Watson’s Weekly 23-10-2021

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 MACRO NEWS…

• China’s GDP growth is slowing down (Monday), according to official figures from the National Bureau of Statistics. It still grew by 4.9% in Q3 though, but the slowdown was due to a cooldown in the property market and ongoing energy shortages. China’s energy crisis looks like it’ll continue for a while yet (Monday) as Xi Jinping is sticking to his aim to wean his country off its current reliance on coal. There was also some interesting news about China continuing to block beef imports from Brazil (Monday), which is a nightmare for Brazil because the country is the world’s biggest exporter of beef. China stopped imports initially because of a few cases of mad cow disease, but although Brazil later gave the all clear, the Chinese kept the ban in place. This might work in China’s favour because they’ve got an oversupply of pigs and I believe that Chinese people generally prefer pork to beef anyway. This is clearly bad for Brazil though – but maybe that will mean beef prices elsewhere will go down. Meanwhile, Brazil saw 4 economic ministers resign (Friday) because Bolsonaro looks like he’ll breach spending caps to boost welfare payments to poor families, which critics say is doing to buy votes given next year’s election!
• In the UK, the Bank of England dropped more hints about an earlier-than-expected rate rise (Monday) and speculation of a rate rise in the November meeting continued to gain traction (Tuesday). The new chief economist, Huw Pill, said inflation could hit 5% early next year (Friday), reinforcing that perception. Mind you, the inflation rate cooled off slightly from last month (Thursday) but given that wages are rising, and consumers are looking at higher paint prices and utility bills (Thursday), the pressure is still on! Sunak is also considering an online sales tax (Tuesday), which sounds good in theory but could slow down the digitisation of the economy, target startups and will be another burden on companies who are just emerging from the pandemic. Some believe that it would be better to increase VAT or income tax because the burden will be spread more widely.

In ENERGY NEWS…

• Russia kept gas prices up (Tuesday) but offered to boost gas supplies to Europe as soon as the new Nord Stream 2 pipeline is approved by Germany. In the UK, Goto Energy went bust (Tuesday) and the government announced an offer of £5k incentives for households to get heat pumps (Tuesday) but subsequent reports pointed out that there aren’t many people qualified to install them and it’s also not a given that they will be appropriate for all properties. Renewables (or lack of them) have been partly to blame for the current shortage of power and so SMRs continue to be pushed as the future of nuclear power (Thursday).

In CRYPTOCURRENCY NEWS…

• A bitcoin ETF, called the ProShares Bitcoin Strategy ETF, started trading (Wednesday). The market saw this as another move towards the mainstream, which led to Bitcoin breaking through $65k (Thursday) and Facebook launched a digital currency wallet (Wednesday). There was also an interesting article on Worldcoin (Friday) being given out for free in exchange for personal details via the use of iris-scanning orbs.

• The buzz around EV batteries continued as Britishvolt and an Aussie battery maker Gelion Technologies are aiming for London IPOs (Monday) and Coventry is open for giga-action (Thursday) at the site of its airport.
• In terms of the cars themselves, Tesla posted a third consecutive quarter of profits (Thursday), Foxconn unveiled its first EV (Tuesday) and Ford committed to investment in EVs in the UK (Tuesday).

• Facebook is committing resource to becoming a player in the metaverse (Tuesday), joining others including Nvidia, Roblox, Epic Games and Microsoft. The company sounds like it’s going to do a rebrand (Thursday) but it’s got a lot of convincing to do (Friday). Snap is the latest digital advertiser to suffer from Apple-it is (Friday).
• Meanwhile, Klarna seems to be preparing for a regulatory crackdown (Monday) and Apple’s ads have taken off since their new privacy updates came into force (Monday).

• City deal-making is continuing to soar (Monday) and this week we saw Aristocrat buying Playtech (Tuesday) bringing together analogue and digital gambling, PayPal announced an interest in Pinterest (Thursday), which is particularly interesting because of PayPal’s aim to build a “superapp” (Friday), as per WeChat and Alipay, where financial services, social media and commerce come under one roof in some kind of app ecosytem. PayPal has already bought online coupon start-up Honey Science (for $4bn in 2019) and Japanese Buy Now Pay Later player Paidy (for $2.7bn only recently), so Pinterest could fit in nicely as a social network that would give them a pathway to customers. Elsewhere, FirstGroup announced the £125m sale of its Greyhound bus services in the US (Friday), making the company 100% UK-focused.
• WeWork floated on the NYSE this week (Friday) and it had a great debut just two years after its previous attempt fell apart in disastrous fashion.
• Pod Point edged closer to flotation (Tuesday), BrewDog postponed its float (Tuesday) and, separately, rapid grocery-delivery start-up Gorillas raised $1bn (Wednesday) as the trend for superfast delivery increases momentum and it was interesting to see quantum computing gaining momentum (Friday).

• South Korea is feeling China heat (Thursday) amid the ongoing government crackdowns and so is looking elsewhere for growth.
• Netflix announced strong figures (Wednesday) and have a pretty good pipeline going into the end of the year. Squid Game has clearly helped!
• THG’s chief decided to give up his golden share (Tuesday) in an effort to appease investors who have been selling his stock.
• There was a really shocking story about vets this week (Wednesday) because, despite the fact they are in the private sector, pay and conditions are very poor at a time when a number of companies and investors are putting more money into petcare.

• 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 of the week this week was Pop-up restaurant Karen’s Diner opens with ‘rude staff and poor service’ (The Mirror, Emma Rosemurgey), which sounds like an interesting concept! It sounds like fun, though!