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 the US, the latest official figures show that prices are still rising, but losing some steam. The US annualised rate of inflation in April stood at 8.3% (Thursday) versus 8.5% in March, but it’s still at levels that haven’t been seen since the 1980s.
- In CHINA, the inflation rate has reached its highest level for five months (Thursday) thanks to a combination of food stockpiling in the wake of strict lockdowns and ongoing supply chain problems. China also saw its exports grow at their slowest pace in almost two years in April (Tuesday) and employment isn’t in a great place either – Chinese premier Li Keqiang reckons that unemployment is likely to increase (Tuesday) as the latest data from its National Bureau of Statistics shows its unemployment rate hitting 5.8%, its highest level since May 2020. All of the problems that China is experiencing are likely to continue to affect world supply chains and where companies source their materials and parts.
- In RUSSIA, we see that the finance ministry is now forecasting a 12% fall in GDP this year (Tuesday), which would be the biggest economic contraction since it made the transition to capitalism in 1994.
- In EUROPE, it sounds like the ECB just might be thinking about increasing interest rates (Thursday) in order to curb inflation. The EU also tried to put a figure on the potential cost of the Ukraine war (Thursday), although these kind of estimates are usually waaaaay off – and the war hasn’t finished yet either. BoJo signed a security agreement with Sweden and Finland (Thursday), a move that will no doubt smooth the path to NATO entry.
- In the UK, the pressure is increasing on the government to help with the cost of living crisis (Thursday) and Sunak is thought to be putting together a support package. It could be unveiled in August around the time that the new energy price cap is due to be announced. No doubt the Labour Party, TUC and BCC want swifter action (Friday), particularly as the latest ONS figures showed that the UK economy contracted by 0.1% in March.
Meanwhile, in energy and oil news…
- The US is facing electricity shortages (Monday) and potential blackouts as generation looks like it’ll fall short of demand. European gas prices shot up at the end of the week (Friday) as gas supplies to Germany were cut off as Gazprom imposed sanctions on some European firms.
- In OIL, US refiners are benefitting from high pump prices (Monday) as well as shortages of diesel, petrol and jet fuel. BP is still facing calls to pay a windfall tax (Friday) but doing its best to fend this off while Shell sold its Russian petrol stations and lubricants business (Friday) for an undisclosed sum (undisclosed because it’s probably 💩 as Shell is obviously a forced seller!).
It was also a pretty dramatic week for crypto…
- The market value of cryptocurrencies fell sharply (Tuesday) as investors continued to get nervous about risky assets and the panic continued into the end of the week (Friday) as the FCA seemed to enjoy sticking the boot in when it said “…if you buy crypto-assets you should be prepared to lose all the money you invest”.
IT WAS ALL GO IN THE AUTOMOTIVE SECTOR...
- Toyota said that its profits would be hit (Thursday) by – surprise, surprise – higher energy bills and raw material prices. This was particularly interesting given that their sales are actually increasing! Ford sold a bit of its Rivian stake (Tuesday) – but then only a few days later we saw the news that Rivian announced a recall (Friday). Fishy much? Who knew what when??
- In EV news, Tesla said its Shanghai gigafactory would be cutting production (Wednesday) due to supply chain problems, the latest SMMT figures show that sales of used EVs have increased by 120% (Tuesday) and EV maker Arrival announced the shutting down of its Russia operations (Thursday).
- In BATTERY news, Stellantis warned of shortages (Wednesday), Allianz’s insurance division warned of increased fire risk of ships carrying EVs (Wednesday) due to their combustible nature and commodities trader Trafigura announced that it would be investing in UK start-up Green Lithium to build a refinery in the UK (Monday), which would be a fantastic development if it works out as most lithium used in EVs is currently processed in China. Separately, it was great to see that Shell is accelerating the rollout of its charger network (Wednesday).
AND THIS WEEK, IN CONSUMER AND LEISURE DEVELOPMENTS...
- In the US, consumers are continuing to spend money on meat (Tuesday) despite rising prices and they are also spending money gambling (Thursday), helping casinos to have their best month ever!
- In EUROPE, wages are rising (Tuesday) thanks to increasingly confident unions.
- In the UK, the latest BRC figures show that UK consumer spending is falling (Tuesday) while figures from the Food Foundation Charity show that 57% more households are cutting back on food or skipping meals to reduce spending (Monday) than they were in January and Energy Support and Advice UK observed that the trend of people using “buy now, pay later” to pay for their utility bills via companies like Zilch is increasing (Monday). You know that things are getting bad when the CEO of Scottish Power is appealing for the government to help financially-stretched families (Monday). It is interesting to see that employers are paying out more in bonuses rather than raising salaries (Thursday) as it’s probably easier for them to cut bonuses in future than cut salaries.
- In LEISURE NEWS, Tui’s chief exec is saying that bookings are strong for summer (Thursday), Airbnb has made adjustments to its website to broaden customers’ travel horizons (Thursday) and in aviation, British Airways has a management reshuffle (Wednesday) while Wizz Air announced ambitions to launch flights to Saudi Arabia (Wednesday). Meanwhile, on the sea, Eurotunnel benefitted from P&O’s recent misery (Wednesday) as more trucks have used the service. In GAMING NEWS, EA ended its long-term relationship with Fifa (Wednesday), Nintendo had a stock split (Wednesday) – making it easier for retail investors to buy its stock – and Sony was bullish on PS5 sales this year (Wednesday). In STREAMING NEWS, Netflix announced the launch later this year of a a cheaper membership that will have ads (Wednesday) as it tries to stop the outflow of subscribers. It was interesting to see, however, that Disney+ is adding subscribers (Thursday), contrasting sharply with what’s going on with Netflix at the moment.
THERE WAS SOME INTERESTING M&A ACTION GOING ON THIS WEEK...
- Elon Musk’s takeover of Twitter is now postponed, pending a look at the figures related to the proportion of bots and spam accounts. Musk also said that Donald Trump could make a return to the platform (Wednesday).
- Elsewhere, Philip Morris bought Swedish Match for around $16bn, Pfizer agreed an $11bn deal for biotech company Biohaven (Wednesday), Morrisons bought McColl’s (Tuesday) and it turns out that Vodafone and Three are in talks to merge (Friday). BT and Warner announced the creation of a 50:50 JV pay-TV sport business (Friday) and Warner Music is competing with BMG to buy Pink Floyd’s back catalogue (Friday).
- I think that it was interesting to note that Goldman Sachs has announced that it has stopped new SPAC offerings for the moment (Tuesday), which is pretty incredible considering that it was the second-biggest SPAC underwriter in the world last year, helping sponsors raise $16bn! Does this signal the further demise of SPAC offerings?
AND IN OTHER NEWS...
- In SOCIAL MEDIA NEWS, Twitter announced the departure of two top execs (Friday) as it tries to cut costs (and prepare itself for a Musk takeover – assuming that he’s still going to go ahead with it!). Dating app Grindr is aiming to float via a SPAC merger (Wednesday).
- Other than that, we saw that global investment banks have started to make money in China (Thursday), West End landlords Shaftsbury and Capital & Counties are in merger talks (Monday) and Peloton saw its share price crash (Wednesday) thanks to a bigger-than-expected quarterly loss and pessimistic sales guidance.
AND IN UPDATES FOR WATSON'S YEARLY...
- 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!
I didn’t put that many “alternative” stories in this week – so I think I’ll put an educational one in this time to end here: Hacking expert shares which social media posts to avoid to keep your data safe (The Mirror, John Bett). See you again next week!