), saying that video streaming platforms including TikTok, Snap and OnlyFans will have to verify the ages of users and take down harmful and illegal content or face chunky fines.
- Amazon has data breach with Twitch (Thursday), which highlights failure but also underlines the importance of keeping our data safe.
IN CONSUMER & RETAIL NEWS...
Consumers continue to face more challenges…
- US mortgage payments are rising faster than wages (Monday)
- The New York real estate market is getting stronger (Wednesday)
- UK consumers are getting hit by higher gas, utility bills manufacturing (Wednesday) despite wages rising
…and there were some interesting developments for retailers..
- Morrisons got a new owner (Monday) but its fate may be painful (Wednesday) as the winning bidder paid a fat premium and is likely to do things that private equity firms are (in)famous for.
- Investors were speculating as to whether Tesco and Sainsbury’s could be next (Tuesday), but Tesco announced some bullish results (Thursday) and implied that it would be cutting prices going into Christmas.
- Amazon launched first UK 4star outlet (Wednesday), which was quite interesting, but it’s not worth getting too carried away given that it is such a small part of the overall business.
- Greggs was positive about the full year (Wednesday) but Hotel Choc and Pepsi warned about price rises (Wednesday)
...AND IN OTHER DEVELOPMENTS...
- Evergrande shares got suspended (Tuesday)
- China’s property situation could have ongoing repercussions (Wednesday), as it turns out that Chinese Estates Holding, HK-based property group, is going to take itself private (Friday) after exposure to China Evergrande nuked its share price.
- China is also feeling the impact of the current energy crunch (Monday) because the country is trying to cut emissions, and in doing so is effectively cutting manufacturing activity. This is likely to lead to shortages of anything made there – adding to the consequences of an already backed-up supply chain.
AND IN UPDATES FOR WATSON'S YEARLY...
- 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 was Doting dog owner refuses to mow lawn so Chihuahua can peek above the clovers (The Mirror, Edward Kay). Cute!