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, there’s good news for the global economy (Wednesday) as the latest half-yearly World Bank report predicts that it will grow at a rate of 5.6% – the fastest recovery in 80 years!
- The G7 global minimum tax rate was agreed over the weekend (Monday), which will allow the US to keep its own corporate tax rate high (Biden’s actually hoping to hike it up from 21% to 28%) whilst making it less attractive to leave the US (in theory 😂). Low-tax countries like the British Virgin Islands, Cayman Islands and Bermuda were particularly unimpressed (Tuesday) as they feel they could lose out although Ireland’s opposition party sounds like it is warming to the idea (Thursday). Meanwhile, the Republicans are threatening to torpedo the plan when it goes to the vote in a finely-balanced Congress (Thursday) but it seems like the market doesn’t seem to think this is going to go ahead anyway (Friday), given the rather muted reaction to the news.
- Talking of Biden, he reversed Trump’s TikTok ban (Thursday), which had pretty much failed anyway. However, he seems to have broadened the remit of the US Commerce Department to investigate foreign transactions more broadly if they pose an “unacceptable risk” to national security. Separately, the US is thinking about lifting travel restrictions (Wednesday) for arrivals from the UK, EU, Mexico and Canada, which will please airlines no end I am sure.
- The latest official US inflation figure of 5% showed the sharpest rise for 13 years (Friday), imports to China grew at their steepest rate for a decade (Tuesday) due to ongoing raw material demand and the UK’s business confidence is the highest it’s been since June 2014 (Monday), according to a BDO survey.
- In COMMODITIES NEWS, options traders are betting on a $100 per barrel oil price (Tuesday) and diamond prices continue to rise (Tuesday), according to De Beers.
- It was a very eventful week for cryptocurrencies this week! Bitcoin started off weaker and some technical analysts reckoned it could go down to $20k (Wednesday). On the plus side, El Salvador declared Bitcoin to be legal tender (Thursday) and US Pension provider ForUsAll announced a venture with Coinbase that would let workers invest up to 5% of their pensions in cryptocurrencies – something that is extremely rare at the moment. On the other hand, Chinese Police did a massive raid mid-week involving 1,100 arrests in 23 regions and cities in a crackdown on money-laundering and Bitcoin mining – not a great look for the reputation for cryptocurrencies. It is interesting to note that ransoms for recent hacking attacks on Colonial Pipeline and JBS, the world’s largest meat processor were all paid in Bitcoin! Funnily enough, global regulators are now calling on a major tightening of rules on crypto (Friday). It remains to be seen as to whether anything will actually come of this.
IPOs MIGHT BE MAKING A COMEBACK, LBO's COULD BE A THING AND MEME STOCKS EMERGE...
- After a bit of a pause, and a hiccup on the London Stock Exchange where London-based broker Marex postponed its IPO (Thursday) due to “challenging IPO market conditions”, it seems that the Americans are readying themselves for another wave of flotations (Friday). Both Didi and Robinhood are expected to float soon and many bankers reckon the current pipeline is so good that 2021 will be the best year ever for IPOs.
- On the other hand, SPAC-backed EV IPOs have been disappointing (Thursday), with Lordstown looking like failing only months after its own flotation. However, Pershing Square’s Bill Ackman is trying to make SPACs better (Wednesday) and more beneficial to investors outside the SPAC itself. I wonder whether London is watching and taking notes on what to do and what not to do as it reviews its own SPAC rules.
- There was some interesting M&A this week as a consortium of private equity firms bought US medical supply group Medline for $34bn (Monday) in a deal which could herald a surge in leveraged buy-outs (Tuesday).
RETAIL AND HOSPITALITY CONTINUE TO GO BANANAS...
- UK retail sales continue to pick up pace (Tuesday), according to the latest British Retail Consortium figures which show that retail sales got a 10% boost last month versus May 2019 and burgeoning demand has led to recruitment growing at its fastest pace for 20 years, according to ManpowerGroup. UK shop workers are asked to adapt their jobs (Monday) and help online colleagues when things are slow, but Ted Baker has a shocker (Monday) – which isn’t surprising considering that it is highly exposed to occasion and office wear although Gap has said it won’t renew the leases of 19 of its UK stores (Thursday) and Gap’s stuff is decidedly casual! In Europe, Zara’s parent Inditex has put in a storming performance (Thursday).
- The hospitality sector is having real difficulties as it tries to attract staff who’ve left the industry (Wednesday) and competition for restaurant employees in the US is so fierce that some incredible incentives are being offered (Tuesday) to garner their interest!
...ELECTRIC VEHICLES CONTINUE TO EVOLVE...
- The UK is thinking about ending tariffs on EVs (Thursday) in order to make them more attractive to prospective purchasers and Tesla’s Model 3 is the best-selling 100% electric vehicle in the UK (Monday) while it’s facing stiff competition in China from the cheap-and-cheerful model from Wuling (Wednesday).
- Germany continues to suffer from chip shortages (Tuesday), which Flex reckons could last until the middle of 2022 (Monday). Johnson Matthey is making progress in EV battery technology (Monday) but Belgian recycling company Umicore cautions on the downsides of cheaper batteries (Wednesday) as a UK charging network is sold to a Hitachi venture (Wednesday). Meanwhile, Swedish electric car battery maker Northvolt has just raised another $2.75bn from existing shareholders to expand its first gigafactory (Thursday).
...AND AMONG THE OTHER MAJOR STORIES THIS WEEK...
- In TECH, Apple has made FaceTime available on Android (Tuesday), France has fined Google €220m for antitrust abuse in advertising (Tuesday) and Amazon is getting closer to rolling out Amazon Sidewalk (Tuesday), a mini network that can be accessed by other Amazon devices and side-steps mobile phone companies.
- Meme stocks got more attention again from retail investors as Clover Health shone (Wednesday) and then lost momentum (Thursday) once more.
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” stories this week involved pizza, as per Pizza fans have just figured out the perfect way to get more slices in a takeaway (The Mirror, James Rodger) and Pizza chef shares hack for stealing a slice from customers without them noticing (The Mirror, Emma Rosemurgey), although I think that Balenciaga stiletto Crocs now exist – and shoppers ‘can’t tell if it’s a joke’ (The Mirror, Paige Holland) was also worthy of mention!