Watson’s Weekly 19-06-2021

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, the Bureau of Labor stats showed producer prices rising at their fastest rate since 2010 (Wednesday) as demand continues to outstrip supply. This is yet another data point that is piling the pressure onto the Fed – and after its two-day meeting this week, America’s central bank said that it would raise rates earlier than had previously been indicated (Thursday). World markets got spooked as a result (Friday), which isn’t surprising when you realise that the US economy accounts for almost 25% of the world’s GDP!
• Israel got a new PM this week in the form of Naftali Bennett (Monday) after 12 years of Benjamin Netanyahu. Israelis have had four elections since April 2019 and this government isn’t necessarily going to stick around either given that Bennett is presiding over an eight-party coalition! Stability in the Middle East is likely to be more unpredictable than usual given the change.
• In the UK, lockdown got extended to July 19th (Tuesday) due to the prevalence of new variants and businesses were not happy (Wednesday) given that they’d planned for a June 21st “Freedom Day”. However, the government gave cause for tenants to be relieved and landlords to be frustrated when they announced the extension of the ban on commercial tenant evictions (Thursday) to March 2022. UK inflation overshot the Bank of England’s 2% target (Thursday) for the first time in two years as fuel and clothing costs continued to rise. In trade, the UK signed a deal with Australia (Wednesday) meaning that we will get loads of their meat and they will get more of us working over there! On the other hand, HMRC data showed that British food and drink exports to EU fell sharply in Q1 as Brexit kicked in (Friday).
• It was another eventful week for Bitcoin! Bitcoin strengthened to the $40,000 level (Tuesday) as Elon Musk said Tesla would accept it as payment once more if Bitcoin miners could prove they were being more eco-friendly. There were two other interesting negatives that were brought to light by newspaper articles this week – namely that having a ton of Bitcoin on your balance sheet makes your company’s valuation go haywire (Tuesday), given its volatility – and that new research shows that as more people buy into cryptocurrencies fewer of them actually understand the risks they are taking (Friday). It is interesting to note that, according to the Bank for International Settlements, almost 90% of the world’s central banks are already involved in their own cryptocurrency projects (Tuesday), so existing cryptocurrencies could not only suffer from being pummelled by the regulator, the regulator could also be their biggest competition!
• The oil price is staying at relatively elevated levels (Tuesday) as investors bet that demand and supply will remain tight as oil majors put more money into renewable projects, restricting supply, while demand continues to be strong.

• The latest stats show that more Americans are quitting their jobs than at any point in the last 20 years (Monday). It would seem that confidence is rising among workers that they can find other jobs but I also wonder whether this has got anything to do with people doing “interim” jobs under lockdown migrating back to what they were doing before.
• There seem to be a variety of approaches to coming back to “office” work (Wednesday), with some companies being keener than others to get bums on seats – and this is particularly true with banks such as Goldman Sachs, JP Morgan and Morgan Stanley. Opinions seem to vary between what bosses want and what employees want, according to ONS data (Tuesday), as 40% of companies expect over 75% of their workforce to be in the office and only 14% expect over 50% to work remotely whereas WFH is generally seen as an attractive option by many employees. In terms of more “physical” work, the UK meat industry is facing a shortage of staff (Friday), which could affect the supply of meat in our shops further down the line if the situation doesn’t change!

• Americans are keeping their cars for longer (Tuesday), according to IHS Markit figures. I wonder whether this is at least partly due to whether current owners are willing to hang on a bit longer to their existing vehicle before buying an electric one.
• Speaking of electric vehicles, GM is committing 30% more money to EVs (Thursday) than it said it would back in October and Polestar is considering a stock market flotation (Thursday). In terms of charging, the UK government is in talks with six companies (Ford, LG, Samsung, Nissan, InoBat and Britishvolt) about building battery gigafactories (Thursday). Given how big these places are (the clue’s in the name – “giga-” 😂), they’d presumably have to be in the middle of nowhere which would present financial and logistical challenges re power for the factory itself and you wonder just how good for the environment these places would actually be in the end! Still, it’d be great for jobs and keeping the UK automotive industry alive.

• IN M&A NEWS, Sony Music bought into podcasts by buying Somethin’ Else (Thursday), the UK’s biggest independent producer of audio programmes, in an effort to boost its podcast capability. Addison Lee hoovered up ComCab (Thursday), London’s biggest taxi firm, in a move to strengthen its ability to compete against the likes of Uber etc. and JP Morgan Chase bought UK roboadvisor Nutmeg (Friday) as part of its plans to expand into UK retail banking and wealth management.
• IN MONEY-RAISING NEWS, UK start-ups raised record amounts of money in Q1 (Wednesday), especially in life sciences and tech as investors look to park some of their money into growth assets. Meatless Farm launched a crowdfunding campaign (Monday) to raise £5m via Crowdcube as it needs to increase production and distribution to mix it with the likes of Beyond Meat and Impossible Foods etc. Lockdown winner OnlyFans is exploring a share sale to new investors (Friday) and wants to use some of the proceeds to go more mainstream and smarten up its reputation.

• In LEISURE/TRAVEL NEWS, it looks like the dispute between Airbus and Boeing that’s been dragging on for 17 years is at an end (Wednesday), Europeans are booking up their holidays (Tuesday) as vaccine rollouts leads to more freedom but Emirates outlines what a nightmare year it has had (Wednesday). Meanwhile, in the UK, CVC bought a majority stake in UK holiday park operator Away Resorts for £250m (Tuesday) as investors snap up “staycation” assets. For instance, Butlin’s owner Bourne Leisure was bought earlier this year and there are other assets available.
• Then we saw the news that the UK and Norway completed the construction of the world’s longest subsea cable (Wednesday). It will trade power between the UK and Norway with a view to starting operations properly in October as part of plans to cut emissions and boost offshore wind power.

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

My favourite “alternative” stories this week involved the absolutely bizarre world record in Kanna Hashimoto wins Guinness World Record for getting tissues really fast (SoraNews24, Master Blaster) and the potentially useful Elon Musk’s favourite question to ask during job interviews which leaves people stumped (The Mirror, Rosaleen Fenton) if you think you will be having an interview with him any time soon 👍.