Watson’s Weekly 16-04-2022

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.

• The WTO downgraded world growth forecasts (Wednesday) as the Ukraine war continued to impact the world economy while Shanghai’s lockdown due to increased Covid cases hit China’s economy (Monday). However, it sounds like a plan is in place to ease restrictions (Tuesday), so there is light at the end of the tunnel!
• In terms of sanctions and consequences, Ukraine is appealing to the world’s biggest oil traders to stop handling Russian crude (Monday), as it finances the war effort. Also, a cardboard crisis is on the cards (Monday) as the starch biproduct of wheat, potatoes and other food is in short supply and has therefore become more expensive. This starch is used to stick the three layers of corrugated cardboard together – so is pretty key! Russian consumers are cutting expenditure (Monday) as sanctions are now trickling down to the real economy while Finland – and possibly Sweden – is considering membership of NATO (Thursday) in response to Russia’s current actions.
• In other macroeconomic news, US inflation hit a 40-year high of 8.5% in March (Wednesday) and US producer prices also rose by their sharpest level since records began (Thursday). Elsewhere, the UK economy stalled on the GDP front (Tuesday) while inflation rose to 7% in March (Thursday). Australia’s PM Scott Morrison announced an election date of May 21st (Monday). If he wins the vote, he’ll be the first Aussie PM to have a second term since 2007! He doesn’t seem to be able to count on his colleagues for support though as many lined up to stab him in the back (Wednesday). Ah, politicians, eh?!? Meanwhile, both Canada and New Zealand raised their respective interest rates (Thursday) in order to curb inflation.
• There was also some interesting news on renewable energy this week. It turns out that energy from wind turbines hit a new high (Wednesday) and Shell signed a deal with German energy company Uniper to produce hydrogen (Wednesday) that will provide power to industry around the Humber but Rolls-Royce took a bit of a pasting as some analysts reckoned that the SMRs they are developing will cost more than the company is saying (Wednesday).
• Staying on the theme of energy, though, it looks like Germany’s economy is going to take a €220bn hit if it stops accepting Russian gas (Thursday). It continues to face mounting pressure from the international community for trading with Russia.

• UK consumer confidence is falling (Tuesday), according to the latest figures from the British Retail Consortium. Given continued high petrol prices (Wednesday), rising costs of heating and seafood (Thursday) and a rent boom (Thursday), it’s not surprising! On the real estate front, London property prices are rising again (Monday) and UK landlords are buying properties again (Monday). The most consistent performer in the real estate sector is still warehousing, though (Tuesday). However, when consumers have got some money, they are spending it on holidays (Monday) and casual dining (Tuesday) and less on takeaway deliveries (Wednesday).
• The problem is that although the job market is growing (Monday) and unemployment is falling (Wednesday), wages just aren’t keeping up with inflation (Wednesday) despite some employers offering very nice incentives (Wednesday)! The problem of a tight labour market combined with wage increases that can’t make up for rising prices means that employees are getting frustrated. They are realising that this is a candidates’ market and are feeling confident enough to unionise at Amazon (Monday) and at Starbucks (Thursday), although new CEO is doing his best to discourage staff from joining unions.
• Meanwhile, some retailers are trying to help cut prices. M&S is cutting the price of a number of essentials (Tuesday) and Tesco says it’ll try to keep a lid on prices (Thursday), but generally speaking, supermarkets tend to do well in an inflationary environment.

• It turns out that digital ad revenues rose by a chunky 35% in the US last year (Wednesday) and TikTok was one of those companies smashing it in that area as it tripled its ad revenues (Tuesday, Thursday). Epic Games got a nice $2bn cash boost from Sony and Lego (Tuesday) in order to help it build a metaverse for children while China’s clampdown on the gaming sector seemed to ease as regulators approved some new games (Tuesday) for the first time in nine months. Apple is now facing another antitrust suit from the EU (Tuesday) as part of the ongoing investigation into music streaming.
• Probably the most dramatic story this week was about Elon Musk deciding against taking a seat on the board of Twitter (Monday) while disgruntled investors take him to court saying that he should have disclosed his stake-building earlier (Thursday).

• In CAR-RELATED NEWS, Honda announced that it would keep investing in hybrid and hydrogen fuel cell development (Wednesday) while GM managed to strike a deal with Glencore (Wednesday) to supply it with cobalt for its car batteries. Interestingly, Renault is considering moving future production of its Alpine brand from France to the UK’s Lotus (Wednesday).
• In INDIVIDUAL COMPENY NEWS, Deutsche Bank and Commerzbank got sold off as major shareholder Capital Group sold down its stake (Wednesday) and JP Morgan saw its Q1 profits fall (Thursday) due to a slowdown in dealmaking and the impact of the Russia/Ukraine war. On the plus side, the IPO of Dubai’s biggest utility had a very successful market debut (Wednesday) and little old Cornish Lithium managed to hire the former chairman of Polymetal (Tuesday), which sounds like a great move as the company is planning on a stock market flotation later this year.

• 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! 

My favourite “alternative” story this week was undoubtedly the one about this very niche themed café in Tokyo: This Tokyo cafe won’t let you inside unless you’re a writer or translator with a deadline looming (SoraNews24, Casey Baseel). I think this would be very useful for a lot of people!