Watson’s Weekly 27-09-2020

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.

• China exports recovered from April Lows (Monday) but the Asian region as a whole appears to be recovering on strong exports of things like tech hardware and medical equipment.
• In the UK, Rishi Sunak announced various new measures (Friday) to keep the economy going and to smooth the effect of the end of furlough. The current system is being replaced by a German-style wage subsidy scheme, extended the 5% VAT rate for restaurants, hotels and cinemas, announced more support for the self-employed and extended the life of four loan schemes

• The week started with what looked like a positive development for the TikTok deal (Monday) as ByteDance said it would own 80% of the new TikTok Global venture with Oracle and Walmart on the one hand, but the Americans said they would actually hold a majority shareholding given that they own 40% of ByteDance on the other. This led to a load of confusion as to who exactly is top dog in the venture (Tuesday) and the Chinese state media was very critical of the way the deal had been done (Thursday), throwing doubt on whether it would be approved. ByteDance ended the week seeking approval by the Chinese Commerce Ministry (Friday) and things are still hanging in the balance
• Trump recently tried to impose a ban on Tencent’s WeChat app, but a Californian judge upheld the objections of a non-Tencent affiliated group called the WeChat Users Alliance (Monday) which delayed the ban. It seems that Trump’s recent bravado regarding Chinese tech companies could potentially backfire badly – not something he’ll want as he gets closer to the presidential election. Having said that, he’s continuing in his efforts to hobble Chinese tech in China’s biggest chipmaker hit by US sanctions (Financial Times, Yuan Yang and Kathrin Hille) as the US Department of Commerce told companies on Friday that exports to China’s Semiconductor Manufacturing International Corporation (SMIC) posed an “unacceptable risk” of being put to military use and would therefore impose sanctions. It all depends how these sanctions play out, but they could severely restrict China’s biggest chipmaker’s access to key US software and chipmaking equipment. This is all getting very nasty…
• Microsoft bought ZeniMax Media (Tuesday) for $7.5bn in an interesting move to boost its content capabilities ahead of the upcoming November console wars when it goes head-to-head again with Sony. With relatively similar technical specs, I suspect the initial success of the consoles will be very dependent on the games lineup. As things stand it seems that Sony may be slightly ahead at the moment on that front…
• There was a lot of news on Apple this week. It launched an online store in India (Thursday), the world’s second biggest mobile phone market (the biggest is China), which is probably a wise move given the testy relationship between the US and China on the tech front at the moment and an ever-present risk that it will become a political football as a result. It needs exposure to growth markets, so this is a positive step. On the other hand, it faced increasing resistance to its AppStore policies as a number of tech companies got together to form the “Coalition for App Fairness” (Friday). Interestingly, Apple makes unexpected concession on 30% App Store fees (Financial Times, Hannah Murphy and Patrick McGee) shows a rare moment of contrition for the tech giant as it said it would drop its fees for businesses that have been forced by the coronavirus to pivot to online-only events until the end of the year. Apple released stats this week saying that over 500 Apple experts review 100,000 apps each week. However, Epic Games’ CEO Tim Sweeney, scoffed at this saying that “a developer spends 1000s of hours creating an app, and 100s of hours updating it. Apple spends 12 minutes reviewing the update and takes 30%”
• Amazon did a gadget reveal event this week (Friday) will a lot of cool stuff – but do you really want Amazon to embed itself even more deeply in your life than it is already??

• On the positive side, we have been buying loads of DIY stuff as Kingfisher (owner of B&Q and Screwfix, among other things) was confident enough to pay back its furlough cash (Wednesday) and online shopping was strong at Nike (Wednesday) and UK apparel retailer Joules (Thursday)
• On the negative side, we are not spending money on travel. Ryanair’s current booking levels are shockingly low (Thursday) while Airbus and Tui are announcing job cuts (Wednesday). It’s not much better on land either as things have got so bad that the government is going to do the biggest overhaul on our railways for the last 25 years (Tuesday)…
• …and the sudden lack of commuters travelling by train has led to a dire performance by SSP (Thursday) which owns concourse stalwarts Upper Crust and Caffè Ritazza. BoJo’s previous eagerness in encouraging workers to go back to the office was reversed, meaning that many workers will return to working from home (Thursday) and jobsite Indeed confirms that more workers are looking at moving out of the capital (Friday), something that estate agents have been noticing recently

• Banks saw a bit of drama this week as Deutsche Bank announced that it was cutting 20% of its branches in Germany (Wednesday), which comes shortly after Handelsbanken made a similar move in its native Sweden. HSBC got caught up in a money laundering scandal (Monday) and it suffered as a result (Tuesday)
• The FCA reached a conclusion on insurers following a review (Wednesday) which means that renewals on home and car insurance will no longer be higher than the cost of policy for a new customer. This is great for the consumer on the surface because it is fairer (and means that loyal customers aren’t punished!) but then I am sure that insurers will just whack up insurance for all of us to cover the cost 😁

• It was a bad week for electric vehicle manufacturers. Tesla’s share price fell because expectations of exciting announcements were rather more advanced than the reality (Wednesday). Nikola’s founder resigned (Wednesday), as the whole ridiculous scandal continued – but that isn’t the end of it! Nikola founder bought truck designs from third party (Financial Times, Claire Bushey, Peter Campbell and Ortenca Aliaj) contends that the original design for Nikola’s flagship truck wasn’t designed by founder Trevor Milton – he actually bought it from a designer in Croatia! O.M.G. 😱😱😱. Is there no end to this man’s shame?!? My money’s on a Netflix documentary on this within the year 😂. You just couldn’t make this stuff up!

• Watson’s Yearly updates: watch this space!

I think this week was quite tame regarding “alternative” stories, but I have to say that this make me laugh quite a lot: Waitrose mocked by shoppers for selling £6 ‘autumn foliage’ as leaves are free outside (The Mirror, Courtney Pochin). Whoever came up with this wheeze is a genius 😂. Getting punters to pay six quid for a bag of leaves is just superb!