Watson’s Weekly 24-04-2021

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.

• Given that it was Earth Day on Thursday and that Joe Biden was holding a two-day climate summit at the end of this week, there was a lot of environment-related comment this week. The US and China pledged joint action on climate change (Monday) to take concrete actions this decade to cut emissions in line with the 2015 Paris Agreement. Brazil, South Korea and Russia were among the countries making solemn commitments to improve things but we’ll just have to wait a few years to see whether this is just a load of hot air 😁. Although I’ve seen this kind of thing a few times before, I think there may be more chance of it happening this time around because of the momentum that’s been building up over the last few years. We’ve had oil price nightmares, Sir David Attenborough on single-use plastics, Greta Thunberg going on strike, numerous natural disasters, the likes of BP and Shell committing to renewable energy and now a coalition of major global investors putting pressure on banks to stop funding carbon-intensive projects (Monday). I think that recent momentum capped off with hitting polluters where it hurts – in the pocket! – may tip things in favour of the planet, but we’ll just have to wait and see.
• Things are continuing to go in the right direction for the UK economy. According to a survey of economists carried out by the Treasury, the UK is set for its best GDP growth since 1988 (Thursday) as vaccine rollout, business reopenings and other restrictions lift. Interestingly, although consumer spending is up (Thursday) the latest ONS figures show that inflation still has a way to go before it hits the Bank of England’s 2% target – the level at which central banks tend to get twitchy and start thinking about putting interest rates up.
• There were some interesting cryptocurrency developments this week. Bitcoin had its biggest one-day drop for two months on Sunday (Monday) with various fluffy explanations being offered but Scottish investment company Baillie Gifford seems to be getting behind cryptocurrencies (Wednesday) as it invested $100m into the UK’s biggest cryptocurrency group Blockchain.com, thus edging it another step closer to the mainstream. Even the government is getting in on the crypto-fun as Rishi Sunak launched a taskforce to explore the possibility of a Bank of England digital currency (Tuesday).

• Hope are high that the $5.4tn people are thought to have saved globally during the course of the pandemic will power economies to growth (Monday). UK consumers might be feeling more optimistic as the unemployment rate has fallen to 4.9% (Wednesday) despite Covid restrictions, although it has to be said that the youth unemployment rate is at a five-year high. I wonder whether this is due to a higher proportion of younger people being employed in industries such as retail and leisure as well as potentially being more likely to be cut by companies who keep on more experienced revenue generators at the expense of possibly less revenue-generative youngsters.
• So what is everyone spending/going to be spending their money on? Anna Wintour reckons you’ll be spending your money on luxury goods (Wednesday), which is actually borne out by a strong performance from Gucci-owner Kering (Wednesday) and then from Hermès (Friday), following on from last week’s strong showing from LVMH. We’re also spending money on cars (Thursday), houses (Thursday), going to the gym (Thursday), Toys (Friday) and bookshops (Thursday) while some companies are making preparations for lifting restrictions, like Pizza Express (Thursday) and Wetherspoons (Thursday). Things are actually getting so frenzied at the moment that UK pubs and restaurants are facing staff shortages (Monday).

• In ICE car news, Hyundai reported a cracking set of profits in Q1 (Friday) but Jaguar Land Rover and Renault announced halts in production due to chip shortages (Friday). The prospect for a resolution to this situation is still pretty distant according to Intel (Friday).
• In EV news, it was a tricky week for Tesla as Chinese carmakers are trying to close the gap (Tuesday) and then the state media got involved with slagging them off for apparently poor customer service (Thursday). This involved a Chinese Model 3 owner complaining that “the brakes didn’t work” (pretty much the worst thing you can say about a car, no?), Tesla then asking the customer to give permission to get this verified and then the owner not allowing them to do so. Tesla then gets the blame for being arrogant etc. and the state media makes a big song and dance about it. Now I think that Tesla can be pretty slippery, but I think that the timing of all this is very fishy! China is a key market for Tesla but I think it needs to broaden its appeal in other countries as I would imagine that it is not going to get as much support as its domestic rivals over the long term. Mind you, the EV revolution could hit some real problems as Rystad Energy says that there could be “a serious lithium supply deficit” by 2027 (Monday) and Bosch said that more attention needs to be paid to alternative technologies (Friday). In the meantime, lithium miners Orocobre and Galaxy Resources announced plans to merge in a $3.1bn deal (Tuesday) to create one of the world’s biggest lithium producers, which they argue will enable them to more than double their annual production of lithium carbonate.

• Other stories worth mentioning this week included Nvidia getting investigated by the UK’s Competition and Markets Authority for its proposed $40bn acquisition of Britain’s Arm Holdings (Tuesday), Apple reinstating Parler (Tuesday) and boosting its ad business (Friday), and Netflix having a shocker in terms of very disappointing new subscriber numbers (Wednesday) while rival HBO actually did pretty well in comparison (Friday). Tobacco companies had a wobble over fears that Biden’s administration would force a reduction of nicotine in cigarettes (Wednesday), Uber Eats decided to move into Germany (Thursday) and Real Madrid’s Florentino Pérez tried and failed to launch a new European Super League (Monday).

• 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 the astoundingly bizarre Ultra-realistic cat backpack causes a fur-enzy online (SoraNews24, Oona McGee). Who on earth would want to buy such a thing?!?