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 MACROECONOMIC NEWS, the latest OECD figures showed inflation across the world’s leading nations rose at the fastest pace since 2008 (Tuesday). The global minimum corporation tax deal is still not finalised as it still has to pass the Senate vote (Thursday) and G20 ministers are meeting in Venice in order to put pressure on the low-tax countries who have yet to sign the agreement. Interestingly, some low-tax jurisdictions like the Bahamas and Switzerland have already signed the deal, so you would have thought that the others will fall in line. IN EUROPE, the ECB has decided to move the goalposts and upgrade its previous inflation target (Friday). This target has been in place since 2003 (!) – from “close to, but below, 2 per cent” to 2%. It added that it would be willing for inflation to rise above 2% in the short term. I guess if you can’t stick within your own rules, you just chance them 😂. IN THE UK, BoJo announced the lifting of restrictions (Tuesday) and there was talk of listing rules changing for the London Stock Exchange (Tuesday) to address the weakening trend of IPOs in recent years. Dual share structures and a lower free float requirement were mentioned but I didn’t see anything about SPAC-friendly guidance, which is something that has been mooted.
- IN COMMODITIES, OPEC didn’t reach an agreement on oil production (Tuesday) but the threat of increased production from US shale producers when oil prices get to decent levels has been neutralised (Friday) due to them still operating under contracts signed last year which ties them to a price of $55 per barrel rather than the current $75 level. Meanwhile, coffee prices are likely to rise in coffee shops (Thursday) due to acute supply issues. Coffee producers are still on contracts signed at lower prices, but when they come off them, prices to end users are likely to rise.
- In CRYPTOCURRENCY NEWS, Bitcoin exchange Binance had its network suspended (Thursday) and it is promising to work with regulators on compliance and putting in new structures to protect customers. Meanwhile, a study by Oxford Risk (a behavioural financial risk specialist) showed that most buyers of Bitcoin don’t understand it (Thursday), which I guess isn’t that surprising, but it does put a figure on it!
MEANWHILE, IN PROPERTY AND RETAIL NEWS...
- IN EUROPE, house prices rose at their fastest rate since 2007 (Friday), according to the latest data from Eurostat, while IN THE UK, Halifax figures showed that house prices fell last month for the first time this year (Thursday) as we head towards the end of the stamp duty holiday. Having said that, estate agent Knight Frank says that London prices are rising (Monday) and they saw 42% more new prospective buyers registering in June than the five-year average, with the number of offers 86% higher than that average. A mortgage war is looming (Thursday) as banks scramble to compete for falling customer numbers, with HSBC and TSB offering super-low mortgage rates. Lloyds Bank has launched a rental business called “Citra Living” (Wednesday) and John Lewis has announced that it will be building homes (Monday) as part of efforts to diversify its operations.
- IN RETAIL NEWS, the latest figures from the BRC show that total UK footfall was down by 27.6% in June versus 2019 (Friday), implying that shoppers browsed less in fewer stores despite the lifting of some restrictions. It was all go in supermarkets this week! Morrisons got another bid – this time from a consortium led by private equity firm Fortress (Monday) and Sainsbury’s has announced more price cuts (Monday) as it decided to get aggressive on price in order to keep the pressure on the likes of arch-rivals Aldi and Lidl but also raised its profits guidance (Wednesday) after sales soared over lockdown. It is also interesting to note that some US supermarkets are stockpiling (Wednesday) as they are buying up supplies of sugar and frozen meat in anticipation of further food price rises. Elsewhere, WH Smith bought half of Dixons’ airport outlets (Friday) as it broadens its airport exposure and boosts its gadgets format, InMotion.
THERE WERE SOME MAJOR DEVELOPMENTS IN TECH THIS WEEK...
- Big Tech threatened to leave Hong Kong (Tuesday) over proposed data laws that could leave them liable for “the malicious sharing of individuals’ information online”.
- Microsoft took a blow as the Pentagon decided to abandon the JEDI project (Wednesday), a win for Amazon who complained that Microsoft got preferential treatment under Trump as the former president had a personal dislike for Jeff Bezos. The new project will now go to multiple vendors to avoid this kind of accusation.
- Didi is having a nightmare. Although it listed to great fanfare last week, Chinese regulators are saying that it violated the laws on the collection and use of customer data (Monday), which sent its share price down by 20% (Tuesday) and it is thought that this sudden crackdown could lead to the evaporation of any other Chinese companies’ aspirations to list outside of China (Thursday). Talking of Chinese tech companies, though, it was interesting to see that ByteDance is selling TikTok’s AI to other companies outside China (Monday). I thought that the authorities banned this – so we’ll see whether they start to get involved!
- The UK’s biggest chip plant, Newport Wafer Fab was about to be sold to a company controlled by Chinese company Wingtech (Tuesday) but the uproar was such that BoJo ordered an immediate review (Thursday). You may recall that, last year, BoJo put in place rules to stop the takeover of key British interests to foreign firms. Given the currency global chip shortage, this was always bound to be controversial.
IN AUTOMOTIVE NEWS...
- Stellantis said that it would be spending €30bn on EV development (Friday), including the opening of five battery factories in Europe and the US by the end of this decade and a new line-up of EVs that will be able to drive for up to 500 miles on one charge. It also announced its commitment to Vauxhall’s Ellesmere Port plant (Wednesday) to make electric cars and vans.
- Elsewhere, Toyota did well from stockpiling chips (Wednesday), although it concedes that this advantage won’t persist forever, JLR halved sales expectations (Wednesday) due to supply chain issues and Rimac is also due to take control of Bugatti (Tuesday).
...THEN IN OTHER STORIES THIS WEEK...
- IN TRAVEL NEWS, corporate business is showing signs of returning (Monday) and the US is experiencing an uptick in bookings across the board (Thursday) while a consortium of investors puts in a bid for Sydney Airport (Tuesday) and it was decided that the double-jabbed in England would be able to enjoy quarantine-free travel (Thursday).
- IN IPO NEWS, Wise had a successful London market debut (Thursday), which could set a precedent for more IPOs via direct listing.
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 Exact timings you need to follow to cook the perfect English breakfast (The Mirror, OliviaRose Fox) as this is something that could save a lot of stress!