Watson’s Weekly 16-04-2021

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 the US, a Wall Street Journal survey of economists showed that there is a belief that GDP will grow at its fastest rate (+6.4%) since 1983 (Monday) due to federal stimulus and a successful vaccine rollout. There was more good news at the end of the week as retail sales shot up by 9.8% in March and jobless claims came down (Friday). All of this feelgood helped US stock markets hit record highs (Friday).
• China’s GDP shot up by 18.3% in Q1 versus the previous year (Friday). Although this is undoubtedly an impressive growth rate, it fell short of analyst expectations.
• In the UK, the latest stats from the ONS show that we have returned to economic growth (Wednesday) as retailers saw rising sales and manufacturing saw an uptick on rising car production. A survey by YouGov and the CEBR showed that consumer confidence was at its highest level since 2018 and business confidence is also up.
• In cryptocurrency news, Bitcoin breached the $63,000 level (Wednesday) and America’s biggest cryptocurrency exchange, Coinbase, had a dramatic debut on the NYSE (Thursday).
• In vaccine news, there seemed to be mostly negative developments this week. Someone from the Chinese Centre for Disease Control and Prevention said that they were considering the mixing of jabs to improve efficacy (Monday) but then they quickly backtracked (Tuesday), saying that they have been “misunderstood” and the media reiterated its strong support for domestic-made vaccines. India gave emergency approval for Russia’s Sputnik V vaccine (Wednesday) – adding that it would give emergency approval for vaccines already approved in the US, UK, Europe and Japan without putting them through “bridging trials” – as the number of cases continues to grow. There was bad news when we heard that the Johnson & Johnson jab’s rollout in Europe would be suspended (Wednesday) due to blood-clotting issues. This would have been really useful for accelerating Europe’s vaccine distribution, so will definitely be a blow. The Europeans got more bad news as it turns out that Pfizer is increasing its prices for supplying vaccines to the EU by a whopping 60% (Tuesday), but there was some good news towards the end of the week as Germany’s CureVac said that it has high hopes of getting its vaccine approved in May or June (Friday).

• China’s crackdown on Big Tech companies continues. Alibaba had an expensive start to the week as it was slapped with a $2.8bn fine (Monday), which sounds a lot (it is), but it only represents about 4% of Alibaba’s revenues. I think this is a good outcome for Alibaba as at least it remains intact and it seems that investors seemed to take heart as its share price shot up after the fine was announced (Tuesday). Ant Group, on the other hand, is facing increasing pressure from regulators (Tuesday) to cut ties between its payment platform and its lending business. The regulators also announced that they were giving some Big Tech companies one month to sort out their anti-competitive behaviours (Wednesday) otherwise they would get the Alibaba treatment. The companies look set to comply.

• April 12th marked the reopening of non-essential shops (Monday) and there were high hopes that consumers would spend at least some of the £180bn they’ve saved under lockdown (which roughly equates to 10% of the UK’s GDP!). Footfall was decent (Tuesday), although not completely stellar, and Roadchef announced it was going to be taking on 1,000 new staff at its service stations (Monday) to cater to all the staycationers travelling around the UK. It seems that we are spending money on drive-ins (Monday), laptops (Tuesday), takeaways via Just Eat (Wednesday) and Deliveroo (Friday) and are being targeted by the railways to get back commuting via the offer of new flexible tickets (Friday). Airlines are betting that people are going to travel again as both American Airlines and EasyJet upped their summer flight schedules (Thursday).
• Meanwhile, at the retailers themselves, LVMH had superb Q1 results (Thursday) as sales of champagne, fashion and leather goods were all incredibly strong, particularly in America and Asia as Europe suffered more from store closures. In supermarkets, there was speculation that Sainsbury’s might be taken private (Wednesday), Asda axed in-store baking (Thursday) and Tesco counted the cost of last year (Thursday) while AO World said it would be deepening its involvement with Tesco (Friday).

• This week was an eventful one for banks! HSBC moved virtually all of its top management to Hong Kong (Thursday) while Goldman Sachs, JP Morgan (Thursday) and Bank of America (Friday) posted excellent results. Fund manager BlackRock saw record fund inflows (Friday) and momentum has been so good in IPOs and M&A that British investment bank Peel Hunt is said to be considering an IPO (Friday). Fears about an exodus of City jobs post-Brexit appear to have been overdone (Thursday) as job vacancies shot up by 70% in Q1 this year, according to research by recruitment agent Morgan McKinley.

• The IPO and M&A gravy train continues unabated as the London Stock Exchange had its best Q1 for IPOs since 2007 (Monday) as PensionBee and Darktrace prepared for their IPOs (Tuesday) although BrewDog is thinking hard about listing in London (Monday) given Deliveroo’s recent disastrous debut. Meanwhile, southeast Asian superapp Grab announced the biggest SPAC deal ever (Wednesday) as the SPAC frenzy continues! Coinbase debuted but I already mentioned that above!
• In M&A, Microsoft bought Siri-creator Nuance (Tuesday) in a deal worth around $16bn that will double its presence in healthcare and Veolia finally bought its target Suez (Tuesday), signalling the end of what has been one of France’s hardest-fought takeover bids between the world’s two biggest waste and water groups

• Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly

My favourite “alternative” story this week was the one that highlighted one man’s attempt at a cunning plan in Man gets morphsuit to be invisible during video calls – but it doesn’t work as he hoped (The Mirror, Courtney Pochin). I think it gets funnier the more you watch it! A video for our times 😂