Watson’s Weekly 17-10-2020

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.

• So it looks like China is going to be the only major economy to grow in 2020 (Wednesday) as exports were up (helped by sales of things like PPE and laptops), as were car sales. This news powered China’s markets upward
• The Indian government announced a $10bn stimulus package (Tuesday) to encourage investment, but it fell way short of expectations. No doubt there will be more to come…

• The EU is talking about getting tough on Big Tech (Monday) as it is drawing up a list of 20 tech companies that will have to adhere to much stricter rules in order to rein in their massive power. The devil will clearly be in the detail on this one but Big Tech won’t take this lying down. If the EU can’t even win against Apple (remember it tried to fine it a few months back and failed), you do wonder how it will fare against the combined might of Big Tech!
• The OECD failed in its attempt to get 137 countries to agree on a blanket digital tax on tech companies (Tuesday). There are too many countries with vested interests and agendas and so the deadline got booted into next year. In the meantime, countries that imposed their own digital services taxes (France, Italy and the UK) are looking particularly exposed
• Silicon Valley companies are talking about making pay cuts of 15% or more (Monday) as more of their staff work from home. The argument is that they shouldn’t be paid premium wages if they don’t live in commutable areas, but in practical terms I think this will be very hard to police
• Apple unveiled four new iPhones this week that all have 5G capability (Wednesday). Prices are actually quite competitive by Apple standards and I think that they will sell incredibly well as many people will have held back upgrading until the company brought out a 5G phone
• Samsung had a bit of a turn this week as it had to hastily withdraw BTS-branded phones from China (Tuesday) because one of the band members managed to offend China in a comment. This didn’t seem to affect the IPO of BTS’ management company – Big Hit Entertainment had a hugely successful market debut (Thursday) although it does look quite precarious to me
• Zoom announced a new marketplace platform feature (Thursday) as well as a platform for other apps that will enhance the existing offering (called “Zapps”). It’s good to see that one of the major winners of lockdown is continuing to innovate in order to keep the momentum going

• Levi’s and Hilfiger are trying to introduce new ways of shopping (Monday) by doing livestreams. It’s a bit like a more up-to-date and interactive form of QVC and is already very popular in China. I think it’s the way forward for apparel retailers – especially under lockdown
• Asos announced strong results (Thursday) but the share price weakened because it outlined a cautious outlook given that its core demographic – twentysomethings – are having the worst time in terms of unemployment
• It was Amazon Prime Day this week (Wednesday) and the company continues to go from strength to strength by expanding its workforce, its air freight business and its Amazon Prime member numbers

• There was a definite division in terms of performance from US banks this week. JPMorgan (Wednesday), Goldman Sachs (Thursday) and Morgan Stanley (Friday) did well from trading and investment banking revenues while those with more exposure to the “boring” businesses of deposits and loans like Wells Fargo and Bank of America (Thursday) didn’t perform so well as worries persist of loans going bad and continued low interest rates mean wafer-thin margins

• In COMMERCIAL PROPERTY – WeWork is offering rent discounts to existing customers (Thursday) as they try to hang on to who they have currently. This is going to get trickier as lots of SMEs will probably work from home and larger companies will be reviewing their office space needs as working from home becomes the norm for many
• In RESIDENTIAL PROPERTY – there are signs that residential property demand is losing some of its momentum (Thursday) after an initial frenzy when Sunak announced the Stamp Duty holiday, but at the £10m+ end of the market demand is still brisk (Thursday)

• Watson’s Yearly updates: watch this space!

There were a couple of gems in this week’s “alternative” stories! There was some mind-bending ink on display in Man’s ‘insane optical illusion’ tattoo looks like giant hole in his head (The Mirror, Paige Holland) which I thought was just incredible! But then there was also the hilarious Woman poses dog for photo to announce her engagement and quickly regrets it (The Mirror, Luke Matthews) which goes to show that you shouldn’t try to over-complicate things.