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 Biden failed that TV debate, when VW announced a JV with Rivian and when Frasers did BNPL with THG…
- IN THE AMERICAS – a report by Moody’s Analytics contended that if Trump got the presidency, there would be a recession by mid-2025 while unemployment and inflation would rocket with the less affluent taking most of the brunt (which is ironic because they are the ones looking to vote for Trump). Biden’s plans look less extreme in comparison but he had a disastrous TV debate with The Orange One, prompting commentators to say that this would be disastrous for his bid for a second consecutive term in office. Will Michelle Obama come to the rescue?? The IMF voiced concern about the potential for the US to pile on the debt whoever gets into office and urged whoever gets in to pay down debts while the economy is still strong (but that would be a real buzzkill for voters, so is unlikely to happen!). In Argentina, President Milei’s tough economic policies designed to get the country’s finances back on track have pushed the country into recession. Unemployment has risen while consumer spending and investment have fallen. No pain, no gain??
- IN ASIA – the Yen fell to its weakest level versus the dollar since 1986 but the Finance Ministry may be reticent about wading in to shore up the currency because they chucked loads of money at it in April and the impact didn’t last for as long as it had hoped! Meanwhile, the situation regarding the Philippines, China, the Second Thomas Shoal and the US got increasingly fraught, prompting the Philippine ambassador to Washington to warn that this could escalate to nuclear war if things remain unchecked.
- IN EUROPE – Ursula von der Leyen got closer to winning a second term as the EC president by gaining endorsement from most of the European leaders (although Italy’s PM Meloni abstained). She’s now got to win a vote scheduled for the week of July 15th. Meanwhile, in France, an FT poll suggested that the French electorate trusts Le Pen more than President Macron on the economy. Both the extreme right and extreme left parties are comfortably more popular than Macron’s centrists and it looks likely that they will spend, putting France further into debt (and they’re already quite substantially in debt).
- IN THE UK – there was a suggestion that France’s political predicament could present an opportunity for the City of London to claw back some of the business it had lost to Paris during Macron’s ongoing efforts to make his own finance hub since Brexit. However, the IFS think tank believes that Britain’s finances are in a right old state and it looks like pledges of NHS spending are quite spurious whoever gets in.
IN CLIMATE-RELATED NEWS…
- A coalition of businesses, mayors, governors and investors – dubbed “Mission 2025” – has come together to oppose the increasingly prevailing view that tackling climate change was “too difficult, too unpopular or too expensive”. Mission 25 wants governments to solidify environmental commitments for the next decade. As if to illustrate further why this is necessary, BP’s CEO implemented a hiring freeze and suspended new offshore wind projects in an attempt to calm investors who don’t like the company’s green targets. It is the latest example of an oil company walking back its climate commitments.
IN COMMODITIES NEWS…
- There’s potentially good news for chocolate lovers as cocoa futures prices have continued to fall in the longest “losing” streak since 2022 as weather in the key growing region of West Africa has been improving with the arrival of seasonal rains. Will this signal the “ceiling” for chocolate prices?
IN CONSUMER & EMPLOYMENT-RELATED NEWS...
IN CONSUMER-RELATED NEWS…
- REGARDING MORTGAGES – Rightmove stats show that first-time buyers are facing monthly mortgage repayments that are 61% higher than they were in 2019 but then at the other end of the scale, the Bank of England says that most of the 3 million households who are currently on relatively low mortgage rates (at or below 3%) will see their monthly repayments jump by over 25% within the next two years as they roll on to new deals.
IN EMPLOYMENT-RELATED NEWS…
- Data from Adzuna showed that the UK jobs market remained largely unchanged last month despite early signs of improvement in the economy. Meanwhile, the Resolution Foundation think tank says that average weekly wages in Britain have reason by just £16 a week in real terms since 2010 thanks to anaemic GDP and productivity growth that followed on from the financial crisis of 2008. This compares badly with equivalent average wage rises of almost £70 a week in Germany and the US.
IN AUTOMOTIVE NEWS...
- China has agreed to talk with EU on EV tariffs. Proposed tariffs could be up to 48% for some makers and Germany has the most to lose if the Chinese were to retaliate with tariffs of their own. Talks are certainly needed if a trade war is to be avoided!
- Ferrari is looking at offering a €7,000 annual subscription fee that will entitle the owner to a replacement battery for its hybrid and electric vehicles after eight years and then 16 years. I think this is a canny way to squeeze more money out of Ferrari owners but this is a service that I think “normal” car companies should offer (for much less than €7,000 per year, obviously) in future in order to help address the problem of battery degradation and massive depreciation.
- Stellantis is threatening to shut down production at two UK plants unless the next government puts up some cash and provides some tax incentives to encourage demand for EVs.
- VW announced that it would invest up to $5bn in a 50/50 JV with Rivian. This is great for both sides because VW will get better software (its in-house effort, Cariad, was 💩) and Rivian will get a sugar daddy to finance it. There will obviously be other benefits (e.g. VW getting a better foothold in the US and Rivian getting access to Europe etc.) but this seemed to go down well with the investment community. Given that the rollout of Chinese-made EVs might be slowed down by the incoming tariffs, it may give VW time to make up some ground…
- Tesla recalled its Cybertrucks again, this time for issues with the trunk and windscreen wiper. Tesla isn’t having a great time at the moment as it’s had to announce a lot of recalls and comes at a time when the company is facing increasing competition in China and waning demand for EVs generally elsewhere.
IN RETAIL NEWS...
IN CONSUMER TRENDS NEWS…
- Amazon announced plans to launch a service that will offer cheap fashionwear, household goods and other products that come directly from China in a bid to take the fight back to upstarts Temu and Shein. Delivery to customers in the US would take between 9 and 11 days of placing the order, coming directly from China. Meanwhile, Amazon is being sued by a University of East Anglia professor on behalf of UK third-party sellers on Amazon’s website for £2.7bn.
- Shein submitted paperwork with the FCA ahead of its anticipated IPO on the LSE. It still needs to get approval from Beijing authorities to list in London. In order to work, though, it would be advisable for it to give more detail about why it wants to list, address ongoing supply chain concerns and give more assurance about its corporate structure.
- Frasers Group signed a multi-year partnership with THG where Frasers will buy some of its luxury goods websites and sell some of its protein products at Sports Direct while THG will use Frasers’ BNPL product and integrate its customer service and loyalty programme.
- Boots’ American owner, Walgreens Boots Alliance, has decided to postpone the sale of the high street retailer (presumably because no-one wanted to buy it at a price they were comfortable with). This is the second time it’s failed at this and it only fairly recently ditched efforts for a flotation. Clearly, a new strategy is needed – pronto!
- Halfords announced disastrous profits and said that the “Golden age of cycling” is over. The car business has been pretty rubbish as well and it has also been hammered by high freight costs.
- On a more positive note, AO World announced a tripling of its profits! Tumble dryers have been flying off the shelves thanks to wet weather and the Euros have helped boost TV sales.
- Gap seems to be getting some of its mojo back after a long period of decline. It had its its first quarterly rise in like-for-like sales for six quarters and was confident enough about the outlook to upgrade its full year sales and operating income forecasts.
- Watches of Switzerland reported a disappointing performance and blamed it mainly on Sunak sticking with his decision to axe tax-free shopping, which it says drives tourists away.
IN TECH NEWS...
- Apple announced that it would delay the rollout of its AI-powered features in Europe, blaming EU rules. It plans to roll them out in 2025 to give the company time to comply with the EU’s Digital Markets Act. Meanwhile, Apple and Meta are talking about a potential AI tie-up where Apple could integrate Meta’s Llama 3 model into Apple Intelligence, but it is also holding similar talks with other firms, including Anthropic. In regulatory developments, the European Commission has accused Apple of restricting competition on its App Store and will be using the new Digital Markets Act One of the purposes of the DMA is to force “online gatekeepers” like Apple to open up their businesses to competition.
- The European Commission accused Microsoft of abusing its market power by including Teams with its Office 365 productivity software suite following the announcement of its preliminary antitrust findings this week. The drama instigated by Slack back in 2020 rolls on…
- The US is pushing for more China tech restrictions, this time in investment. There is draft legislation that could put total bans on certain investments and force American individuals and organisations to notify the government of related transactions. Meanwhile, TikTok advertisers are bracing themselves for a ban in the US as the January deadline approaches. They are now putting things like “kill clauses” in contracts that will enable them to cut off financial commitments if a ban comes into force.
- X had a senior management shake-up as the CEO, Linda Yaccarino, had to fire her head of business ops and communication as she is feeling the pressure to boost sales and cut costs. Although 60% of the advertisers that abandoned the platform have returned in the last few months, I really do think that the company could do with outlining a proper strategy…
IN OTHER NEWS...
- Airbus lost a big chunk of its market value after it lowered its commercial aircraft delivery and financial targets for the year thanks to supply chain problems and impairment costs relating to its space activities.
- Fast delivery specialist Getir is set for a break-up and a $250m cash injection by Abu Dhabi’s wealth fund Mubadala Investment Company, which will give it majority control of the Getir’s Turkish operations. The company will be split into its food delivery business in Turkey, which Mubadala will control, and a separate business that will be made up of its other assets.
- Nike’s share price took a major tumble after it reported slower demand and cut its outlook for the year. It’s already deep into executing a cost-cutting plan that it announced in December – it’s not got to concentrate on innovation and address the slide of its core business.
- YouTube is currently holding talks with record labels over how to licence their songs to train AI models for use by creators on its platform. A final agreement has not yet been reached but I guess that this is all going to be about price!
- Nestlé is about to launch a range of products that address the problem of “Ozempic face”, where takers of weight-loss drug Ozempic find that their face looks gaunt and skin loses elasticity. I guess if you are going to lose out on revenue from confectionary and ice cream, you might as well lean into the phenomenon that’s causing it!