Watson’s Weekly 23-01-2021

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.

• President Biden reversed Trump’s anti-WHO stance (Friday) and committed to join international efforts to make Covid-19 vaccines available worldwide by signing up to its Covax programme
• Things are getting sticky in the EU regarding vaccine rollout. The grumbling is getting louder as EU members are considering legal action against Pfizer/BioNTech to make them ship more vaccines (Thursday) and Hungary decided to go rogue and approve Russia’s Sputnik V vaccine (Friday). If others decide to go down the same road and source vaccines directly themselves, EU disintegration really could be a possibility – and with Angela Merkel leaving office this year, this could really escalate as others line up to take her place both within Germany and outside. Populists in Europe will be loving the potential discord and they could potentially use the kerfuffle to get back on the offensive again. They will no doubt point to the relative success of the UK’s vaccine rollout (Tuesday) – although, as we all know, this situation could change!
• All the while, poor countries are going to suffer, as one study predicted that some countries could take up to three years to get vaccinated (Thursday). I think it’s in these countries that the Chinese and Russian vaccines are going to do best – and if they prove to be effective the companies that make them could find themselves new overseas markets.
• Now that we actually have vaccines, though, the next thing is going to be how to transport them all. Companies who make fridges that can cope with the cold temperatures needed for the vaccines will benefit (Friday). China’s Haier and Japan’s Panasonic make such fridges, but I am sure that others will also benefit! I think that this is going to be a major trend for this year…

• In petrol-powered vehicle news, the Fiat Chrysler/Peugeot Citroen merger went live as the new entity “Stellantis” (Monday) becoming the world’s third biggest car maker by sales, according to 2019 figures. The chief exec warned that the Ellesmere Port factory in the UK could be at risk at some stage (Wednesday) because of Brexit uncertainties and the commitment by the UK government to stop selling petrol-powered cars in 2030, although let’s face it – car sales have been pretty ropey for a while now so I think he’s just setting the stage to blame someone else (the government) if he has to sack loads of people. Nissan said the complete opposite (Friday) as they saw that Brexit might present opportunities as their cars would look pretty attractive compared to more expensive imports. Time will tell who is right! Meanwhile, Audi was the latest manufacturer to bemoan the shortage of microchips (Monday). The chip industry doesn’t cope well with big swings in demand and companies like TSMC are likely to benefit (Friday). Intel saw a strong end to last year because of increased demand (Friday).
• In EV news, Tesla started deliveries of its new Shanghai-made Model Y (Tuesday). A survey by Deloitte showed that UK buyers remain reticent about buying EVs because they are still a bit too expensive (Tuesday) and a number of companies are getting stuck into upgrading our charging network (Tuesday). Having said that, other companies are developing batteries that can charge faster, hold their charge longer and deteriorate more slowly (Wednesday). I personally think that if we can get the batteries right with longer range and faster charging times the need for an expensive and hard-to-roll-out charging network will actually diminish over time. We need the charging network at the moment, though, in order to convince more people to buy EVs in the first place!
• Interestingly, VW just missed their European emissions targets leading to a whopping €100m in fines (Friday)! Ouch 😱! Presumably, this wasn’t helped by the later-than-planned launch of their ID3 all-electric car. I would have thought that this means Tesla will do a roaring business next year from VW for emissions credits (Tesla makes a huge amount of money from this)!

• In Financials news: the US banks’ reporting season showed us that banks with more exposure to trading and advisory revenues ruled (Wednesday) while those with more exposure to consumer lending were held back. Elsewhere, BlackRock and Vanguard continue to dominate the world of ETFs (Tuesday), but although they probably wield more power between them than the likes of Facebook, Amazon and Google on tech, it doesn’t seem to attract much attention. Then we also saw Elliott Management leave Hong Kong (Wednesday), making it one of the first major financial institutions to pull out since all the pro-democracy tensions led to China imposing new stringent national security laws on the territory. It’ll be interesting to see whether this trickle will become a flood.

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

My favourite “alternative” story this week was One of Japan’s best ramen chains now has a VR game that lets you cook their noodles (SoraNews24, Casey Baseel) which makes me crave ramen!