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 COLOURED HIGHLIGHT 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...
This was the week when Trump lost to Harris on TV, when Apple unveiled upgraded gadgetry and when Northvolt made a dramatic announcement…
- IN THE US – inflation fell unexpectedly over August on an annualised basis to its lowest level for three years. The bet now is not if they cut interest rates at the next meeting, it’s more how deeply will the cut go? Meanwhile, there was a lot of chat about the TV debate between Trump and Harris – and it looked like Harris won (although that’s not how Trump saw it 🤣!). Trump said that he doesn’t want to do another one before the election. Meanwhile Trump’s running mate JD Vance kept up the xenophobic rhetoric.
- IN EUROPE – the ECB cut interest rates from 3.75% to 3.5% in a widely anticipated move. It remained cagey about the timing of any further cuts.
- IN THE UK – the economy showed no growth for the second month in a row, according to the latest ONS release. Still, the OECD decided to up its growth forecasts for the UK after stronger-than-expected performance in the first half. There are mounting concerns about the country’s debt and UK councils apparently face a £4.3bn ‘black hole’ in financing next year.
IN OIL NEWS…
- Prices of Brent crude and WTI fell out of their year-long trading range as investors got increasingly nervous about slowdowns in the world’s biggest economies. The IEA’s monthly oil market report confirmed this drop off in demand and although it thinks prices will soon start to recover, they will do so at a slow pace.
- The IEA continues to believe that global oil demand will peak by the end of this decade, which is in sharp contrast with OPEC+’s rather more bullish projections (but what do you expect from a bunch of rich oil producing countries?!?).
IN BUSINESS, EMPLOYMENT & INVESTMENT TRENDS NEWS...
IN BUSINESS TRENDS…
- IN ACCOUNTANCY – PwC addressed ongoing issues in its China business by parachuting in one of its most senior UK partners to run the business but at the end of the week China’s finance ministry and securities regulator slapped PwC with $62m in fines and a six-month suspension of operations in the country as punishment in its role in the audits of China Evergrande. Also, PwC’s operations in mainland China will be suspended for six months and its Guangzhou office was shut down by the finance ministry. Meanwhile, accountancies are cracking down on office attendance as PwC said it would monitor this more closely while Deloitte is now tightening the net on remote work. Talking about Deloitte, the company is now bringing back face-to-face interviewing for final stage interviews given rising concerns about the rising instances of cheating in virtual assessments.
- IN BANKING – HSBC announced a major hiring spree as it looks to grow its UK wealth division and replicate the success it’s seen with its Asian wealth division. It’s already got 400 bankers in this part of the business but it wants to hire across the UK in order to double assets under management to around £100bn over the next five years. Santander is now insisting on its UK workers being in the office three days a week. It sounds to me like many white-collar jobs are increasingly trending towards 3-4 days in the office per week…
- Foreign companies are increasingly getting cold feet about doing business in China thanks to rising barriers to market access, low growth and tough competition.
IN EMPLOYMENT TRENDS…
- The global jobs market is changing in the overall shift to renewable energy. It will have a big impact on skills (retraining is likely to be required), pay (highly skilled vs lower skilled) and unionisation (many renewables areas are under-unionised currently).
- UK wage growth is lost momentum over the quarter, according to the latest figures from the ONS. This could help to justify another interest rate cut from the Bank of England although it doesn’t seem to be as eager to pull the trigger as the Fed and the ECB.
IN INVESTMENT TRENDS…
- Multi-manager hedge funds saw their first outflow of funds for seven years as the cooling of interest in them across a range of asset classes would suggest that investors are tiring of the fat fees and not particularly stellar returns.
- The gold price continues to rise and looks like it’ll continue to do so as investors are increasingly using it as a safe haven from ongoing shifts in the geopolitical landscape – be it trade wars, actual wars, the rise of the populists, fears about the fragility of some economies etc.
IN TECH & MEDIA NEWS...
IN TECH NEWS…
- IN AI-RELATED NEWS – there is a theory that the AI frenzy is actually masking a sector that is otherwise not doing that well as AI-related names are doing extremely well while others are not and continue to suffer from the over-hiring and overspending of the boom years. It was also interesting to hear that BP has signed a deal with Palantir Technologies to use its AI-powered software to help with its oil and gas exploration operations. Meanwhile, chancellor Reeves announced an £8bn investment by Amazon’s AWS in data centres in the UK and we also heard that UK data centres will now be officially designated as Critical National Infrastructure by the government, meaning that they will be given greater protections from cyber attacks and IT outages in order to boost investor confidence in the UK. Meanwhile, there was a lot of chat about OpenAI raising at least $5bn in its latest funding round that would give it an implied valuation of $150bn – and later in the week it launched a new model that has a more human-like reasoning capability and spends more time thinking before it responds to questions.
- IN REGULATION – the Data Protection Commission is now investigating Google regarding whether it has breached GDPR rules by handling sensitive user data in a reckless way when training its AI models. Elsewhere, Apple lost its appeal in the European Court of Justice which overturned an earlier ruling and came to the conclusion that the Republic of Ireland had “granted Apple unlawful aid” in the form of $13bn in unpaid taxes.
- IN HARDWARE – Apple launched the iPhone 16 and other mildly upgraded gadgetry (with AI functionality to come) while Huawei brought out the world’s first commercially available tri-fold phone.
IN SOCIAL MEDIA NEWS…
- The Australian government is looking at imposing a minimum age for the use of social media somewhere between 13 and 16 which could mean that kids will no longer be able to access sites like TikTok and Instagram! It looks like this move will get broad support – and stick – because even opposition parties are behind it (elections are due next year).
- Brazilians protested against the X ban imposed by a Supreme Court judge over a week ago. Meanwhile, it looks like Elon Musk could be forced to answer to Parliament to give evidence about X’s operations regarding the dissemination of “hateful material” on X and other platforms.
IN MEDIA NEWS…
- According to Ofcom stats, online platforms have overtaken TV channels as the most popular sources for news thanks to a “generational shift” in media consumption habits.
- Hedge fund founder Paul Marshall bought The Spectator for £100m. Now all eyes will be on who will buy (big) sister publication The Telegraph, which was originally going to be bought by an Abu Dhabi-backed fund, but was blocked.
IN RETAIL & LEISURE NEWS...
IN RETAIL NEWS…
- IN OVERALL TRENDS – American dollar stores like Dollar General and Dollar Tree are not doing as well as they should because of the onslaught of the likes of Temu and Shein, who are turning the heads of their traditionally cash-strapped customer base. There has been comment that the Chinese e-tailers are a danger to Amazon but Amazon’s got various highly lucrative revenue streams whilst the dollar stores are wholly reliant on retail. Meanwhile, we’re now heading into the “Golden Quarter”, the last three months of the year where most retailers’ profits are made. UK retailers could benefit from being an economy that’s one of the fastest growing in the G7, consumer confidence that’s at a three-year high, the (likely) positive effect on spending that falling interest rates will have and a buoyant housing market. On the flipside, there’s nervousness ahead of the Budget but then again it will be the first time the final quarter won’t have a general election, a pandemic or very high inflation to contend with!
- IN INDIVIDUAL COMPANY NEWS – Aldi posted record sales growth despite market share slipping and it’s set to open 23 new stores by the end of this year. Given the slippage, there’s talk that Aldi is now maturing after years of being in growth mode. John Lewis unveiled a positive set of numbers and said that it’s on track to “significantly” grow profits this year but there was bad news for Boohoo as it continues to lose ground to the likes of Shein and Temu and announced the closure of its US warehouse just one year after opening it. Meanwhile, Zara’s parent Inditex announced strong sales despite a tricky start to the summer and B&Q is diversifying its revenues by using some of its space as mini-fulfilment centres for online orders. Customers continue to shop in the front of the store, but the back of the store now picks and packs items for home delivery or click-and-collect, creating a hybrid model.
IN LEISURE NEWS…
- Greece is cracking down on excessive tourism by unveiling a set of measures that could include the restriction of short-term holiday rentals and cruise ship traffic. Clearly the government will have to get the balance right between the sentiment of locals and the needs of its hospitality industry as economists reckon that tourism contributes over 25% to the Greek economy.
- Indian tourists could be the next group to power travel spending in the coming years, perhaps even replacing Chinese tourists as a major driver. The middle classes are becoming more numerous and they like to travel!
IN AUTOMOTIVE NEWS...
- IN CHINA-RELATED TRENDS – foreign carmakers are losing ground in the China market as they face increasing competition from local makers and they are now using production capacity there to export abroad. They are getting increasingly nervous, though, about retaliatory tariffs in China. Chinese makers such as XPeng are looking at dominating autonomous driving. Competition is intensifying in driver-assistance software among companies such as XPeng and Huawei and they are using AI to accelerate the process.
- IN BATTERY NEWS – European EV battery maker Northvolt announced that it would be mothballing part of a Swedish gigafactory and close another in response to sluggish demand for EVs. Announcements about other projects will come in time. If Northvolt fails, it will be another green technology battle that will have been lost to the Chinese (solar panels is a previous area where they have won). The sluggish demand for EVs was further illustrated by Stellantis’ decision to suspend production of the Fiat 500e due to insufficient orders! Meanwhile, BMW’s share price hit a four-year low after the announcement of a recall of 1.5m vehicles and VW announced the end its commitment to provide job security for thirty years, which was originally due to expire in 2029. Ouch.
IN MISCELLANEOUS NEWS...
- IN REAL ESTATE-RELATED NEWS – housing secretary Angela Rayner struck a £150m deal with Barratt Developments and Lloyds Banking Group to build new garden towns in an initiative dubbed the Made Partnership. It’ll run for 20 years and £150m will be allocated to get the ball rolling. Meanwhile, Rightmove noted that more larger homes are being put on the market as owners try to beat widely-expected changes in CGT in the forthcoming Budget while the latest RICS survey showed that house prices have risen for the first time since October 2022 as expectations of a strengthening market – powered by falling interest rates – increase.
- Novo Nordisk said that its Liraglitude drug, which is in the same family as its Ozempic and Wegovy treatments, is OK for 6 to 12 year olds. If things continue to progress, it could be the first obesity treatment available to this age group.
- Rightmove rejected a proposed £5.6bn takeover from Australia’s REA. It sounds like this isn’t over yet, though!
- Campbell’s Soup Company is planning on changing its name to The Campbell’s Company to reflect the fact that it also makes things other than soup! It’ll need to get shareholder approval at this year’s AGM though.
BANTER
My favourite “AND FINALLY” video this week is of the super-cute dog that’s clearly enjoying being pampered 😍! The dog actually looks like it’s smiling!