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 BIG PICTURE NEWS...
This week was dominated by news about Boris Johnson’s survival, China challenges and Microsoft’s biggest ever acquisition. However, before we get into that, let’s tuck into a bit of macro:
- President Biden made an almost Trump-esque gaffe regarding the Russia/Ukraine situation (Friday) when he said that a “minor incursion” by Russian forces into Ukraine would not provoke a full response from the Allies. He had to retract this rather hastily given how offensive this was to Ukraine, but Putin is sitting pretty at the moment as he’s managed to split the newly-minted German coalition government (Tuesday) and NATO whilst giving away no concessions!
- Meanwhile, China is having a tough time as its GDP growth rate slowed to 4% year-on-year (Monday), its slowest pace for 18 months. It has been exercising extreme caution ahead of next month’s Winter Olympics and shut roads and suspended plane, train and bus services, which has been terrible for the economy. China cut its policy interest rate this week (Tuesday) in order to jolt it back on track.
- In ITALY, investors had a bit of a wobble as they worried about Mario Draghi becoming President in next week’s elections (Monday) because they thought he would leave a vacuum behind that would create a real void and potentially plunge the country back into the very turmoil he was brought in to tame! Maybe that wily old dog Silvio “bunga bunga” Berlusconi could save Italy from this and keep Draghi in the PM spot as he has, at the tender age of 85, thrown his hat into the ring as a Presidential candidate (but no-one really thinks he stands a chance)…
- In the UK, inflation hit a near-30 year high of 5.4% (Thursday). Raw materials price rises have been causing small and medium-sized builders to go out of business (Monday) because they just can’t make any money and road freight rates shot up by almost a third last year (Monday), which all add up to higher prices that are then being passed on to customers. On the plus side, recent moves by the Baltic Dry Index (which measures the prices of shipping bulk materials around the world and is widely regarded as a proxy of world trade) suggest that supply chain problems have gone past their worst point. BoJo managed to hang on to being PM thanks to Operation Save Big Dog (Monday) and the subsequent announcement that Plan B restrictions would be lifted (Wednesday), which was welcomed by businesses (Thursday). It sounds like the signatures are building up to the 54 needed to prompt a vote of no-confidence in the PM. I think he’s a dead man walking, but maybe everyone is waiting to see the contents of a report into the whole shebang that is due out next week.
- In ENERGY, Together Energy became the latest UK power company to go bust (Wednesday), plans to build offshore wind power plants off Scotland caused controversy (Tuesday) and Serica Energy continues to benefit from high gas prices (Friday), although it might have to be careful not to do too well as the government might ask it to pay a windfall tax!
- In CRYPTO, things got quite interesting this week what with regulators in Spain (Tuesday) and the UK (Wednesday) cracking down on dodgy crypto ads while the FCA is also considering additional moves to limit crypto investment incentives (Thursday). Russia is actually considering an outright ban on all crypto operations (Friday) given that crypto-mining’s thirst for electricity will severely hamper the country’s bid to cut carbon emissions. On the other hand, Turkish people are turning to crypto investment in larger numbers (Friday) due to the lira going bananas because of President Erdogan’s penchant for doing crazy things to the economy. Meanwhile, Facebook is making plans for the metaverse (Wednesday) and looking into increasing activity in NFTs (Friday), as is Twitter.
THIS WAS A BIG WEEK FOR TECH...
- Microsoft made its biggest ever acquisition in the form of Activision Blizzard for $75bn (Wednesday), which hit the share price of Sony (Thursday) because investors feared the impact the deal could have. It’s not a done deal yet, though, because Activision has been facing allegations of sexual harassment and dodgy work practices (which could yet prove to be expensive) and regulators could see it as a way to challenge Big Tech (Friday) while investors were trying to guess what the next target might be (Friday). EA looks like a possible acquisition target, although this is obviously just speculation.
- In the UK, THG suffered a sell-off (Wednesday) as it issued a profit warning. The share price is now at less than half its flotation price as it just doesn’t seem to be doing anything right at the moment.
AND IN CONSUMER AND RETAIL DEVELOPMENTS THIS WEEK...
- Although the cost of living is rising faster than wages in the UK (Wednesday), we’re losing confidence about our finances (Friday) and companies like P&G are saying that prices will continue to rise (Thursday), pubs are recovering (Friday) and will probably get a further boost as workers are ordered back into the office. We’re already shopping in Covent Garden, to the extent that retailers there are now more able to pay rent (Tuesday) and richer consumers are pushing luxury brands like Burberry to new highs (Thursday) and buying posh cars (Tuesday). It was also interesting to see that Amazon and Visa have decided to bury the hatchet for the moment (Tuesday) regarding processing charges.
- In other retailer news, Boots is attracting bidders (Monday) while Aldi unveiled a cashierless shop (Wednesday) but ditched Deliveroo for grocery deliveries to concentrate on click-and-collect (Friday).
THERE WERE SOME SIGNIFICANT EV-RELATED DEVELOPMENTS AS WELL...
- In EUROPE, EV sales overtook diesel sales (Monday) but carmakers protested against new rules in France (Wednesday) that would compel them to insert phrases like “for short journeys, walk or take a bike when possible”, “consider carpooling” and “take public transport for your daily journeys” in adverts.
- In the UK, it turns out that EV sales are exceeding the number of chargers being installed (Friday), but on the positive side, Britishvolt’s Northumberland factory got another load of cash from investors (Friday). It expects to begin construction near Blyth in April, with battery production slated to start by 2024!
IN CHINA CLAMPDOWN NEWS...
- Evergrande continues to die a slow death (Wednesday) and TikTok owner ByteDance disbanded its investment team (Thursday), not long after it did a structural overhaul. Ant Group got caught up in allegations of corruption (Friday) in the latest setback for the former fintech titan (well it’s still a titan – just a tamed one!).
- On a positive note, Chinese casino stocks like Sands China, MGM China and Wynn Macao all got a boost (Tuesday) as Chinese officials decided to keep the number of gaming operator licences unchanged. There had been fears that their number would be cut as part of an overall clampdown.
IN OTHER NEWS...
- Netflix saw its share price absolutely crater (Friday) due to disappointing new subscriber numbers in Q4. I guess that lockdown momentum was never going to last forever. They need Squid Game 2 to come out asap!
- Peloton also saw its share price bomb (Friday) as it has decided to temporarily pause production of its connected fitness products due to weakening demand. This is extremely concerning IMO. Given the competitive environment, inflationary pressures on consumers and the fact that more people are going to gyms at the moment the immediate future is not looking good.
AND IN UPDATES FOR WATSON'S YEARLY...
- 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. I have also added to the “Themes for 2022” section. 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, without a shadow of a doubt Meet the Japanese grandma who manually operates vending machines in the countryside (SoraNews24, Oona McGee). What a fantastic place and wonderful woman!