Watson’s Weekly 24-07-2021

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.

• GLOBAL MARKETS had a wobble at the start of the week (Tuesday) on fears of the impact of the delta variant, but then they bounced back on optimism about the US economy (Wednesday).
• IN OIL – OPEC managed to hammer out an agreement to increase oil production (Monday), deciding to raise production by 400,000 barrels of oil per day. This was good (for OPEC) because it keeps everyone together, meaning that the price won’t start getting all volatile when rebel members just go out and produce whatever they want.
• VACCINE/HEALTH PASSPORTS FEATURED THIS WEEK – as vaccine passports became law for the first time in England (Tuesday). BoJo said that from the end of September anyone going to a nightclub would have to prove that they’d been double-dosed. It’s likely that this will spread to pretty much anything with a crowd (e.g. concert venues, theatres, sporting events etc.). Over on the Continent, the French government is introducing “health passes” (Tuesday) that will be needed to enter bars, restaurants, shopping centres and long distance trains. Failure to check health passes will result in €45,000 fines and a year in prison 😱. Governments don’t need to make it illegal to make people get vaccinated – but they can make you life much more miserable if you don’t.

• The week started off with the tragic floods in Germany (Monday) and Chancellor Merkel said that “We have to up the pace in the fight against climate change”. The German government pledged €200m in flood aid (Thursday), which is in addition to the €250m promised by regional governments. Given the fact that the government hasn’t covered itself in glory in the handling of one of Germany’s biggest natural disasters for the last 100 years, it’s surprising that the opposition parties have not made much ground.
• It was perhaps rather poignant to see a report by British insurer Aon saying that insurance payments were going to be at a ten year high this year (Thursday) due to claims resulting from the sheer number of natural disasters so far this year. How ironic, then, that billionaires were playing spaceman (Monday) in rockets that belch out 200-300tons of CO2 into the atmosphere per flight versus long-haul flights that emit 1-3tons! Branson and Bezos seem to be keen on damaging the planet. OK, so Musk is also partaking in this galactic 🍆-swinging contest, but at least he’s offsetting his jaunts with EVs and businesses like Tesla Energy!
• There was a really interesting article on the urgent need for the UK to narrow the gap between power generation and power retention in battery technology (Monday) in order to smooth out the provision of electricity – but it seems that the Americans may already have a solution in the form of a four-year-old startup called Form Energy (Friday) which makes cheap batteries that can discharge power for days using iron! Given that wind farms in the UK are regularly paid to switch off on particularly windy days because the grid can’t cope with the sudden surge (!), you can see just how much a necessity it is to be able to hang on to the electricity that we do generate.
• It was interesting to see that Mercedes has bought British electric motor start-up Yasa (Friday) for an undisclosed sum, in its ongoing effort to boost its technological expertise. Yasa’s axial flux motors are smaller and more efficient than other designs and it will now supply its motors across a range of new electric models in Mercedes’ AMG range.

• Consumer confidence is returning to pre-Covid levels (Monday) according to a Deloitte study and a PwC report said that consumer sentiment is at its highest levels since 2008 (Monday)! And if that wasn’t enough positivity for you, a survey from GfK showed that households are feeling increasingly confident about their own finances and the wider economy (Friday)! This may be due in part to house prices rising to new highs in June, according to Rightmove (Monday), something backed up by HMRC data which showed that June was the busiest month on record (Thursday) for residential sales.
• On the other hand, we’re not spending money on Netflix as it reported one of its weakest ever quarters for new subscriber numbers (Wednesday). I think that Netflix – unlike, say, Disney+ – has been around for quite some time and it’s entirely possible that lockdown was a double-edged sword in that more people wanted it, but they also had more time to consume the contents. This means that people may now be jaded with its current offering which means that it might be a good idea for Netflix to buy a studio (Thursday) to get a sudden injection of good quality new content. On the other hand, HBO Max announced that the number of new subscribers on its platform increased (Friday).
• It wouldn’t be a Watson’s Daily without some chat about inflation 😂 and so, in order not to disappoint you, I thought I’d mention the fact that Unilever said that it is facing the biggest cost rises in a decade, and they’re squeezing operating margins (Friday). At the moment, it’s absorbing these costs, but it sounds like price rises are going to be passed onto the customer very soon! More upward pressure on inflation, no??

• Kantar data showed for the first time ever that online grocery sales actually fell (Wednesday)! Talking about online grocery retailers, Ocado had to deal with two big fires at one of its warehouses (Monday), which wasn’t a good look given that it is trying to sell its tech expertise to other retailers around the world. I’d say this is a blip for now but Ocado will want to get that sorted in order to calm existing customers and stop making potential customers nervous. In other grocer-related news, Morrisons is testing out a cashierless format – not using Amazon tech – (Monday) and the Fortress offer for Morrisons got a shot in the arm from Apollo (Wednesday). In the meantime, Brexit red tape is becoming more serious in Northern Ireland (Thursday).
• In other retailer news, Next was confident enough to raise its forecasts (Thursday) and Wickes saw strong like-for-like sales growth over Q2 (Thursday) as it continued to benefit from the wave of DIY popularity powered by a red-hot property market.

• In IPO NEWS, Robinhood announced that it was going for a valuation of up to $35bn in its upcoming flotation (Tuesday) as it tries to take advantage of the retail investor hype it has created. Talking about companies trying to surf a wave of popularity, PureGym, the UK budget gym chain, is now seeing demand rising above pre-Covid levels and is considering a potential IPO (Wednesday). British private equity firm Bridgepoint had a strong market debut (Thursday), which no doubt goes some way to restoring the London Stock Exchange’s mojo that has taken a bit of a battering in the last few months.
• Meanwhile, in M&A, Tencent said that it was buying British games developer Sumo (Tuesday) and Zoom announced a $14.7billion deal to buy Five9 (Monday), a company that provides cloud-based customer service software.
• In TECH, Google and Jio have teamed up to make a smartphone for the masses in India (Wednesday). It’s called the JioPhoneNext, and it is thought that it will be priced at under $50. The Indian market clearly has potential but even a smartphone for under $50 is likely to be too pricey for mass-adoption.
• In SEMICONDUCTOR NEWS, Intel said that the current global semiconductor shortage could potentially run into 2023 (Friday) but that supply shortages should start to ease later on this year, something that was echoed by TSMC recently.

• 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 most definitely Japan’s brain wave-reading cat ears are back, with a brand-new twist! (SoraNews24, Casey Baseel). A great invention that we never knew we needed!