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 that the UK officially fell into recession, Uber announced its first share buyback and Musk moved another company out of Delaware…
- IN THE US – inflation came in stronger than expected due to the rising costs of shelter, motor vehicle insurance and medical care. Meanwhile, Trump continues to edge Biden in the pre-election polls and caused a kerfuffle about NATO members when he criticised their perceived lack of defence spending. That being said, it looks like 18 of NATO’s 31 members are on track to hit targets of 2% of spending GDP on defence, with more expected to hit this mark as time goes on. Joe Biden is currently trying to push through a $95bn national security bill that includes $60bn of military aid for Ukraine “immediately”.
- IN JAPAN – we see that the country has slipped into recession and its economy has also been overtaken by Germany, being pushed into being the world’s fourth biggest economy. It was pushed into third place by China back in 2010 and it looks like Japan will be overtaken again in 2026 by India!
- IN EUROPE – the European Commission has released new forecasts which show that the eurozone economy will grow more slowly than expected.
- IN THE UK – inflation remained unchanged, chancellor Hunt is thinking about cutting public spending to fund tax cuts but then we heard the news that the UK officially fell into recession in the final quarter of last year.
IN COMMODITIES NEWS…
- IN OIL – Diamondback Energy announced the acquisition of Endeavour in a deal worth $26bn that will make it one of the biggest players in the Permian Basin, the biggest oilfield in the US. OPEC left its oil demand forecasts unchanged and BP struck a deal with the state-owned Abu Dhabi National Oil Company (Adnoc) that will deepen ties in the region.
- IN GAS – Shell reckons that LNG demand will surge 50% by 2040 and wants LNG to be seen as the transition fuel between coal and renewables.
- IN NICKEL – mining giant Glencore has decided to cease nickel production at its Koniambo mine in New Caledonia as weak prices have made it financially unviable – so it wants to sell the business! Nickel weakness was also responsible for the world’s biggest miner, BHP, announcing a hefty $5.7bn write-down. It’s considering mothballing the whole nickel operation if prices don’t improve.
IN CRYPTOCURRENCY NEWS…
- Bitcoin breached $50,000 for the first time in two years on hopes that last month’s Bitcoin ETF approval in the US will bring it closer to the mainstream and make it more investable.
IN BUSINESS, EMPLOYMENT & CONSUMER TRENDS NEWS...
IN BUSINESS TRENDS NEWS…
- IN CHINA-RELATED TRENDS – US companies are now finding exposure to China increasingly tricky as sanctions tighten and, as if to further illustrate how essential Chinese companies have become to western supply chains the world’s biggest solar company – China’s Longi Green Energy Technology – warned the US and Europe that their decarbonisation timetables will be delayed if they try to cut out Chinese suppliers. China accounts for over 80% of global production in solar manufacturing. Elsewhere, US law firm Latham & Watkins decided to cut off automatic access to its international databases for its Hong Kong-based lawyers in the latest example of how crackdowns by Chinese authorities are forcing global companies to change their business practices. New anti-espionage laws and crackdowns on global companies operating in Hong Kong have led many of them to change the way they do business there and now Latham & Watkins treats its Hong Kong office in the same way that it treats its mainland China office. Chinese fleets are cashing in on the Houthi crisis in the Red Sea and using their “Chinese-ness” to use the Suez canal without fear of attack due to China’s closeness with Iran. Mind you, Norwegian company Wallenius Wilhelmsen, the world’s biggest operator of car-carrying ships, announced record annual profits thanks to growing exports of Chinese EVs.
- It was interesting to see that X was accused by the Tech Transparency Project (TPP) of taking money from terrorists and other sanctioned groups in order to get their blue check mark! X swiftly removed the marks of those organisations shortly after the report was published but I suspect that there will be more of this going on as authorities around the world crack down on social media platforms.
IN EMPLOYMENT TRENDS…
UK wage growth slowed down less than expected although the labour market seems to be cooling down. However, a recent survey said that about a fifth of firms are still finding it hard to fill vacancies!
Employers are racing to beat the deadline for visa applications for skilled staff! In December, the home secretary said that the main salary floor for skilled worker visas would rise significantly from £26,200 to £38,000 from April.
Meanwhile, some PwC grad promotions have been delayed by six months because there just isn’t enough work for them to do to promote them. OK it’s a small number versus the overall number that will be promoted on time, but it still shows how difficult the situation is at the moment.
IN CONSUMER TRENDS…
- A Uni of Michigan survey said that US consumer confidence rose in January to its highest level since July 2021! The pressure on the Fed to cut interest rates continues to build…
- China’s consumers are still proving to be very cautious despite the country being in deflation for the last four months, as the latest figures showed that consumer prices fell at their steepest annual rate in 15 years in January! The property market continues to be problematic and that is hurting sentiment and confidence, meaning that even though spending power is rising, actual spending isn’t.
IN AUTOMOTIVE NEWS...
IN GENERAL…
- Although Stellantis has had a good run over the last three years, it said that it reckons that the coming year is going to be “turbulent” thanks to ongoing high wage costs, more competition from China and weaker demand for EVs.
IN CAR “POWER” NEWS…
- European carmakers in the Automotive Cells Company (the ACC) borrowed €4.4bn to spend on EV gigafactories over the next few years in an effort to reduce current reliance on China for EV car batteries. Given that about 40% of the cost of an EV is made up of the battery, it makes sense to have at least come control in this area!
- There was an interesting debate on the pros, cons and reality of hydrogen fuel cells, with the main conclusion at the moment being that they are not long-term viable for cars but they are viable for bigger vehicles.
IN EV NEWS…
- BYD is looking at setting up a factory in Mexico as a way into the US market.
- Lucid cut its prices by 10% as the EV price war continues.
- The UK’s used EV market continued to tank last year as new vehicles were sold at a discount to shift units and this looks likely to continue this year with an influx of new models and early adopters put their vehicles onto the market to help pay for the newer vehicles!
- It also became apparent that charging your EV predominantly from public chargers meant that you would be paying more to “fill” your EV than you would with the petrol equivalent. So not only are EVs now more expensive to buy in the first place, they depreciate like crazy and they cost more to “fill”. Hmmm. Not great PR then…
IN RIDE-HAILING…
- Uber announced its first ever share buyback, buoyed by its recent announcement that it had achieved its first full year of operating profit. It looks like this bad boy is growing up!
- Rival Lyft saw its share price hit a 52-week high following the company’s strong Q4 results. There was a bit of drama as it became apparent that the press release contained an extra zero on profit margins – so initial astonishment came back to reality quite quickly!
IN DRIVERLESS NEWS…
- Google-owned Waymo made its first driverless taxi software update following an incident last year where two of its vehicles hit the same pickup truck. No damage was done but it really seems that driverless just can’t catch a break at the moment…
IN FINANCIALS NEWS...
IN INVESTMENT NEWS…
- The latest Bank of America survey showed that the world’s fund managers are feeling at their most positive since February 2022 on rising hopes that the global economy will manage to avoid a recession. Meanwhile, private equity firms have seen $40bn-worth of gains since the beginning of last year. Interestingly, a lot of these gains have been made in their more “mundane” lending business where they benefited from US regional lenders going bust last year.
- JP Morgan and State Street have quit the Climate Action 100+ group, which is trying to use shareholder influence to pressure companies to decarbonise using the collective power of the group. It sounds like the giants joined the group in 2020 in the ESG boom and are now leaving as it comes increasingly under fire. They say that the obligations of membership are too onerous and don’t prioritise the underlying clients.
IN OTHER FINANCIALS NEWS…
- The private equity owners of Shawbrook, the specialist savings and lending bank, are thinking once again of an IPO after abandoning previous plans to do so in 2022 because of tricky market conditions. BC Partners and Pollen Street Capital bought the bank in 2017 for £868m.
- Meanwhile, Close Brothers decided to cancel its dividend as investors are worried that the company could face a hefty fine or compensation bill as a result of the FCA’s investigation into alleged mis-selling in vehicle financing. It’s sounding increasingly like motor financing is going to be the next PPI…
IN REAL ESTATE NEWS...
IN COMMERCIAL PROPERTY NEWS…
- Warehousing appears to be slowing down in the US as companies revert to the pre-Covid “just-in-time” model.
- In the UK, Tritax and UK Commercial Property Reit agreed a £4bn merger that would see the enlarged group become the UK’s fourth biggest commercial property owner. There’s been a lot of consolidation in this industry already – and we also heard that private equity firm Blackstone is putting together two of its divisions to form a new warehousing group called “Indurent”.
- The gloom continued in Canary Wharf as Blackstone decided to postpone plans to sell a £250m tower in the district as discussions with a potential buyer broke down. This came just a week after news that another big building in the area got sold off at a massive discount and ongoing news that some big tenants are leaving.
IN RESIDENTIAL PROPERTY NEWS…
- The latest data from the ONS showed that average house prices felly by only £4,000 last year, which makes it look increasingly likely that the housing market could rebound this year.
- Mortgage rates showed their biggest one-month drop since December 2022 – the sixth consecutive monthly drop since December 2022. This should help the property market recover…
IN TECH NEWS...
IN SEMICONDUCTOR NEWS…
- Arm’s share price continued to boom on the AI frenzy and the company, which is listed in New York, is now more valuable than every company in the FTSE100 apart from Shell and AstraZeneca!
- Aussie tech company Altium agreed to a $5.9bn takeover by Japan’s Renesas and although this makes strategic sense it’s not a given that this will be a great success as Japanese acquisitions seem to have a mixed track record.
ELSEWHERE…
- TikTok is continuing to fight against Universal Music, which is digging its heels in over music rights and payment. If another deadline is missed at the end of this month, there will be a big copyright claim to come. There will be a lot of people watching this to see who manages to win the tussle!
IN OTHER NEWS...
- Elon Musk is continuing in his crusade against Delaware, whose courts denied him a fat payout recently. He has now moved SpaceX’s incorporation away from Delaware to Texas and he’s not the only one pushing back against Delaware’s courts! Nevada and Texas are looking to lure companies away from Delaware, so they must be loving this!
BANTER
My favourite video this week was the one with the fancy cheese on toast! I bet you’ve never had cheese on toast like this before!