Watson’s Weekly 12-02-2022

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.

The Russia/Ukraine drama continued, talks about a potential windfall tax caused a kerfuffle, prices rise everywhere, Arm/Nvidia collapsed and Peloton saw its CEO step down. But apart from that is was quite quiet 🤣…

• With the Russia/Ukraine situation – US president Biden and Germany’s Olaf Scholz presented a disjointed view on Nord Stream 2 (Tuesday) and it looks like any sanctions that Europe takes against Russia will be messy (Thursday), especially given that Russia is Europe’s biggest energy supplier, a major commodities exporter and owe-er of money. Later in the week, western nations advised citizens to leave Ukraine as the situation worsened.
• In the US – inflation hit its highest level for 40 years (Friday), but inflation is rising pretty much everywhere you look (Friday) and it seems that it’s always the poorer citizens that get affected the most as they are the ones who spend the highest proportion of their income on the basics like bills and rent.
• In EUROPE – the ECB’s president backpedalled on recent statements (Tuesday) that the market interpreted as the central bank potentially looking at making an earlier-than-expected interest rate rise.
• In the UK – BoJo is mooting the brave/stupid move of ending requirements to self-isolate after a positive Covid test (Thursday) but we’ll have to see whether this does indeed come forward a month earlier than expected, as is being speculated.
• In COMMODITIES – aluminium prices hit their highest level since 2008 (Wednesday), which will put even more pressure on producer prices considering that the metal has so many applications. Aluminium also uses a huge amount of electricity to produce, which doesn’t bode well for the likelihood of prices coming down any time soon…
• In OIL AND GAS – there was a lot of talk this week about the UK government imposing a windfall tax on oil and gas companies. BP rejected the suggestion (Wednesday) despite having announced not only its best results for eight years, but also that they were going to give some of that money to shareholders and do a share buyback! The UK oil regulator also voiced its opposition to a windfall tax (Thursday). As if to reinforce just how well oil companies are doing right now, French rival Total announced massive quarterly profits (Friday) and its very own share buyback! US shale oil producers continue to hold back (Wednesday) despite sky-high oil prices because they are still smarting from over-investing too early in previous booms. There was a sobering bit of news in a report from the Oil and Gas Authority and Climate Change Committee (Friday) which predicted a huge uptick in gas imports as North Sea reserves run down.
• In SUPPLY CHAIN NEWS – the world’s #2 container shipping company Maersk predicted that supply chain woes will calm down in the second half (Thursday) but companies are finding things really difficult in the interim (Thursday).
• In CRYPTOCURRENCY NEWS – it turns out that January saw record outflow of tokens and cryptocurrency (Monday) but then again Bitcoin staged a recovery this week (Tuesday) and crypto exchange Binance put a large slug of money into Forbes (Friday).

• In the US – Tyson Foods, America’s biggest meat processor, said that rising meat prices have failed, so far, to phase consumers (Tuesday) while Chipotle raises prices in response to climbing raw ingredients prices (Wednesday). Ride-hailer Lyft also raised prices (Wednesday) and its results followed the success of Uber’s Q4 numbers (Thursday). Car insurers are also increasing premiums (Thursday) because repairs/parts prices are on the rise – yet another rising cost that consumers have to bear!
• In the UK – house prices continue to rise (Tuesday) but at a lower rate as Barratt booms (Thursday) while the north-south divide in terms of price rises continues (Thursday). Lenders are withdrawing their cheapest mortgages (Thursday) in anticipation of more interest rates rises from the Bank of England, food prices look like they will continue to rise (Monday), according to Tesco’s chairman and apparel retailer Joules increases its prices (Wednesday) to mitigate soaring costs and supply chain disruptions. No wonder that both Deloitte’s consumer confidence tracker (Monday) and Bank of America’s research (Wednesday) point to consumer wobbles about the cost of living and research from the British Retail Consortium pointed to more potential pressure on consumer spending in the coming months (Tuesday).
• In terms of SPENDING TRENDS – luxury continues to do well! Chanel is managing to put through price rises with ease (Monday), posh watches are selling well (Friday) and L’Oreal put in a decent performance as well (Thursday). At the “normal” end of things, Disney+ subscribers numbers continued to rise (Thursday), showing that there is still life left in the market, something that Netflix needs to be struggling with at the moment. UK shops are restaurants are seeing a recovery in footfall (Friday) after the Omicron dip we experienced at the end of last year and beginning of this.
• In GROCERY RETAIL NEWS – Ocado has lost all of its pandemic gains (Wednesday) and Amazon got classed as a supermarket (Thursday), which means it’ll have to obey tighter rules regarding suppliers. It was also interesting to see how supermarkets are trying to keep a lid on prices (Tuesday) via a mix of cutting staff costs, putting pressure on suppliers, shrinkflation and cutting less popular product lines, among other things.

• US budget airline Frontier put in an offer to buy rival Spirit for $6.6bn (Tuesday) in a move that will help them to compete against the “big four” airlines American, Delta, Southwest and United.
• Tata took the reins at Air India (Tuesday) in a bid to turn fortunes around at the national flag carrier that has had problems for the last twenty years.
• Nvidia’s proposed purchase of Arm fell through (Wednesday) and it looks like Arm’s next move will be to float in New York rather than London.

• Apple announced a new service (Wednesday) whereby you can use your iPhone to pay merchants by tapping their Apple device. It also turns out that Apple is prioritising iPhones over iPads, but given how important phones are to Apple this is hardly surprising!
• Google is being sued by PriceRunner (Tuesday) as the latter is being accused by the former of unfairly prioritising its own price comparison service over others.

• It was a dramatic week for Peloton as rumours of bidders emerged (Monday) – and that was closely followed by its CEO stepping down (Wednesday) and then activist investor Blackwells Capital reeling off a number of potential suitors (Friday)
• It was interesting to see parts maker Bosch earmarking €2bn to retrain some of its 400,000 employees (Thursday) to keep them relevant as carmakers switch to EVs.
• AstraZeneca announced record annual revenues (Monday) as it unveiled its first profits from its Covid vaccine. Will it be able to match the stellar profits at rivals who made money from their vaccines right from the start?

• Watson’s Yearly updates 2021/22: there have been updates in the G20 statistics (some inflation and unemployment rate changes) as well as country updates. Please click HERE to see Watson’s Yearly and the changes. Changes have been highlighted in this purple colour 👍 You will be able to see how themes and countries develop throughout the year by reading this document! 

Given that I included quite a lot of stories about dogs this week it probably won’t surprise you that my favourite “alternative” story for this week was Talented Labrador performing yoga with his owner steals people’s hearts (The Mirror, Nia Dalton). Amazing!