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 COLOURED HIGHLIGHT 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 was the week when Sam Altman returned to OpenAI, when Jeremy Hunt announced the Autumn Statement and when Argentina got a new president…
- IN TAIWAN – plans for the opposition parties to get together got problematic over the weekend as neither party could agree who would lead the campaign! They have to unite in order to stand any chance of winning against the ruling DPP.
- IN EUROPE – the Eurozone is moving closer to recession, according to the latest data from the HCOB PMI. Business output fell in November for the sixth consecutive month and the number of jobs cut exceed the number of those created for the first time since the pandemic. The ECB said that it could potentially raise interest rates if needs be to tame inflation (although most believe that Europe has already hit the peak). Meanwhile, within the region, Germany’s government were forced to suspend a vote on the country’s budget for 2024 following a ruling by the country’s highest court declaring that the government’s move to shift €60bn to a climate fund breached fiscal rules to limit debt! Politics in the Netherlands shifted to the right as Geert Wilders won elections on Wednesday, benefitting from the increasing disconnect between liberal city-dwellers and more right-wing rural voters who are getting increasingly concerned about immigration and worsening public spaces. Turkey’s central bank whacked up its interest rate to 40% in order to tame inflation while Greece’s leftist Syriza party looks like it’s breaking up as nine of its MPs quit in protest against its leader.
- IN THE UK – chancellor Jeremy Hunt announced various initiatives in the Autumn Statement. It looks like he’s used any “spare” money to implement more broader-based measures than I had expected and it is, unsurprisingly, designed to win more votes. In the meantime, the latest “flash” reading of the S&P Global CIPS PMI highlights the first signs of economic recovery in the UK for four months. It was also good to see that UK business activity grew slightly in November.
- IN ARGENTINA – Radical libertarian Javier Milei won the presidential election and so Argentina will be facing an uncertain future until everyone can work this guy out.
IN OIL NEWS…
- Oil prices fell as the Opec+ alliance postponed a meeting which was scheduled to get members to commit to production targets. The group is expected to either keep production plans unchanged or cut them in order to support the price.
IN CRYPTO NEWS…
- Binance founder and CEO Changpeng Zhao pleaded guilty to money laundering yesterday. He’ll pay a $50m fine himself and sever any involvement with the business while Binance itself will pay fines of over $4bn to settle criminal charges. The new chief, Richard Teng, has called for calm and is committed to getting customers and regulators onside.
IN BUSINESS & CONSUMER TRENDS NEWS...
IN BUSINESS TRENDS…
- US private equity firm Carlyle sold its 28% stake in McDonald’s Chinese operations for $1.8bn in the latest example of a western private equity firm reducing exposure to the region.
- India is seeing a back-office boom which means that IT services workers are hot property! Multinationals are opening their own “Global Capacity Centres” (aka GCCs) to develop proprietary tech such as cyber security systems and AI. These centres are very cost effective because of cheaper labour costs.
- More businesses are closing than opening, according to the latest data from the ONS. Transport and storage businesses were hit hardest as rising energy prices, inflation and higher wage costs continue to hit hard.
- Compass benefitted from more companies deciding to outsource their catering – and it also managed to increase its prices as well. Not bad!
IN CONSUMER TRENDS…
- US retailers are not expecting great things from Black Friday given the squeeze on household incomes and it looks like they will have to offer deeper discounts to attract increasingly cost-conscious customers.
- UK retailers are also offering deeper discounts but, on the plus side, the latest GfK consumer confidence survey shows that Brits are starting to feel more optimistic about the economy and personal finances! Unfortunately, consumers will face more pressure on their finances as the energy price cap is set to rise from January, which means that bills will go up.
IN RETAIL & LEISURE NEWS...
IN RETAIL NEWS…
- Electrical goods retailer AO World managed to return to profit after a year of painful cost cutting. It also pleased investors by lifting full-year profits.
- Go Outdoors saw profits almost halve last year as it struggled to cope with higher operating costs. On the plus side, sales are now showing signs of recovering and it’s going to roll out a new format in high streets called Go Outdoors Express after a successful trial.
- Halfords got a bid and rejected it not long after it threw its hat in the ring to buy rival bike specialist Wiggle out of administration. I still think that we’re potentially at “peak bike” for now and that there will be more sector consolidation.
- Kingfisher, which owns B&Q and Screwfix, announced its second profit warning in two months as its French business saw a weakness in sales. It has decided to concentrate on growing market share in Britain, France and Poland next year whilst keeping a lid on wage costs.
- UK beauty retailer Space NK has benefitted from the “Zoom Boom” of people wanting to look their best on video calls and reported strong sales!
IN LEISURE NEWS…
- Jet2 had strong results for the first half and although winter bookings have been a bit lacking, bookings for summer next year look pretty good.
IN TECH NEWS...
IN CHIPS NEWS…
- Nvidia reported yet another storming quarter powered by its leading position in AI but investors remain concerned about the effect of the ongoing US-China trade tensions. Through it all, Nvidia is taking things in its stride and continues in its aim to be a one-stop chip shop as it announced an even better AI chip.
IN OPENAI NEWS…
- There was a kerfuffle over the weekend as there was speculation that Sam Altman would be returning as CEO of OpenAI, but then the board rejected this and appointed a new interim chief, Microsoft then hired Altman and his team but then he made a dramatic return to OpenAI as chief exec with a new board. There were comments that one of the reasons why Altman was ousted in the first place was that the company had been working on a new AI model which was so powerful that it caused safety concerns among staff.
IN OTHER TECH NEWS…
- The $69bn Broadcom-VMWare merger finally got approval from the Chinese regulator, which had been dragging its heels. Is this a sign of a thawing of relations between Washington and Beijing??
- The UK government has stopped advertising on X over the last few months although they continue to spend on Facebook and Instagram ads. This was happening even before last week’s anti-Semitism row.
- Sage announced booming profits and it’s working on an AI product that it says will be a game-changer for SMEs!
IN CAR-RELATED NEWS...
IN BATTERY NEWS…
- South Korean battery makers such as LG Energy Solution and SK On are reining in their US operations due to slow EV demand, which has itself prompted a pause in EV production capacity expansion at the likes of GM and Tesla. Ford announced that it would continue to build its Michigan factory but on a smaller scale precisely because of this.
- Stellantis is in talks with CATL about a 50-50 battery joint venture that would increase the affordability of EVs, although this means that superior Chinese tech is firmly embedded in European car supply chains!
- European battery maker Northvolt has made a breakthrough discovery of a sodium-ion battery which costs less to make, is more sustainable than existing lithium ion batteries and doesn’t require the use of any lithium, nickel, graphite or cobalt. It is currently designed for electrical storage plants but it could potentially be used in EVs.
IN CARMAKER NEWS…
- Nissan said that it plans to build new EVs at its Sunderland plant, which will be great news for the region.
- Musk is getting frustrated about workers at his Swedish factory striking to protect collective bargaining rights. Could this inspire other Tesla workers around the world perhaps??
- Fisker lost its second chief accounting officer in less than a month, shortly after unveiling its Q3 results. Fisker is finding out the hard way how difficult it is for a new car company to survive in an increasingly competitive space.
IN OTHER CAR-RELATED NEWS…
- The chief of GM’s autonomous car unit, Cruise, resigned after all the safety troubles last month. Cruise’s future is unclear but, for the moment, it has planned a more conservative reintroduction of its robotaxi service that will be much smaller-scale than before.
- France has voiced its support for the UK call to delay tariffs on electric vehicles. It had, up till now, been the only major European opponent of the UK’s request to defer the 10% duty on EV sales.
IN FINANCIALS NEWS...
- Chinese shadow bank Zhongzhi warned that it was “severely insolvent”, which could have big implications for the whole $3tn shadow banking market as its exposure to a disastrous real estate sector is dragging everything down with it.
- Barclays said that it would be reducing headcount by 2,000 as part of a cost-cutting drive. The cuts will mostly come in the “back office” (non client-facing) departments.
- Citigroup announced imminent big job cuts as part of its own restruction.
- Swiss bank Julius Baer announced a profit warning mainly thanks to its exposure to troubled Austrian property group Signa.
- Virgin Money fell short of market expectations because it had to make bigger-than-expected provisions for bad loans to cover rising credit card arrears prompted by the ongoing cost-of-living crisis.
IN OTHER NEWS...
- IN REAL ESTATE NEWS – London landlords are racing to upgrade their office properties to new tighter standards, according to a survey by Deloitte. Meanwhile, EY is considering ditching its London HQ as it has a think about its ongoing office space requirements near the end of its 25-year lease.
- IN MANUFACTURING NEWS – farm equipment maker Deere & Company made downbeat forecasts for 2024 thanks to higher borrowing costs and an increasingly budget-constrained customer base and Thyssenkrupp wrote down the value of its steel business by a massive €2.1bn due to low demand and falling prices.
- Bayer shares fell by up to 20% to their lowest level since 2008 as investors expressed their disappointment with a blood-thinning drug that saw its drug trial halted. It had been seen to be a potential blockbuster and the cessation of the trial exposes Bayer’s relatively poor drugs pipeline.
- Lego is pinning a lot of hopes on its new proprietary line of Lego sets called “Lego Dreamzzz”, which is a result of four years of testing with children. The company is trying to wean itself off reliance on third party franchises like Star Wars and Harry Potter by coming up with its own “thing”, so we’ll just have to see how this goes!
- The UK Supreme Court decided that Deliveroo riders are contractors – and not employees – in the latest development in the whole gig economy thing. The Independent Workers’ Union of Great Britain will look to appeal against the ruling under international law…
BANTER
My favourite “alternative” video from this week was the one with the trap door! You could have soooo much fun with that!