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 FED COMMITS TO LOW INTEREST RATES, GERMANY FALTERS, THE UK GAINS CONFIDENCE AND BITCOIN BREAKS $60K...
- In the US, the Fed said that it will keep interest rates close to zero until at least 2024 (Thursday), which is an extension of what the base case was previously – 2022.
- In China, manufacturing output was very strong for Q1 (Tuesday). You could say that this will look particularly impressive given that China was in lockdown in Q1 last year and that this year the annual mass-migration of workers and shutdown of factories over the lunar new year didn’t happen because of the imposition of very strict travelling restrictions.
- In Germany, the government’s economic advisers said that growth is stalling (Thursday) as the slow vaccine rollout is holding the economy back
- In the UK, confidence is rising in both the manufacturing and services sector (Monday) and consumers are also feeling more optimistic as well (Friday). The Bank of England seemed to echo this confidence as it raised its forecasts for the UK and left interest rates unchanged at 0.1% (Friday).
- Meanwhile, Brussels continued to needle the UK as the EU launched legal action against the UK at the European Court of Justice (Tuesday) that may result in trade sanctions regarding actions over Northern Ireland. They have also threatened to stop vaccine exports (Thursday) and will be discussing this further.
- Bitcoin surged through $60,000 (Monday) but, as usual, no-one really knows why 😁
CONSUMER CONFIDENCE IMPROVES, RETAIL PROSPECTS ARE MIXED...
- Regarding consumer spending, US economists think that Biden’s massive $1.9tn stimulus will lead to the biggest spending spree since WW2 (Wednesday). In the UK, there was some research published by Scottish Friendly and CEBR which reckons that we’ll spend 26% of the £192bn that people have saved over lockdown on things like holidays, travel and eating out (Wednesday). It seems that we’re all gearing up for a summer of barbecues and partying as Asda said that sales of barbecue and garden furniture have increased by over 400% (Tuesday). UK consumers also seem to feeling more affluent as UK property prices are rising, according to Rightmove (Monday) and customer inquiries have increased significantly.
- In retail, the picture is mixed what with news that 5% of all shops closed last year in the UK (Monday) – the biggest drop for 10 years. Thorntons the chocolatier announced that it wasn’t going to reopen its shops (Tuesday), in stark contrast to the relative success of Hotel Chocolat. SSP, the owner of brands such as Upper Crust and Caffè Ritazza, asked shareholders for more cash (Thursday) but at the same time are looking out for opportunities as other tenants abandon railway stations and airports. Greggs announced big losses from last year (Wednesday) but added that they are opening 100 new shops and Ocado announced strong sales for the recent quarter (Friday) but said that the growth rate would slow down as lockdown lifts.
IT WAS AN EVENTFUL WEEK FOR EVs, BATTERIES AND CHARGING...
- Carmakers are continuing efforts to drive down the costs of making EVs (Tuesday) and there was another sign this week that EVs are edging closer to the mainstream as their prices are now being included in Office for National Statistics data that is used to come up with inflation figures.
- BMW said that at least 50% of vehicles they sell will be electric by 2030 (Thursday) but their Mini brand is to be 100% electric by 2030.
- VW announced its commitment to battery-making (Tuesday) as it unveiled plans for six new battery factories in Europe by 2030. It reckons that 70% of European sales and over 50% of sales in the US and China will be EVs by 2030.
- Panasonic announced reduced reliance on Tesla (Monday). Tesla is putting more resource into making its own batteries and is already working with the likes of South Korea’s LG Chem and China’s CATL.
- The UK’s biggest chain of independent petrol stations, called Motor Fuel Group (it runs petrol stations under BP, Shell, Murco, Texaxo and Jet brands), announced that it was going to spend over £400m on chargers to add 100 miles in under 10 minutes (Monday). As things stand, we need ten times the number of chargers to cope with government EV targets (Thursday), but EV sales may take a hit in the near term as the government surprised everyone by cutting EV subsidies (Friday). Generally speaking, this usually kills EV sales stone dead, so it’ll be interesting to see what the real demand is for EVs given that they were a rare bright spot in an otherwise dire 2020.
...AND IN OTHER NOTABLE DEVELOPMENTS...
- Stripe achieved a stellar valuation this week (Monday) giving it an implied valuation of a whopping $95bn! That’s bigger than either Facebook or Uber were before they did an IPO. Not bad, eh?
- Disney+ is narrowing the gap with Netflix (Monday), according to some recent analysis. I personally think that people will start to cancel subscriptions as lockdown lifts and maybe they will rotate subscriptions to cut costs. I would argue that the one service that won’t be cut is Amazon Prime because you get much more with that.
- eToro is planning on a Nasdaq listing via a SPAC (Wednesday) that could give it a valuation of $10bn. They boasted about 1.2m sign-ups in January, but I think that many of these “traders” will be flaky and leave. A great idea from eToro to surf the wave, but I think it’s fraught with danger for potential investors.
AND IN UPDATES FOR WATSON'S YEARLY...
- Watson’s Yearly updates: These will be left until the next edition of Watson’s Yearly that will be published shortly
This week, I have another favourite “alternative” story that stood head and shoulders above the rest: Airline employee goes extra mile to reunite toddler with Buzz Lightyear toy (The Mirror, Paige Holland). What a heart-warming story!