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 BIG PICTURE NEWS...
This week was dominated by news about Russia/Ukraine, BoJo’s partying and some major Facebook developments.
- The IMF cut economic growth forecasts (Wednesday) in its latest World Economic Outlook report. It blamed the impact of supply chain issues and pandemic restrictions for the cuts but said that it thought fuel prices would “moderate during 2022-3” while supply chain issues and the effects of Covid would lessen as time goes on. Not particularly insightful, but there you go…
- The Russia/Ukraine situation continued to develop as the week wore on. Russian state media continued to up the ante with the broadcast of accusations against Ukraine (Thursday), the ECB asked the 115 banks it overseas in the Eurozone about contingency plans for an invasion and China threw its weight behind its Russian comrade (Friday).
- In the US, the Fed made clear signs that it would be raising interest rates very soon (Thursday), a move that got all the more pressing with the release of its latest GDP growth figure (Friday), which beat expectations.
- In the UK, the whole Boris Johnson/partygate scandal continued to escalate (Tuesday) with the “imminent” release of the Sue Gray report, which didn’t actually get released as expected. No-one seems to be emerging as a leading candidate for the PM’s position at the moment, but you would have thought that Liz Truss’s star got tarnished by revelations about the use of the government’s private jet to fly to Australia which would have cost the taxpayer about £500,000.
- In Europe, the latest IHS Markit PMI showed that Eurozone businesses had a weaker-than-forecast start to 2022 (Tuesday) but it looks like the Omicron effect isn’t going to be as bad as first feared.
- In cryptocurrency news, Bitcoin continued to weaken (Monday). Some said it was due to the “de-risking of portfolios” but I think it’s more to do with the threat of Russia potentially banning it (although it sounded like that assumption may have softened a bit towards the end of the week).
Meanwhile, there were some pretty notable developments in the world of energy and oil.
- Gas prices continued to climb as tensions rose as the week progressed with Russia/Ukraine/NATO/EU/US (Tuesday). Europe gets around 40% of its gas from Russia, most of which goes via Ukraine, and so prices are rising because it is feared that supplies could be interrupted by potential conflict. Analysts at Goldman Sachs think that gas prices will stay higher for three more years (Tuesday) on the assumption that energy shortages in Europe will continue.
- Oil prices hit $90 a barrel (Thursday) and many think they’ll hit $100 before long. Again, some of this is being driven by fears that a Russia/Ukraine conflict could hit supplies.
THERE WERE SOME MAJOR DEVELOPMENTS THIS WEEK IN THE AUTOMOTIVE WORLD...
- Renault, Nissan and Mitsubishi committed to putting £17bn into EVs over the next five years (Monday) in an initiative dubbed “Alliance to 2030”. They will be pooling R&D costs and production facilities in France, Britain, China and Japan.
- Tesla announced a great set of results (Thursday) thanks to the major surge in demand for EVs. Its Model 3 became the second most popular vehicle in the UK and Europe’s most popular car.
- GM continued to commit to EVs and announced more detail on its plans to electrify (Wednesday) but supply chain problems forced Ford to stop taking any more orders for its popular $20,000 Maverick pickup truck (Tuesday) to give it time to catch up on its order book.
- In batteries news, Britishvolt signed a deal to start producing its first batteries (Monday) in the UK’s first ever gigafactory, LG Energy Solution continues to garner excitement (Wednesday) one week on from its flotation – which was South Korea’s biggest ever – as investors bet on it becoming a beneficiary of the ongoing US-China tensions.
- In charging news, the UK’s charging network came in for criticism from the MD of VW UK (Thursday) and a study conducted on behalf of British Gas showed that charging prices were highly variable (Wednesday) depending on your geographic location.
THE TECH SECTOR SAW SOME NOTABLE EVENTS...
- Apple had a brilliant week this week! Not only did it regain its #1 spot in China for the first time in six years (Thursday), it also announced record sales and profits (Friday) thanks to booming demand for its iPhones and growing services business.
- Facebook had a mixed one as it admitted defeat in crypto (Thursday) on the one hand, but announced that it was developing the world’s most powerful AI-dedicated supercomputer (Tuesday) on the other.
- Microsoft took a bit of a battering this week (Wednesday), despite announcing a 20% increase in quarterly revenues, as the wider tech sector seems to be losing its lustre at the moment.
- Nvidia got a bit downbeat this week (Wednesday) as it looks like it won’t be able to buy Arm Holdings as it had originally hoped. None of the world’s regulators have approved it, so it looks increasingly like it’ll lose its $1.25bn security deposit to SoftBank.
- Ocado announced new lighter robots (Thursday) that can pick and pack groceries more quickly than current models.
SOME INTERESTING CONSUMER TRENDS ARE EMERGING AT THE MOMENT...
- So although Ocado is benefiting from consumers doing “dry January” (Tuesday), UK consumers are still spending money on property as TSB returned to pre-Covid levels of profitability on record mortgage demand (Friday). The travel industry is hoping for a second half boom (Friday) with the likes of EasyJet, Saga and Wizz Air talking a good game, but the luxury sector also reported strong performances (Friday) as LVMH did particularly well in Asia and the US, something we’ve seen recently with Burberry reporting similarly.
- Amex is seeing rising card usage (Wednesday) as Americans are building up debt once more and Mastercard is also likely benefit from the spending boom (Friday) while Barclaycard’s latest figures highlight the increasing use of contactless (Wednesday).
SOME INTERESTING BUSINESS TRENDS ARE ALSO EMERGING...
- M&S is launching a new teleshopping service (Friday) by using influencers on a livestream. Shoppers can interact with them and “buy the look” in real time and I think that this could really catch on as it has already shown its popularity in China. M&S is the first major British retailer to do this, which is pretty surprising given its usually bland reputation.
- A report by EY said that almost 90% of major financial services firms plan to expand or set up UK operations (Wednesday), contrary to many predictions made pre-Brexit.
- The advertising industry is staging a big turnaround, according to the Advertising Association and WARC (Thursday). Inflation could limit upside but most areas of advertising are expected to continue to do well.
IN OTHER NEWS...
- In supply chain news, American chip inventory is running very low at the moment (Wednesday), which means that there is absolutely zero room for production shocks. Despite this, Intel announced a fall in earnings (Thursday), but that was because it is playing catch-up with rivals and investing in new facilities. Carmakers continue to see a shortage in chips.
- Chinese authorities are now turning their attention to vaping (Tuesday), more specifically at Huabao International Holdings, which makes flavours and fragrances used by tobacco manufacturers, and is looking at allegations of corruption.
- Calls are increasing for the chief of Peloton to be axed (Monday), with activist investor Blackwells Capital pushing for his removal in order to scale the business. It thinks that Peloton could be a decent target for a fitness-focused or tech company.
- The National Express/Stagecoach deal hit a bump in the road as the CMA said it would be investigating the proposed £1.9bn merger (Thursday).
AND IN UPDATES FOR WATSON'S YEARLY...
- Watson’s Yearly updates 2021/22: there have been updates in the G20 statistics (some inflation and unemployment rate changes) as well as country updates. I have also added to the “Themes for 2022” section. Please click HERE to see Watson’s Yearly and the changes. Changes have been highlighted in this purple colour 👍 You will be able to see how themes and countries develop throughout the year by reading this document!
There was another easy “alternative story” winner this week with Olympic gold medalist skateboarder wears a kimono on the half-pipe (SoraNews24, Oona McGee). You don’t see a skateboarder wearing a kimono very often, now do you!