Watson’s Weekly 13-11-2021

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.

In MACRO NEWS…

US inflation has now reached its highest level since 1990! (Thursday) and President Biden is telling his top economic advisers at the National Economic Council and competition regulator, the FTC, to do something about it! Interestingly, current Fed chief Jerome Powell is up for election at the end of his four-year term and there is only one candidate, Lael Brainard, going up against him. It’s thought to be unlikely that he’ll be pushed out, but if he was a new face might not find it so difficult to raise interest rates IMO…

In China – factory gate inflation (= prices charged my manufacturers to wholesalers) rose at the fastest rate for 26 years (Thursday) due to major power shortages and skyrocketing commodity prices at a time where it looks like President Xi Jinping is going to get the go-ahead to stay in power until 2028 (Friday) thanks to a special “historical resolution” bestowed on previous leaders Mao Zedong and Deng Xiaoping.

In Europe, the German Council of Economic Experts, which advises the government, says that Germany could become the eurozone’s economic laggard (Thursday) as higher rates of Covid will stunt consumer activity and exacerbate existing supply chain problems. Neighbouring Poland faces increasing pressure from the east and the west (Thursday) as the country faces difficulties with the EU over judicial matters on the one hand and chaos on its border with Belarus on the other.

In COMMODITIES,

There was a record surge in gas prices (Tuesday) as Russia didn’t pump gas to Europe at beginning of the week, but then it did (Thursday), causing relief all round.

Rising gas prices and the failure of renewables to deliver consistently enough has boosted talk of nuclear power generation. Mini nuclear power reactors got funding (Tuesday) from France’s BNF and America’s Exelon Generation for Rolls-Royce led SMR venture. Meanwhile, France’s EDF is getting ready to build more nuclear reactors (Thursday) as France aims to rely more on nuclear power in the future.

In CRYPTO NEWS,

Bicoin hit record levels (Wednesday), Apple said it is “looking at” crypto (Wednesday) but didn’t really go into any specifics and Twitter is actually hiring a crypto team (Thursday) that is being tasked with setting “the strategy for the future of crypto at (and on) Twitter”.

• It was interesting to see that automakers did not back a COP26 pledge to end sales of emissions-producing cars (Wednesday) in “leading markets” by 2035 and globally by 2040, although VW did announce it was building a new EV gigafactory (Wednesday). Semiconductor maker Infineon doubled its profits in the latest quarter (Thursday) due to continued strong demand from the automotive industry but it was interesting to hear from one of the world’s biggest supplier of car parts, Continental, that it thought the chip shortage had “likely reached its peak”.
• In electric vehicle news, the US charging network got a major boost from President Biden’s new infrastructure bill (Monday). Rivian Automotive was the hot topic this week as the company went for the top end of its price range (Wednesday) and then boomed on its market debut (Thursday) but it’s still got a tough task ahead of it (Monday) both in terms of production and increased competition. While all this was going on, Elon Musk asked his Twitter followers whether he should sell some of his shares to pay a tax bill (Monday) and then duly sold some (Thursday).
• In EV battery news, Savills came up with the earth-shattering statement of the bleedin’ obvious that UK gigafactories are going to require more space (Monday) – the clue’s in the name 🤣 – and EV battery prices are going to rise (Monday) after years of falling. However, British company Johnson Matthey has decided to withdraw from making battery materials for EVs (Friday), which is disappointing because there were high hopes.

• UK consumer confidence continues to wane (Tuesday) although high street spending is actually going up (Tuesday) as we are returning to offices in our suits (Friday), buying James Bond watches (Wednesday) and buying second hand cars to such a great extent (Friday) that insurance premiums are rising (Thursday)! While Primark outlined its US expansion plans (Wednesday) and Asos stated a similar plan to expand overseas (Thursday) we saw that in the domestic UK market that Tesco has rebounded (Wednesday), M&S is staging a comeback (Thursday), WH Smith expected to be profitable again next year (Friday) and Halfords has benefited from more drivers on the road (Thursday) over the course of the pandemic.

• In food delivery news, American fast food delivery specialist GoPuff is focusing efforts on the UK (Wednesday) to potentially become a consolidator in a fragmented market and DoorDash announced intentions to buy European food delivery company Wolt Enterprises (Wednesday) for $8bn as part of its strategy to broaden its horizons beyond its domestic market.
• In M&A news, America’s Viasat made a $7.3bn offer to buy UK satellite firm Inmarsat (Tuesday) in the latest example of a US firm buying a strategic British asset and McAfee is now being bought out by a consortium of private equity firms (Tuesday) only a year after it returned to the stock market in October 2020.

• 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 of the week were the one about the skateboarding bulldogs in Meet Chowder and Maddie – skateboarding bulldogs who can’t get enough of their wheels (The Mirror, Edward Kay) and the rather more educational video from the BBC about the actual impact of planting trees, which I found quite surprising!